Sinclair Stock Slips On Q3 Earnings Miss


“Despite challenges in the quarter, including Hurricanes Harvey and Irma, the loss of certain technical school advertisers versus last year and mainly transaction-related one-time charges, Sinclair stations continued to deliver,” says Sinclair Broadcast Group President/CEO Chris Ripley.

But, total revenue was down in Q3, as was Sinclair’s operating income. As a result, its net income shrank by 24 cents per share — missing the consensus street estimate by a dime. Investors reacted by selling SBGI stock in the first two hours of Wednesday’s trading.

In Q3, total revenue fell to $670.89 million, from $693.84 million. Operating income was down to $103.4 million, from $154 million.

Overall net income fell to $30.64 million (30 cents per diluted share), from $50.85 million (54 cents) in Q3 2016. FactSet’s consensus on per-share earnings was 40 cents, while the average estimate of four analysts surveyed by Zacks Investment Research was for earnings of 39 cents per share.

With a 1-year target estimate of $48 for Sinclair, investors went into sell mode, sending SBGI stock down as far as $29.85 just before 10am Eastern. At 11am Eastern, Sinclair stock was off 3.3%, to $30.65.

Another drag on Sinclair in Q3 was a rise in its total operating expenses to $567.4 million, from $539.8 million. This was led by media production expenses of $268 million in the quarter, up from $242.9 million.

Yet, Ripley kept upbeat with his comments. “In the quarter, we grew our share of our markets’ revenues, excluding political, versus last year,” he said, adding, “We exceeded our third quarter adjusted operating income expectations previously provided.”

That excluded the acquisition of Bonten Media, a deal that closed in September.

Meanwhile, the ever-popular subject of Sinclair’s proposed acquisition of Tribune Media played front-and-center with the release of subpar Q3 numbers — perhaps as a proper deflection piece that will take the spotlight away from the big per-share earnings miss.

Sinclair Executive Chairman David Smith turned his attention to Washington, as the FCC this month “will be addressing certain deregulatory rulemakings for the television broadcast industry.” This, Smith says, is being done “in recognizing that the competitive marketplace has changed and broadcasters actually do compete against everyone for viewers and advertising dollars.”

Smith added that the FCC’s review of TV ownership rules “also recognizes that the current rules no longer reflect the realities of today’s media landscape and consumer viewing habits.”

Smith says Sinclair expects to close on its Tribune Media acquisition “in early 2018.”