Sinclair's Q3 earnings take a hit from hurricanes, acquisitions

Sinclair’s media revenues, excluding barter, fell 1.7% to $624.2 million.

Sinclair Broadcast Group’s third-quarter net income fell to $30.6 million, down from $50.8 million one year ago, as hurricanes, departing advertisers and acquisition-related charges took their toll.

Total revenues fell 3.3% to $670.9 million, down from $693.8 million one year ago, due in part to $3.1 million of lost revenue. Operating income came in at $103.4 million, down from $154 million one year ago, after accounting for $8.8 million in one-time transaction and spectrum auction expenses.

"We exceeded our third quarter adjusted operating income expectations previously provided, that excluded the acquisition of Bonten Media which closed in September of this year," said Chris Ripley, president and CEO of Sinclair, in a statement. "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. In the quarter, we grew our share of our markets' revenues, excluding political, versus last year. Looking ahead to the fourth quarter, our expectation is for pro forma core advertising revenues, including Bonten, to grow mid-single digit percentage points over the same period last year."

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Ripley said Sinclair continues to partner with new virtual MVPDs, add several new distributors, and renew several Fox and CBS network affiliation agreements. In October, Sinclair said it added a deal with Sony PlayStation Vue for carriage of all Sinclair ABC, CBS, Fox and NBC affiliates plus MyNetwork, Comet, and Tennis Channel.

Sinclair’s media revenues, excluding barter, fell 1.7% to $624.2 million and political revenues were $7.3 million, down sharply from the $45 million posted one year ago during the presidential election. The company said its market share, excluding political, rose almost 1% annually in the third quarter.

Looking ahead, Sinclair expects its fourth-quarter media revenues, before barter, to come in at around $682.3 million to $684.3 million, down 5.8% to 6.1% annually largely due to the lower political advertising revenue.

David Smith, executive chairman at Sinclair, avoided discussing specific earnings in the company’s quarterly update, instead focusing on the Tribune acquisition (which he expects to close in early 2018), ATSC 3.0 and the FCC’s upcoming plans to revise media ownership rules.

"This month, the Federal Communications Commission will be addressing certain deregulatory rulemakings for the television broadcast industry, recognizing that the competitive marketplace has changed and broadcasters actually do compete against everyone for viewers and advertising dollars. Their review also recognizes that the current rules no longer reflect the realities of today's media landscape and consumer viewing habits. We applaud the FCC's action to level the playing field, especially in light of emerging technologies and consolidation in the telecom and cable industries,” said Smith in a statement.