SBGI - Embedded Expectations Analysis - 2020 03 06
Sinclair Broadcasting Group, Inc. (SBGI:USA) is currently trading well below corporate averages relative to UAFRS-based (Uniform) Earnings, with a 9.7x Uniform P/E. At these levels, the market has bearish expectations for the firm, and while management appears concerned about regional sports networks (RSNs), contract renewals, and leverage, the firm's strong execution and position in its space suggest longer-term upside remains warrantedSpecifically, management may be exaggerating the benefit legalized sports betting provides to RSNs and their ability to sell RSNs on a direct-to-consumer basis. In addition, they may be concerned about the progress of their contract renewal negotiations with Comcast, increasing network fees, and projected declines in EBITDA and auto industry ad spending. Moreover, they may lack confidence in their ability to manage SG&A expenses and improve their leverage ratios, and they may be downplaying concerns about seasonality, industry blackouts, and the progress of their investigative reporting roll-out
That said, although management concerns suggest the potential for near-term headwinds, SBGI's strong positioning in its space implies long-term outperformance remains warranted at current valuation
Sinclair Broadcast Group is a television broadcasting company with using the company's spectrum to bring together content providers, advertisers, and consumers on various platforms. The content, distributed through the company's broadcast platform, consists of programming provided by third-party networks and syndicators, local news, the company's own networks, and other original programming produced by the company The company also distributes its original programming, and owned and operated network, on other third-party platforms. The company operates technical services companies focused on supply and maintenance of broadcast transmission systems as well as research and development for the development of broadcast technology.
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