Sinclair Earnings: Core Advertising Struggles Continue; Further Ad Weakness Ahead

Sinclair posted an in-line start to 2021 as first-quarter revenue met and adjusted EBITDA beat FactSet consensus projections. Core advertising revenue weakness continued, dropping 2% year over year, excluding Diamond Sports Group. Uncertain economic conditions produced weak insurance ad spending that more than offset increased automotive ad spending. April saw the return of Sinclai's ABC and CBS stations to Hulu and FuboTV, respectively, ending customer blackouts. We expect future negotiations with distributors will remain difficult as sports leagues explore direct to consumer options. We are maintaining our $22 fair value estimate.