Sinclair Broadcast Reports $63M Cyberattack Ad Loss

Sinclair Broadcast Group Inc. swung to a loss in the fourth quarter and saw revenue fall short of Wall Street expectations, in part due to a recent cyberattack that affected the company’s operations, reports The Baltimore Business Journal.

The media giant reported a loss of $89 million or $1.18 per share, compared to a profit of $467 million or $6.27 per share a year ago. On an adjusted basis, Sinclair said it had a loss of $74 million or 99 cents a share in the most recent quarter.

Total revenue was down 2% to $1.48 billion while media revenue dropped to $1.46 billion compared to $1.49 billion in the year-ago quarter. Excluding the effects of the cyberattack, revenue would have increased for the quarter, Sinclair said.

In its release Wednesday, Sinclair for the first time put a dollar value on the ransomware cyberattack that hit the company in October. The incident led to a $63 million loss of advertising revenues for the broadcast segment in the fourth quarter and has also cost the company $11 million so far. Factoring in potential insurance reimbursements, Sinclair estimates the attack will result in about $24 million in unrecoverable net losses.

Chris Ripley

The company did not pay a ransom and was able to recover its network from backups and has since implemented “several enhancements” to the cybersecurity measures it had in place at the time of the attack. Sinclair also cautioned that its estimate of the cost of the incident may change as “details of the recovery are still fluid” and also noted “there can be no assurance that the insurance policies will pay their full coverage or the timing of such reimbursements.

CEO Chris Ripley said in a statement that after adjusting for the impact of the cyberattack, Sinclair had exceeded its free cash flow and pre-tax earnings expectations for the quarter.

Ripley said the company’s stock continues to be undervalued — a claim he also made in August — and should be triple its current value. To that end, Sinclair has repurchased more than 4 million shares over the past four months and plans to raise the quarterly dividend 25% to 25 cents a share.

Taking a closer look at the company’s fourth quarter results, total advertising revenue was down 31% to $383 million, largely due to the lack of political revenue since 2021 was a non-political year. Core advertising revenues, which exclude political revenues, were up 4% to $346 million due to continued recovery from the pandemic and a higher number of professional sports games, with those increases offset by the negative impacts of the cyberattack.

For the full year, Sinclair reported that total revenue increased 3% to $6.1 billion. The company saw a loss of $414 million or $5.51 per share, compared to a loss of $2.4 billion in 2020. The 2020 figure included a major non-cash impairment of the regional sports networks.

Also on Wednesday, Sinclair announced it has promoted Rob Weisbord to chief operating officer and president of broadcast. Weisbord has been with Sinclair since 1997 and has served as president of broadcast and chief advertising revenue officer since 2020.