Sinclair’s Q1 2024 financial report once again highlighted the growing importance of political advertising for broadcasters at a time when core TV advertising continues to be soft.
As of May 1, the Sinclair reported that it has pre-booked $77 million in political advertising for the second half of the year through Election Day. This is more than three times the $21 million it had booked in the last presidential election cycle as of May 1, 2020 and much more than the $28 million as of May 1, 2022.
In Q1 2024, Sinclair sold $24 million in political advertising as the company reported that it expects the 2024 election cycle to be "record-breaking" in terms of political ad spending.
Political ads boosted ad revenue to $321 million in Q1, up 4% versus $309 million in the prior year period. But core advertising revenues, which exclude political revenues, were down 3% in the first quarter to $297 million versus $306 million in the prior year period.
During the earnings call, the company noted that it met or exceeded first quarter guidance on revenue, media expenses and adjusted EBITDA and that it settled all Diamond Sports Group, LLC (DSG) related outstanding litigation claims
The company also highlighted its progress with NextGen TV, including to the April launch of its its Broadspan datacasting platform to enable data distribution capability across all current Sinclair NextGen Broadcast (ATSC 3.0) markets where it serves as the host station.
Sinclair also reported that to date, the company has launched NextGen Broadcast in 44 markets, including the recent launch of Portland, Maine. NextGen Broadcast is now available in 75% of the TV households in Sinclair’s licensed footprint.
“Sinclair delivered solid first quarter results, meeting guidance expectations in our local media segment and exceeding Adjusted EBITDA expectations at Tennis Channel in the quarter,” said its CEO Christopher Ripley. “Core advertising trends remain solid in most categories, with our effective yield management and sales training processes driving industry-leading core growth over the past several quarters. We have significant retransmission agreements renewing this year, of which we are 42% completed as of the beginning of May. We continue to expect a mid-single digit two-year growth in net retransmission revenues from 2023 to 2025."
In terms of NextGen TV Ripley said that in April "we also announced the launch of Broadspan, our NextGen data solutions platform, that will deliver a unified suite of products to the marketplace, and at the same time announced our first NextGen commercial partner, Edgio. The time for the NextGen data distribution opportunity is now. The broadcast data distribution model has many benefits, such as a more efficient distribution of mass-consumption data, improved customer experience, and lower cost of data delivery compared to traditional one-to-one wireless solutions. We are very excited to see what the future holds for NextGen over the coming quarters and years."
More specifically in terms of the Q1 results, total revenues increased 3% to $798 million versus $773 million in the prior year period and despite cord cutting distribution revenues of $436 million increased versus $426 million in the prior year period. Operating income of $42 million, including non-recurring transaction, implementation, legal, regulatory and other costs (“Adjustments”) of $6 million, increased versus an operating income of $21 million in the prior year period, which included Adjustments of $6 million.
Net income attributable to the company was $23 million versus net income of $185 million in the prior year period. Excluding adjustments, the Company had net income of $27 million.
Adjusted EBITDA increased 13% to $136 million from $120 million in the prior year period.
