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Sinclair Broadcast Group Explores Selling Over 30% of TV Stations in Effort to Unlock Value

Sinclair Broadcast Group Inc., one of the largest owners of broadcast stations in the U.S., is reportedly planning to sell over 30% of its footprint. The company has hired investment banker Moelis and has identified more than 60 stations that it would be willing to sell. These stations, which are a mix of affiliates including Fox, NBC, ABC, CBS, and the CW, have an estimated average revenue of $1.56 billion for 2023 and 2024 if sold together. Sinclair is open to selling all or some of these stations, which are located in major markets like Minneapolis, Portland, Pittsburgh, Austin, and Fresno.

Sinclair’s CEO, Chris Ripley, stated during the company’s earnings conference call that they are open to offloading parts of their business in order to unlock the undervalued value and help with de-leveraging. The company began shopping these stations in February. Sinclair is also exploring options for its Tennis Channel, a cable TV network that features tennis and pickleball matches.

The decision to sell these stations comes as broadcast TV station groups have suffered due to the cancellation of traditional pay TV by millions of Americans. Most stations rely on retransmission fees paid by traditional TV distributors for the right to carry the stations. Sinclair has experienced a significant decline in its market value over the past five years, losing over 70%. The company’s market capitalization is currently around $975 million with an enterprise value of $4.7 billion.

Last year, Sinclair underwent a rebranding and reorganization, splitting the company into two operating units: Local Media, which focuses on the stations, and Ventures, which includes Tennis Channel but also serves as an investment vehicle. This split and the recent sale process for some of its stations are said to stem from tension within the Smith family, who are shareholders and board directors of Sinclair.

The timing of the station sales is noteworthy, as it coincides with the months leading up to the 2024 election, which typically sees high political advertising revenue for broadcast TV companies. Sinclair has already pre-booked $77 million in political advertising for the second half of the year through Election Day, compared to $21 million at the same point in 2020. It’s important to note that Sinclair’s broadcast stations have been known for having a conservative editorial voice.

This decision to sell stations also follows Sinclair’s struggles in the regional sports networks business. In 2019, Sinclair acquired the largest portfolio of regional sports networks from Disney for $10.6 billion. However, with cord-cutting on the rise and a hefty debt load, Diamond Sports, an independently run subsidiary of Sinclair, sought bankruptcy protection. Sinclair later settled litigation related to Diamond Sports, making a $495 million payment to resolve the lawsuits.

Overall, this move by Sinclair Broadcast Group Inc. to sell a significant portion of its broadcast stations reflects the challenges faced by traditional TV broadcasters in an evolving media landscape. The decline in market value and the decision to explore options for its Tennis Channel further highlight the need for strategic restructuring and adaptation to changing consumer preferences.

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