Sinclair, a major owner of broadcast stations in the U.S., is considering selling over 30% of its holdings, according to sources familiar with the situation.
The company has engaged Moelis as its investment banker and has identified more than 60 stations across various U.S. regions for potential sale. These stations, which Sinclair owns or operates, include affiliates of major networks such as Fox, NBC, ABC, CBS, and the CW.
Together, these stations generated an estimated average revenue of $1.56 billion for the years 2023 and 2024. They are located in key markets like Minneapolis, Portland, Pittsburgh, Austin, and Fresno, among others.
Sinclair’s CEO, Chris Ripley, mentioned during the company’s earnings conference call on Wednesday that they are open to divesting parts of their business to unlock value and reduce debt.
“As we’ve always stated, we have no sacred cows. 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 delever, then that’s something that we’d be open to as well,” Ripley stated.
The official process of selling these stations began in February. Representatives for Sinclair and Moelis declined to comment on the matter.
In addition to the broadcast stations, Sinclair is also looking into options for its Tennis Channel, a cable TV network featuring tennis and pickleball matches.
Broadcast TV station groups have faced challenges in recent years due to the increasing number of Americans canceling traditional pay TV subscriptions. Sinclair, in particular, has seen a significant decline in its market value over the past five years.
Last year, the company underwent a rebranding and reorganization, dividing its operations into two units: Local Media, focusing on stations and Ventures, and housing assets like the Tennis Channel.
The decision to sell some of its stations comes amid internal tensions within the Smith family, the shareholders, and the board of directors who played a significant role in building Sinclair.
The sale coincides with the months leading up to the 2024 election, typically a period of high political advertising revenue for broadcast TV companies.
Sinclair reported pre-booked political advertising revenue of $77 million for the second half of the year through Election Day, a substantial increase compared to the same period in 2020.
Despite challenges in recent years, Sinclair’s total revenue and advertising revenue saw slight growth in the first quarter, leading to a 12% increase in the company’s stock on Thursday.
Sinclair’s broadcast stations have been noted for their conservative editorial stance, which has led to controversies in the past, including backlash over promos criticizing the media for “fake stories” in 2018.
The decision to sell stations comes after Sinclair encountered difficulties in its regional sports networks business.
The acquisition of these networks from Disney in 2019, coupled with high debt levels and cord-cutting trends, led to issues for Diamond Sports, an independently run subsidiary of Sinclair.
Diamond sought bankruptcy protection last year, leading to legal disputes settled in January with Sinclair making a $495 million payment to resolve lawsuits related to Diamond.
