Television operator Sinclair Broadcast Group sees a slowdown in pacing moving into Q2 but is still expecting to post significant gains over 2014 Q2 income. The incentive auction is definitely of interest and ATSC 3.0 is an ace in the hole.
Political will continue to throw a headwind on comps, as usual in an odd-numbered year.
SBG is expecting to bring in between $491.6M and $496.1M, with a gain in the neighborhood of 20%. Political is expected to total about $4.5M, down from $11.6M in Q2 2014.
While reverse compensation fees are rising, the company also has potential for retransmission growth as it engages with Cox Communications for a new agreement.
However, 80% of retransmission agreements are up for renewal between now and 2016. On the reverse compensation flip side, CBS and NBC come up at the end of this year, along with a handful of Fox stations. ABC is covered until later, giving SBG a chance to bring money in faster than it pays it out.
President and CEO David Smith said that Senate JSA bill grandfathering existing JSAs is encouraging, and the proper thing to do. SBG is pleased that Commissioner Ajit Pai has come out forcefully in favor of the bill.
Smith said the committee working through tech issuesn for the new ATSC 3.0 standard has been at it for a while. Before year’s end, the committee should be to announce its completion. Maybe by July or August we should have an idea of what the future platform will look like. The FCC may be able to issue an NPRM to adopt the program within four or five months, and Smith expects the industry will get behind it.
“Everybody will line up at the door and say we gotta have this and let’s get it done as fast as possible,” Smith commented.
EVP/COO David indicated that Sinclair is certainly open to selling some of its stations in the incentive auction. Amy noted that FCC value estimates are attractive and participation from broadcasters will be high. The question is that if lots of people participate, who will be selected? Regardless if we’re selected, we control our destiny with ATSC 3.0, and by making broadcast more flexible and IT-friendly, Sinclair will be able to prosper with it.
Discussing OTT services, Amy said that Sinclair is in the basic tier being offered by Verizon and believes that’s where it will be in most OTT packages. SBG views it as a positive, simply adding to SBG’s distribution profile.
Smith sees a potential game changer in terms of competing with cable for advertising dollars. He said SBG programming reaches 38% of the viewing public, which makes it bigger than the biggest cable companies combined in that regard. In fact, the group’s reach dwarfs cable reach. Therefore, Sinclair is considering using this fact to go after cable advertisers specifically, something it has never done before. It’s a new sales basket to play in.
Sinclair says its partnership with Visible World aims at making it easier for advertisers to buy broadcast TV and sees great potential to increase advertising with it.
