Sinclair Broadcast Group, which reported its third-quarter earnings Wednesday said that “creative workarounds” have held the company restore “a significant portion of our systems” after it was hamstrung by a cyber attack last month.
Many of the company’s computer systems were knocked out, making it difficult for the company to keep its local programming on the air. The company had been spare with details on what systems were impacted and how recovery efforts are coming along.
In its earnings report, the company said certain servers and workstations were encrypted with ransomware. There was disruption of certain office and operational network as a result and indications that data was taken from the company’s network.
“While the Company has taken significant steps to contain the incident, the event has not yet been fully resolved, and certain disruptions to its business and operations remain,“ the report said. “The Company is working diligently to restore operations quickly and securely. As the investigation is still on-going, the full extent of the impact on the Company‘s business, operations and financial results is not known at the present time.”
Sinclair has also been talking about adding a direct-to-consumer product to its debt-laden Bally regional sports works. But Major League Baseball commissioner Rob Manfred and NBA commissioner Adam Silver declared that Sinclair might not have the rights it needs to create those products.
"Our focus remains on growth opportunities in the broadcast, news and sports areas. New programming, the implementation of gamification elements across our platforms, the ramping up of activities around a 'Direct to Consumer' product and the utilization of the ATSC 3.0 technology will all be key initiatives as we move into the next year,” Sinclair CEO Chris Ripley said in a statement with the company’s earnings.
On Sinclair earnings call, Ripley said that Sinclair renewed its deals with the Detroit Tigers, Detroit Red Wings and Cleveland Cavaliers. The Tigers deal included DTC rights, he said.
Ripley said that given the changes in consumer behavior, it was important that the current regional sports network product be "extended" to make it more attractive to all viewers.
He indicated that the leagues could not set up their own direct-to-consumer business.
"What important to note is that we have exclusive local rights to our teams," Ripley said. Those can not be ignored "without significant ramifications."
Ripley said talk continue about making DTC a reality, including funding discussions.
Sinclair said third-quarter net income was $19 million versus a loss of $3.3 billion a year ago, when the company took a $4.3 billion charge related to the regional sports network business.
“As the economy emerges from the pandemic, our advertising recovery continues to be strong, with our core advertising, excluding auto, growing versus 2019 across both our broadcast and sports segments,” Ripley said. “The continuing headwinds from auto component shortages, which in the near-term has reduced automotive advertising revenue, has been mostly offset by higher services and sports betting advertising demand, trends we expect to continue throughout the remainder of the year and into next year. 2022 should benefit from the recent moderation of subscriber declines, as well as further recovery from the pandemic and robust political advertising due to the midterm election cycle, which should favorably affect overall advertising demand and rates.”
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