Sinclair Profit Drops

Sinclair Broadcast Group Inc. reported a drop in profit amid uncertainty for the company’s deal to acquire Tribune Media Co.

The Wall Street Journal reports Sinclair reported revenue of $730.1 million, up 12% from the comparable quarter a year ago. Media revenue, rose 9.2% to $695.9 million. Sinclair said revenue from political advertising climbed to $28 million from $5 million a year ago.

Sinclair reported earnings of $28 million, down 37% from a year earlier.

“Second quarter results came in well ahead of guidance in all key financial metrics, and we expect the second half of the year to continue to be robust, underlined by increasing distribution revenues and strong political advertising spend,” commented Chris Ripley, President and Chief Executive Officer. 

Chris Ripley

“This year’s mid-term elections are expected by many to have the most spending in U.S. history with broadcast television a primary beneficiary. In regards to the acquisition of Tribune Media Company, we are working with them to analyze approaches to the regulatory process that are in the best interest of our companies, employees and shareholders.”

Sinclair agreed to buy Tribune Media in May of last year for $3.9 billion. But the Federal Communications Commission sent the deal to an administrative law judge, meaning there would be a hearing over the deal, and also questioned the accuracy of Sinclair’s regulatory filings.

The Justice Department is investigating whether Sinclair, Tribune Media and other TV station owners violated antitrust laws, an issue that surfaced from the government looking into the Sinclair and Tribune Media deal. The DOJ is specifically looking into whether the parties possibly drove up commercial rates by communicating with each other about ad sales performance.

Sinclair Broadcast Group and Tribune Media face a midnight deadline on whether to continue to pursue their $3.9 billion merger deal despite the FCC’s refusal to approve the transaction.

The sides have the ability to walk away after today, per the terms of the initial agreement inked in May 2017. Sinclair would not comment on the status of the deal during its second quarter earnings call with Wall Street analysts on Wednesday morning.

According to Variety, the growing consensus in the marketplace is that Sinclair will give up on the effort to buy all of Tribune’s 42 stations and WGN America cable channel. That raises the possibility that Tribune would move to sell off its stations in piecemeal fashion, which could still leave openings for Sinclair.