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Sinclair Up 26% in 3Q Despite Less Political

Despite significantly less political money than originally forecasted, Sinclair Broadcast Group's 3Q revenues rose 26% over 2016—and the election season isn’t over yet.

“With one week remaining in the political election year, we have been pleasantly surprised by the recent momentum in political ad spending from both sides. This ensures our expectations of a record-breaking political year for us on an as-reported basis," executive VP and COO David Amy said in the group’s 3Q earnings report. 

During the three months ending Sept. 30, Sinclair’s political revenues hit $45 million, close to the $46 million the group predicted in a revised forecast issued September. Sinclair originally expected $58-$68 million in political.

During the three weeks leading up to the election, however, campaign spending has been “robust,” in line with what is usually seen during a presidential year, Sinclair said. The group expects total 2016 political to hit $120-$130 million.

Amy said he doesn’t see the dip in political spending since the nominating conventions – primarily due to a lack of advertising by the Trump campaign and super PACs – as the start of a new normal.

“We believe this lack of financial support is a one-time anomaly,” he said. Robust spending leading up to the primaries and the peculiarities surrounding the Trump campaign – from the lack of super PAC and Republican party advertising support to the candidate’s use of free media – point to that.

“We have never seen before in a presidential political election and don’t expect to see again,” he said.

Total revenues increased 26% to $694 million, versus $548 million in 2015. Total 3Q media revenues rose 27% to $635 million, up from $498 million during the third quarter of 2015. Digital revenue increased 25% year-over-year.

"Although industry political ad spending for 2016 has not been at the levels anticipated coming into the year due to the unique nature of this year's presidential election and certain contested senate races not materializing, our core advertising nonetheless grew slightly in the third quarter, despite the crowding-out impact of political on our normal advertisers," said president and CEO David Smith.

Other 3Q highlights include:

  • Operating income rose 24% to $369 million, up from $299 million in 2015.
  • Net income attributable to the company was $124 million, versus net income of $113 million in the prior year period.
  • Diluted earnings per common share were $1.30 as compared to $1.18 in the prior year period. That includes the 3Q 2016 loss on extinguishment of debt of $23.7 million, which reduced diluted earnings per share by $0.16.

Although auto advertising, the group’s biggest category, was flat in 3Q, Amy said he expects it to rebound in 4Q “despite concerns over production cutbacks, which speaks to our strength and unique focus at serving the auto category.” Sinclair is expecting digital investments to pay off, too, forecasting 20% topline growth during the three months ending Dec. 31.