Sinclair, one of the largest owners of broadcast stations in the U.S., is looking to sell more than 30% of its footprint. The company has hired Moelis as its investment banker and has identified over 60 stations in various regions of the U.S. that it would be willing to sell. Sinclair owns or operates 185 TV stations in 86 markets, which includes affiliates of major networks such as Fox, NBC, ABC, CBS, and the CW. These stations, if sold together, are estimated to have an average revenue of $1.56 billion for 2023 and 2024. Sinclair is willing to sell all or some of these stations, which are in top markets like Minneapolis, Portland, Pittsburgh, Austin, and Fresno.
Sinclair CEO Chris Ripley stated that the company is open to offloading parts of its business in order to unlock more value and help reduce debt. The company began officially shopping the stations in February, and is also exploring options for its Tennis Channel, a cable TV network that features tennis and pickleball matches. Broadcast TV station groups have faced challenges in recent years due to the increase in Americans canceling traditional pay TV, impacting retransmission fees that are a major source of revenue for these companies. Sinclair has seen a decline in its market value by more than 70% over the last five years.
Last year, Sinclair underwent a rebranding and reorganization, splitting into two operating units – Local Media, focusing on the stations, and Ventures, which houses Tennis Channel. The decision to sell some of its stations and explore options for the Tennis Channel is reportedly due to tension within the Smith family, shareholders, and board directors who helped build the company. The stations are being put up for sale ahead of the 2024 election, which typically brings in 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, compared to $21 million in 2020.
Sinclair’s broadcast stations have been known for having a conservative editorial voice, and the company faced criticism in 2018 for requiring some stations to read promos criticizing the media for “fake stories.” In addition, Sinclair experienced challenges in the regional sports networks business after acquiring a portfolio of regional sports networks from Disney in 2019. Diamond Sports, an independently run subsidiary of Sinclair, sought bankruptcy protection last year due to cord-cutting and high debt load. Sinclair settled lawsuits related to Diamond, making a $495 million payment in January. The company’s overall revenue and advertising revenue saw slight increases in the first quarter, with its stock price rising by 12% on Thursday.
