Sinclair, a major owner of broadcast stations in the U.S., is looking to sell more than 30% of its stations, according to sources. The company has hired Moelis as its investment banker and has identified over 60 stations across the U.S. that it is willing to sell. These stations generate an estimated $1.56 billion in revenue for 2023 and 2024 and are located in key markets such as Minneapolis, Portland, Pittsburgh, Austin, and Fresno. Sinclair CEO Chris Ripley has expressed a willingness to sell parts of the business in order to unlock value and de-lever the company.
The company officially began shopping the stations in February and is also considering options for its Tennis Channel, a cable TV network that features tennis and pickleball matches. Broadcast TV station groups have struggled in recent years due to mass cord-cutting, leading to a decline in revenue. Sinclair’s market value has dropped by over 70% in the last five years, with a market capitalization of $975 million and an enterprise value of approximately $4.7 billion. The company recently split into two operating units, Local Media and Ventures, to focus on its stations and other investments.
The decision to sell some of its broadcast stations comes amidst tension within the Smith family, the shareholders and board of directors who helped build Sinclair. The sale process coincides with the upcoming 2024 election, which typically sees high political advertising revenue for broadcast TV companies. Sinclair has pre-booked $77 million in political advertising for the second half of the year, compared to $21 million at the same point in 2020. The company’s overall revenue and advertising revenue both saw slight increases in the first quarter, leading to a 12% increase in its stock price.
Sinclair’s broadcast stations have a reputation for having a conservative editorial voice, and the company faced criticism in 2018 for requiring some stations to read promos criticizing the media as disseminating “fake stories.” The decision to sell some stations also follows challenges faced by Sinclair in the regional sports networks business. The company acquired a large portfolio of regional sports networks from Disney in 2019 for $10.6 billion, and its subsidiary, Diamond Sports, filed for bankruptcy protection due to cord-cutting and debt load. Sinclair settled lawsuits related to Diamond, making a $495 million payment in January.
Overall, Sinclair’s decision to sell a significant portion of its broadcast stations and explore options for its Tennis Channel is part of a strategic effort to unlock value and address financial challenges faced by the company in recent years. The move comes amidst changing dynamics in the broadcast industry, including cord-cutting trends and shifting consumer preferences, prompting Sinclair to realign its operations and focus on core assets.
