Shares of Sinclair (NASDAQ: SBGI) were moving higher after the local broadcasting group posted strong results on the bottom line in its first-quarter earnings report. Later in Thursday's session, CNBC reported that the company was considering selling about 30% of its broadcast stations.
Sinclair delivers a strong profit
Sinclair, which owns or has relationships with 185 television stations in 86 markets including all three major broadcast networks, said that revenue in its first quarter ticked up 3% to $798 million, which was just shy of estimates of $801.3 million. Advertising revenue in the quarter rose 4% to $321 million, though ad revenue was down 4% excluding political ads. Distribution revenue increased by 2% to $436 million.
That growth translated into adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) increasing 13% to $136 million. This is a sign that Sinclair's mix of local broadcasting, regional sports, and streaming news content continues to deliver results.
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On the bottom line, earnings per share was $0.35, which easily beat expectations for a loss of $0.29.
While the stock was up on the earnings report, it got a boost after CNBC said during the afternoon that the company could sell more than 30% of its broadcast stations. According to the report, Sinclair is working with investment banker Moelis and has identified more than 60 stations it could sell, though it's not clear what they would be worth.
On the earnings call, CEO Chris Ripley said: "We want to unlock the sum of the parts valuation that we think we're grossly undervalued for. And to the extent that asset sales make sense in order to unlock that value and help us de-lever, then that's something we'd be open to."
What's next for Sinclair
For the current quarter, Sinclair expects revenue to improve to $823 million-$843 million and sees adjusted EBITDA of $132 million-$155 million. Election years are typically a boon for broadcast television stations, and Sinclair looks ready to capitalize on it as it's pre-booked $77 million of political advertising by May 1, well ahead of 2020 and 2022 levels.
Sinclair also has more than $4 billion in debt on the balance sheet, so selling those stations would help pay it down. Keep your eye on a potential sale, as well as election season developments, as the stock could move higher from here.
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