Sinclair projects up to $340M in political ad revenue by year-end

Sinclair Broadcast Group continued to tout strong political ad revenue in the third quarter, as its core advertising business continues to slow down.

Political advertising amounted to $88 million in revenue in Q3, and Sinclair projects total 2022 political revenue to range from $335-$340 million. Sinclair CEO Chris Ripley said in a statement the company believes it will “easily set a mid-term election year record for political advertising revenue.”

The $335-$340 million in political revenue would be 30% higher than the amount Sinclair booked in 2018, said Sinclair Chief Financial Officer Lucy Rutishauser on Wednesday’s earnings call. That number is also “only down less than 5%” than revenue earned during the 2020 presidential election year.

Political advertising in general is heating up. Comcast’s Effectv estimated political ad spend will hit a record of $9 billion this election season.

Ripley added that while Sinclair’s seeing “general ad market weakness” due to the macroeconomic environment, some core advertising sectors are starting to pick up.

“While we saw political displacement this quarter and expect it as well next quarter, we see positive signs for core advertising in certain categories including the legal category and the auto category, which began to grow again this quarter,” he stated.

Sinclair’s Q3 earnings exclude Diamond Sports Group, the subsidiary that operates Bally Sports regional sports networks and the Bally Sports+ streaming service, which fully launched on September 26. Some media reports have suggested Sinclair might divest Diamond Sports to major sports leagues.

Total revenues declined 45% year-over-year to $843 million, with media revenues also decreasing 45% to $836 million. Excluding Diamond Sports, total revenues were up 5% from $804 million in Q3 2021, while media revenues also jumped 5% from $795 million.

Total advertising revenue was down 16% year-over-year to $374 million, but increased 14% when excluding Diamond Sports. Core advertising revenue, which doesn’t include political revenue, declined 34% in Q3 2022 to $286 million – but down 10% excluding Diamond Sports.

Sinclair attributed core ad sales decline to political crowd out, the absence of Olympics events as well as weakness in the insurance and sports betting categories.

Ripley described political and digital spend as the “twin pillars” to Sinclair’s overall ad business.

“As they’ve gotten bigger, they’ve overwhelmed some of the other weaknesses in the core ad business,” he said on the call.

As mentioned in Sinclair’s second quarter earnings report, the company is also prioritizing digital initiatives. Sinclair in October announced a multi-platform creative partnership with Anthony Zuiker, the creator of the “CSI” franchise.

Sinclair COO Rob Weisbord said on the call that the partnership with Zuiker “underscores our commitment to creating original programs that can not only be utilized on Sinclair platforms but sold to third parties as well.”

On the NextGen TV front, Sinclair has launched ATSC 3.0 broadcasting technology in 34 markets as of October, making it available in 62% of the households in Sinclair’s broadcasting footprint.

Ripley added Sinclair was “very pleased” with its renewed deal with Disney to air ABC affiliates across Sinclair’s broadcast stations through 2026.

“We actually think their commitment to the network has actually been growing recently,” he said. “They put more NFL product on ABC after the last NFL deal. And they have secured their other major sports properties.”