BALTIMORE—A ransomware cyberattack in October 2021 cost Sinclair Broadcast Group $63 million in lost revenue for the broadcast group and has cost the company $11 million to date, it said in its latest quarterly report.
The attack, which plagued the company’s internal operations for several weeks forced Sinclair to have to produce its news on internal networks. The company says it has since implemented extra security measures. Sinclair said it paid no ransom, and was able to restore its network from backups, but the disruption impacted revenues and expenses.
Sinclair added that since there is no assurance that they will be fully reimbursed via their insurance policies, it estimates that the cyber incident will have resulted in approximately $24 million of unrecoverable net loss; however, that estimate may increase as details of the recovery are still fluid.
The security hack was part of the reason that the company reported a loss of $89 million for the quarter or $1.18 a share, compared to net income of $467 million, or $6.32 a year ago.
Revenue dropped 2% to $1.476 billion from $1.512 billion a year ago, which Sinclair attributed partly due to the cyber attack as well as the absence of political advertising. The company would have seen an increase in its revenue had it not been for cyber incident.
Ad revenues decreased 31% to $383 million while core advertising revenue, sans political spending, increased 4% to $364 million. Distribution revenue increased $1.048 billion, up from $917 million a year ago
Sinclair also announced that it was raising its dividend by 25%.
Chris Ripley, Sinclair's President/CEO was optimistic about the next fiscal year.
"We continue to be encouraged by the rebound in the advertising market in 2021 and expect a robust advertising market in 2022, driven by significant political ad placements, continued strong demand from the service and sports betting categories, and a slow recovery in the auto and other supply-constrained sectors." Ripley said.
"The year ahead is an important one for our Company from a content and programming perspective," he added. "Already in 2022, we renewed our local digital rights with the NBA & NHL, paving the way for our new “Direct to Consumer” product, debuted two new original programs on our regional sports networks, and secured live tennis rights for the Women’s Tennis Association tour in Germany, Austria, Switzerland, and the Netherlands. Coupled with the continued roll-out of NextGen broadcasting and the emergence of gamification elements across our platforms, we remain steadfast in our mission of connecting people with content everywhere."
