Signs stand outside Sinclair Broadcast Group Inc.’s headquarters. In Cockeysville, Maryland, United States, on Friday, August 10, 2018.
Andrew Harrier | Bloomberg | Getty Images
Sinclair, one of the largest U.S. broadcast station owners, 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 different regions of the United States that it would be willing to sell, said the people, who asked to remain anonymous because the discussions are private. Sinclair owns or operates 185 television stations in 86 markets.
The stations are a mix of affiliates including Fox, NBC, ABC, CBS and The CW. If sold together, their average revenues for 2023 and 2024 are estimated at $1.56 billion, the sources said. Sinclair is willing to sell all or some of its existing stations in major markets such as Minneapolis; Portland, Ore. pittsburgh. Austin, Texas, and Fresno, California, among other cities.
Sinclair CEO Chris Ripley said on Wednesday that the company was open to offloading parts of its business, without providing details.
“As we’ve always said, we don’t have a sacred cow,” Ripley said during a conference call about his company’s earnings. “We want to disclose the sum of the valuation of the parts that we believe we are significantly undervalued. As much as asset sales make sense in order to unlock that value and help us get unleveraged, that’s something we want to be open about as well.”
The company began officially purchasing these products in February, one of the people said.
Spokesmen for Sinclair and Moelis declined to comment.
Sinclair is also exploring options for its Tennis Channel, a cable television network that shows sports matches and baseball games, the people said. Bloomberg I mentioned earlier that evolution.
Broadcast TV station groups have suffered in the past five years as millions of Americans canceled traditional pay TV. Most stations make money from so-called retransmission fees, which are paid on a per-subscriber basis by traditional TV distributors, such as Comcast, DirecTV and Charter, for the right to carry 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 and the enterprise value is approximately $4.7 billion.
Last year, Sinclair rebranded and reorganized, splitting the company into two operating units — local media, which focuses on stations, and ventures, which includes the Tennis Channel but also has the potential to serve as an investment vehicle.
The split in the company’s divisions, and the recent sale of some of its stations, stems from tension within the Smith family, the shareholders and board members who helped build Sinclair, some people said.
Stations are up for sale in the months leading up to the 2024 election, which typically generates high political advertising revenue for broadcast TV companies. Sinclair said during earnings on Wednesday that it had pre-booked $77 million in political advertising for the second half of the year through Election Day, compared to $21 million in the same period in 2020, the last time former President Donald Trump and President Joe Biden were… On the ticket.
The company’s total revenue and advertising revenue increased slightly during the first quarter. Sinclair stock rose 12% on Thursday.
Sinclair’s broadcast stations have been known for their conservative editorial voice, and the company faced backlash in 2018 after requiring some of its stations to read promotions criticizing the media about “fake stories.”
This process also comes after Sinclair ran into problems with regional sports networks.
Sinclair acquired Disney’s largest portfolio of regional sports networks in 2019 for $10.6 billion, including $8.8 billion in debt. Between increased cord-cutting and a massive debt load, Diamond Sports, Sinclair’s unconsolidated and independently managed subsidiary, sought bankruptcy protection last year.
Diamond later filed a lawsuit against the Sinclair parents, and the lawsuit was settled in January. Sinclair paid $495 million to settle lawsuits involving Diamond.
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