Political advertising is off to a strong start, exceeding the company’s Q1 expectations.
This, Sinclair Broadcast Group President/CEO Chris Ripley says, helped drive the broadcast and “other” Q1 2022 media revenue to the upper end of its guidance range.
But, is it political alone that will ignite Sinclair revenue in Q2 and beyond?
The candidate and issue-oriented campaigns are poised to be big drivers in 2022, CFO Lucy Rutishauser noted during the Sinclair Q1 earnings call held on Wednesday morning.
Responding to a query from analyst Aaron Watts of Deutsche Bank, Rutishauser noted that total advertising revenue is expected to exceed Q2 2018 and Q2 2019 for the three-month period ending June 30. Why? Political dollars have been “very strong” from the start of 2022, with election-oriented issue and candidate activity leading the company to initiate a rate increase due to demand for its inventory.
That performance could help any possible softening of the ad spend from marketers due to inflationary trends, which newly appointed COO Rob Weisbord says is not being seen at Sinclair.
Then, there is the touchy subject of retransmission fee revenue, which is growing in the low-single-digit range. Weisbord says the company “exceeded expectations” on its renewal with Charter Communications, and as such that low-single-digital guidance for FY 2022 is indeed accurate.
With momentum, Sinclair is looking ahead to a strong 2022. But, how it did in Q1 requires a closer look. Yes, media and non-media revenues were down to $1.29 billion from $1.51 billion. But, operating income surged to $3.46 billion from $35 million.
This put Net Income at $2.59 billion ($35.39 per diluted share), rising from a Net Loss of $12 million ($0.16 per share).
Importantly, adjusted EBITDA climbed to $254 million from $182 million.
On an adjusted basis, Sinclair saw its Q1 earnings come in at $0.37 per share. This was far higher than the Zacks Consensus Estimate of a per-share loss of -$1.66. However, the revenue missed the Zacks estimate by 15.73%.
With the financial results released, SBGI was up 2.8% to $24.01 in morning trading on the Nasdaq. Sinclair shares hold a 1-year target price of $31.75.
Helping Sinclair on Wall Street is the Board of Directors’ declaration of a $0.25 quarterly cash dividend, applicable to Sinclair’s Class A and Class B shares. The dividend is payable on June 15, to shareholders of record at the close of business on June 1.
