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Sinclair Broadcast Group Inc Class A SBGI

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Sinclair Reports Weak Third Quarter; RSNs Likely Hindering Dish Renewal

Neil Macker, CFA Senior Equity Analyst

Analyst Note

| Neil Macker, CFA |

Sinclair posted a weak third quarter as revenue and operating income both missed versus FactSet consensus. Despite the miss, the firm made some progress on the regional sports network front with three multiyear renewals with teams and a full-package renewal including the RSNs with Altice. We remain skeptical about the direct-to-consumer service for the RSNs, particularly with respect to the response from distributors. While management noted that customers will pay a retail price versus the lower affiliate fee, we think that distributors may start moving RSNs off the standard tier and onto either higher tiers or add-on packages. We are maintaining our no-moat rating and our fair value estimate of $30.

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Company Profile

Business Description

Sinclair Broadcast Group is the second- largest television station operator in the U.S., with 191 stations in 89 markets. Of the firm's 607 channels, 154 are affiliated with the four national broadcasters--Fox (59), ABC (41), CBS (30), and NBC (24)--with another 86 channels on networks aligned with CBS (47 CW channels) and Fox (39 MyNetworkTV channels). Via the 2019 purchase of Fox Sports Networks from Disney, Sinclair is now the largest owner or operator of regional sports networks with 14 Fox-branded RSNs covering 42 NBA, MLB, and NHL teams along with the new home of the Chicago Cubs, Marquee Sports Network. The firm also owns the Tennis Channel, four multicast networks, and professional wresting promotion Ring of Honor.

10706 Beaver Dam Road
Hunt Valley, MD, 21030
T +1 410 568-1500
Sector Communication Services
Industry Broadcasting
Most Recent Earnings Sep 30, 2021
Fiscal Year End Dec 31, 2021
Stock Type Speculative Growth
Employees 11,600