Sinclair Broadcast Group had a busy third-quarter earnings report Wednesday, announcing a record quarter (and year) for political advertising revenue, key benchmarks for broadcast retransmission deals, and the direct-to-consumer streaming launch for the Tennis Channel.
But Sinclair, which operates 294 stations across 89 U.S. markets, started the day lauding Charter Communications, and the cable company’s recent innovative carriage deals with Disney, Paramount, NBCUniversal, Warner Bros. Discovery, AMC Networks and other media companies. These arrangements allow Charter to bundle these media company’s subscription streaming services within its pay TV packages at no extra cost for customers.
Last week, during its own Q3 call with equity analysts, Charter CEO Christopher Winfrey said that subscribers to the cable operator’s Spectrum Select+ package will receive, once all the SVOD services are integrated next year, around $80 a month worth of subscription streaming services at no additional cost.
Sinclair, which derived around a third of its Q3 revenue from broadcast retransmission from pay TV operators and very much wants to see the legacy distribution paradigm return to health, christened Charter’s strategy as “the great rebundling” in its earnings presentation Wednesday. Sinclair also pointed to the value pay TV subscribers get when factoring in access to subscription streaming services. Charter has been saying that once all of the included apps are made available to customers in market, by early 2025 the pay TV operator will be providing its Spectrum TV Select customers up to $80 per month of retail streaming app value at no additional cost.
“It’s a massive change in the value proposition for customers,” said Sinclair President and CEO Chris Ripley. “We’re anticipating that it will have a very dramatic effect on the [pay TV] market.” (Sinclair’s full Q3 earnings presentation is available here.)
A significant improvement to the cord-cutting-ravaged pay TV market would certainly improve the outlook for Sinclair investors, who were in the process of dinging the company’s stock price around 4% in after-hours trading as this story was being typed.
In the here and now, Sinclair reported a 20% year-over-year increase in third-quarter revenue to $917 million, with political advertising reaching $138 million in the quarter, a 31% uptick over 2020 levels. They would have been even higher, Sinclair said, had campaigns not moved $5 million out of Nevada last minute and into Philadelphia, where Sinclair doesn’t have a station presence.
Sinclair also said that 78% of its subscriber base under the biggest four U.S. pay TV operators is now covered by new retrans deals that yield the broadcaster 5% premium vs. the legacy arrangements. The broadcaster noted that all of these new deals were carved out with nary a station blackout.
Finally, on this post-election Wednesday, Ripley — who leads a company with well-established right-leaning political sentiments — was asked about his thoughts on how Tuesday’s U.S. vote count, which elected former President Donald Trump to a second term, turned out.
“It does feel like a cloud over the industry has been lifted,” he said. “I do think some modernization of regulations is coming.”
Article updated to remove graph and previous information from Sinclair’s earnings presentation regarding Charter pay TV service and included streaming apps, which didn’t accurately reflect the cost and availability of Charter’s Spectrum Select TV offering currently in market. Added information about Charter’s stated timing and expected value of SVODs included with pay TV service.