Sinclair Makes Executive Changes As Third-Quarter Revenues Rise
November 2, 2016 at 6:56 AM (PT)
SINCLAIR BROADCAST GROUP has announced changes in its corporate management along with its third-quarter financial results, with Chairman/Pres./CEO DAVID SMITH scheduled to move to Exec. Chairman on JANUARY 1st. SMITH will be replaced as Pres./CEO by CFO CHRISTOPHER RIPLEY, while SVP/Corporate Finance and Treasurer LUCY RUTISHAUSER will become SVP/CFO/Treasurer.
SMITH said, “We are excited about the announced executive changes and believe they will better position us to grow in a changing media landscape where networks and distributors are getting bigger and consumers have more viewing choices on more devices. The organizational changes provide greater focus and oversight in those critical areas that strengthen our longer term strategies to be multi-platformed, vertically integrated and compete in the broader media ecosystem, ultimately driving value. We have the utmost confidence in CHRIS and LUCY’s ability to oversee and improve upon their new respective areas. In addition, my revised role allows me to focus on our most important assets: local and national news content, and the launch of the ‘Next Gen’ Broadcast Platform and associated single frequency network, IP network infrastructure and user data collection which are expected to revolutionize the way television broadcasters transmit data and interface with end user consumers.”
The company's third-quarter revenues rose 26.5% to $693.8 million, with operating income up 54.6% to $154 million and net income up from $43.3 million to $50.8 million (45 to 54 cents/share, with 2016's number including a 16 cent per share loss from extinguishment of debt). Media revenues before barter grew 27.5% to $635.3 million; political revenues jumped from $7.8 million to $45 million. SINCLAIR does not break out figures for its only radio properties in SEATTLE.
“Although industry political ad spending for 2016 has not been at the levels anticipated coming into the year due to the unique nature of this year’s presidential election and certain contested senate races not materializing, our core advertising nonetheless grew slightly in the third quarter, despite the crowding-out impact of political on our normal advertisers,” said SMITH. “We continued opportunistic share repurchases to capitalize on what we believe to be a discount in our stock. Year-to-date, we have repurchased almost 4.5 million shares or 6.5% of the float. Combined with our full year quarterly dividends and scheduled debt amortization, return of capital to shareholders and debt repayments would represent almost half of our expected discretionary 2016 cash flow.
“Looking ahead over the next few months into 2017, we expect to see the completion of the spectrum auction and the approval of ATSC 3.0, both of which will provide value and opportunities that will positively change the broadcast landscape. Our digital business, believed to be the best in the industry, is growing at mid- 20% top line growth this year, while CIRCA, our newly launched mobile-friendly, video-driven news portal designed for the millennial audience, in the first three months since launch is reaching more consumers and generating more video streams than even we initially expected.”
“With one week remaining in the political election year, we have been pleasantly surprised by the recent momentum in political ad spending from both sides. This ensures our expectations of a record-breaking political year for us on an as-reported basis,” said EVP/COO DAVID AMY. “Additionally, auto advertising, our largest advertising category, was flat in the third quarter and is expected to be positive in the fourth quarter, despite concerns over production cutbacks, which speaks to our strength and unique focus at serving the auto category. In addition, we are expecting over 20% topline revenue growth in our digital business in fourth quarter as a result of our investments in such areas as our content and video management systems and COMPULSE, our digital agency.”
The company expects media revenues before barter of approximately $732.6 million to $748.6 million, up 34% to 37% year-over-year, for fourth quarter, including $120 million to $130 million in political revenues. The board also declared an 18 cents per share quarterly dividend, payable DECEMBER 15th to shareholders of record on DECEMBER 1st.