Local television is not what it once was. Honestly, all television these days is coming under fire thanks to the growth of streaming services. Sinclair Broadcasting (NASDAQ:SBGI) is set to address the market conditions in an unexpected fashion: a fire sale. And a huge one at that. Investors, meanwhile, are in a panic, sending shares down nearly 8% in Friday afternoon’s trading.
Sinclair is looking to sell as much as 30% of its current broadcast station loadout. Not just in radio, either, but also in television. It’s already engaged Moelis to serve as an investment bank in such a sale and might even look to sell the Tennis Channel. This follows its recent settlement with Diamond Sports Group, which currently holds a massive network of regional sports operations but is also operating under bankruptcy protection right now.
Yet Sinclair’s operation is massive and productive; reports note that the average revenue for 2023 and 2024 for the 185 channels is around $1.56 billion. Yet, Sinclair believes they’re worth quite a bit more than that and is prepared to sell them off to get that value.
Earnings Tell the Tale
Sinclair’s last earnings report offers some further light on the situation. Revenue was actually up in the first quarter, gaining 3% and hitting $798 million by itself, though that wasn’t quite a match for the $801.3 million analysts looked for. Advertising that wasn’t political, though, was down about 4%, and that’s not a good sign overall. But that’s part of it; Sinclair is likely looking to sell off at its height, which is pretty much where it is right now. Given the rise of streaming, it’s all downhill from here, and Sinclair is likely trying to convert its potential to cash so it can make a move accordingly.
Is SBGI Stock a Buy?
Turning to Wall Street, analysts have a Hold consensus rating on SBGI stock based on one Buy, one Hold, and one Sell assigned in the past three months, as indicated by the graphic below. After a 4.75% rally in its share price over the past year, the average SBGI price target of $19.23 per share implies 28.89% upside potential.
