Sinclair explores selling 30% of broadcasting stations

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 its investment banker and has identified more than 60 stations in various U.S. regions that it would be willing to sell, said the people, who asked not to be identified 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 revenue for 2023 and 2024 is estimated at $1.56 billion, the people said. Sinclair is willing to sell all or some of the stations, which are in major markets such as Minneapolis; Portland, Oregon; Pittsburgh; Austin, Texas and Fresno, California, among others.

Sinclair CEO Chris Ripley said Wednesday that the company is open to divesting parts of its business, without giving 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 valuation of the pieces that we believe we are very undervalued. And to the extent that asset sales make sense to unlock that value and help us reduce leverage, then that is something to be open to.” also.”

The company officially began purchasing 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 television network that features the sport and pickleball matches, the people said. Bloomberg previously reported on that development.

Broadcast television station groups have suffered over the past five years as millions of Americans canceled traditional pay TV. Most stations make money from so-called retransmission fees, paid per subscriber by traditional television 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 last five years. The market capitalization of the company is about $975 million with an enterprise value of about $4.7 billion.

Last year, Sinclair changed its name and reorganized, splitting the company into two operating units: Local Media, which focuses on 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 process of selling some of its stations is due to tension within the Smith family, shareholders and board of directors who helped build Sinclair, some of the people said.

The stations will be up for sale in the months leading up to the 2024 elections, which typically generates high political advertising revenue for broadcast television companies. Sinclair said during Wednesday's earnings that he pre-booked $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 the former president Donald Trump and President Joe Biden were on the ticket.

The company's overall revenue and advertising revenue increased slightly during the first quarter. Sinclair shares rose 12% on Thursday.

Sinclair's broadcast stations are known for having a conservative editorial voice, and the company faced backlash in 2018 after requiring some of its stations to read promos criticizing the media about “false stories.”

The process also comes after Sinclair faced headaches in the regional sports network business.

Sinclair acquired Disney's largest portfolio of regional sports networks in 2019 for $10.6 billion, including $8.8 billion in debt. Amid increasing cord outages and heavy debt load, Diamond Sports, Sinclair's unconsolidated, independently managed subsidiary, sought bankruptcy protection last year.

Diamond subsequently sued parent Sinclair and the litigation was settled in January. Sinclair made a $495 million payment to settle lawsuits related to Diamond.