TV Station Giant Sinclair Misses Political Advertising Guidance After Late Ad Cancellations

TV broadcasting and media company Sinclair Inc. reported political revenue of $138 million for its third quarter, coming in slightly below its updated guidance.

In September, the company had upped its guidance for the quarter to approximately $140 million to $145 million, up from the previously announced forecast range of $113 million to $128 million. The company attributed the miss to cancellations in political ads in late in September, with $5 million in lost revenue due to late ad cancellations during the quarter.

"We were impacted by some late political ad cancellations from Nevada which occurred in the last week of the third quarter as campaigns move monies to states, cities outside of our footprint, where races grew tighter," the company said.

In total, the company said it experienced over 11 million cancelations from Nevada, and six million in cancelations in some areas in Pennsylvania, as some monies within the state shifted to Philadelphia, where Sinclair does not have a presence.

Executives said they were next looking forward to "a hotly contested midterm election in 2026 and the presidential race in 2028 with two open primaries" in terms of political ad spending. And in the interim, Sinclair suggested it is looking for the loosening of industry regulations and an updating of what it says are "outdated broadcast rules," including the nationwide ownership cap and prohibit the ownership of more than two top four ranked TV stations in the same local market. Sinclair is known for being a conservative-leaning media giant and one that had enjoyed a close relationship with Trump.

"It does feel like a cloud over the industry is lifting here, and we do think some much needed modernization of the regulations will be forthcoming, and we intend to, as we've always said, or consistently over the last few years, we intend to participate in that, in the M&A in the industry, be it as a buyer as a seller or a merger partner," said Sinclair CEO Chris Ripley.

Asked what makes him more hopeful about this regulatory environment, given the fact that Sinclair's $3.9 billion merger with Tribune Media fell apart in 2018 under Trump's first term and FCC scrutiny.

"We really haven't lived in a world where even the current rules have been in effect, or at least, followed by the FCC," Ripley said, adding that FCC Chariman Pai had enacted new rules, including getting rid of cross ownership, during his term but it was then challenged in court and then new leadership took over.

"It just isn't consistent with a level playing field versus big tech or big media. And I think the Republican Party understands that," he added.

The company noted that it had seen record Q3 and Q4 revenue, up through Election Day, as well as for full-year political advertising.

The estimates for 2024 political revenue is $406 million, up 16 percent more than 2020 pre-Georgia runoff total. That total also includes $26 million in cancellations as "dollars shifted to states and local markets outside of our footprint."

Total revenue increased 20 percent to $917 million in Q3 versus $767 million in the prior year period. Total advertising revenues hit $433 million, up 42 percent versus $304 million in the prior year.

Net income attributable to the company was $94 million after a net loss of $46 million in the prior year period.

"Sinclair delivered solid third quarter results, as core advertising revenues grew by 1% year-over-year, in spite of record-breaking political revenues," Ripley said in the press release. "This is unprecedented for Sinclair in recent history and perhaps the industry to be able to grow core advertising revenues in the third quarter of a political year. Total advertising revenue was up 42% year-over-year and distribution revenues grew by 5%.

"We have now reached agreement to renew retransmission consent agreements covering 78% of our Big 4 network MVPD linear subscriber base this year and we are confident in our ability to grow net retransmission revenues in line with our prior mid-single-digit CAGR estimate from 2023-2025. Our industry-leading core advertising revenue trends, and with most of our retrans and network affiliation agreement renewals now behind us, we believe we are well-positioned to finish 2024 on a strong note," he added.