Signage stands outside the Sinclair Broadcast Group Inc. headquarters. in Cockeysville, Maryland, USA, on Friday, August 10, 2018.
Andrew Harrer | Bloomberg | Getty Images
Sinclairone of the largest owners of broadcast stations in the U.S. is looking to sell more than 30% of its footprint, according to people familiar with the matter.
The company has hired Moelis as an investment banker and has identified more than 60 stations in various regions of the U.S. that it would be willing to sell, said the people, who asked not to be named because the discussions are private. Sinclair owns or operates 185 TV stations in 86 markets.
The stations are a mix of affiliates, including Fox, NBC, ABC, CBS and the CW. If sold together, their average sales for 2023 and 2024 would be an estimated $1.56 billion, the people said. Sinclair is willing to sell all or some of its stations, which are in top markets such as Minneapolis; Portland, Oregon; Pittsburgh; Including Austin, Texas and Fresno, California.
Sinclair CEO Chris Ripley said Wednesday that the company is open to transferring parts of its business, without providing further details.
“As we've always said, we have no sacred cows,” Ripley said during his company's earnings conference call. 'We want to unlock the sum of the valuations of the parts for which we think we are severely undervalued. And to the extent that asset sales make sense to unlock that value and help us reduce leverage, then that's something we would do. be open to it too.”
The company officially started buying them in February, one of the people said.
Spokespeople for Sinclair and Moelis declined to comment.
Sinclair is also exploring options for its Tennis Channel, a cable TV network that broadcasts sports and pickleball matches, the people said. Bloomberg previously reported that development.
Broadcast TV groups have suffered over the past five years as millions of Americans ditched traditional pay TV. Most stations make money from so-called rebroadcast fees, paid on a per-subscriber rate basis by traditional TV distributors, such as Comcast, DirecTV and Charter, for the right to carry the stations.
Sinclair has lost more than 70% of its market value in the past five years. The company's market capitalization is approximately $975 million, with an enterprise value of approximately $4.7 billion.
Sinclair changes
Last year, Sinclair rebranded and reorganized, splitting the company into two operating units: Local Media, which focuses on its stations, and Ventures, which houses Tennis Channel but can also act as an investment vehicle.
The split in the company's divisions and the recent sale process for some stations come amid tensions within the Smith family, the shareholders and the board members who helped build Sinclair, some people said.
The stations are up for sale in the months before the 2024 elections, which typically generates high political advertising revenue for broadcast companies. Sinclair said during earnings calls Wednesday that it had set aside $77 million in political advertising for the second half of the year through Election Day, compared with $21 million at the same time in 2020, the last time former President Donald Trump and President Joe Biden came together. on the card.
Both the company's total revenue and advertising revenue rose slightly during the first quarter. Shares of Sinclair rose 12% on Thursday.
Sinclair's broadcast stations are known for their conservative editorial voice, and the company faced backlash in 2018 after requiring some of its stations to read promos criticizing the media over “fake stories.”
Diamond misery
The lawsuit also comes after Sinclair faced headaches in the regional sports networking industry.
Sinclair acquired Disney's largest portfolio of regional sports networks in 2019 for $10.6 billion, including $8.8 billion in debt. Between the ramped-up cord-cutting and heavy debt burden, Diamond Sports, Sinclair's independently run and unconsolidated subsidiary, sought bankruptcy protection last year.
Diamond later sued parent Sinclair, and the lawsuit was settled in January. Sinclair has made a payment of $495 million to settle lawsuits related to Diamond.