After making a $10.6 billion investment in regional sports broadcasting last year, Sinclair Broadcast Group withdrew its financial outlook Wednesday for its 2020 fiscal year because of uncertainty over when professional sports will resume amid the coronavirus pandemic.
“These are unprecedented times with the COVID-19 pandemic continuing to impact the economy, businesses and lifestyles in extraordinary and uncommon ways,” said Chris Ripley, president and CEO of the Hunt Valley-based broadcaster, in a statement.
Sinclair completed its massive deal to acquire 21 regional sports networks and Fox College Sports from Disney in August. The networks own exclusive local rights to 42 professional teams, including 14 MLB teams, 16 NBA teams and 12 NHL teams.
Sinclair also acquired a 20% ownership stake in the New York Yankees’ YES Network in August and launched the Marquee regional sports network in February.
In early March, the company had projected sports media revenues of $3.52 billion to $3.55 billion for the year.
Ripley said Sinclair has acted quickly to manage nonessential costs and transition its employees to working from home. The broadcaster said it has deferred noncritical capital expenses, delayed nonessential hiring and reduced discretionary expenses until conditions improve.
“We are confident that our diversified revenue streams, content, and delivery platforms will allow us to see our company through the pandemic’s effects and that we will be able to meet our liquidity needs,” Ripley said.
Sinclair reported first-quarter earnings Wednesday. Revenue jumped 123% to $1.6 billion with gains driven largely by the acquisition of the sports networks, an increase in political advertising and higher retransmission fees, which the broadcaster charges cable providers. Wall Street analysts had expected sales of $1.65 billion.
The broadcaster said media revenue came in $31 million below the low end of the company’s guidance due partly to the impact of the pandemic on advertising revenues.
Sinclair reported income of $123 million, or $1.35 per share, for the three months that ended March 31, compared with $22 million, or 23 cents a share, in the first quarter of 2019.
The company beat analysts’ earnings estimates of 2 cents per share and its stock was up about 4% in midday trading at above $16 a share.
The stock has traded down substantially in this year. The price is about half what it was in February before the extent of the coronavirus outbreak became evident. A year ago, it was over $60 a share and it was over $40 when it closed the sports network deal.
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