Sinclair's Ripley Notes ATSC 3.0 Progress, Says Industry Made Strong Case to DOJ on Ads
Sinclair executives think broadcasters made a strong case to DOJ on advertising and remain optimistic about ATSC 3.0, saying they also expect a bump from political ads starting later this year. The company's Q1 sales gained 9 percent to $722.1 million from the year-ago quarter and it expects by year-end to start feeling the political advertising boost from the 2020 election, said CEO Chris Ripley and others on Q1 call Wednesday. Ripley said the broadcaster’s recent deal with Disney for 21 regional sports networks was the largest in his company's history (see 1905030059), saying Sinclair is “diversifying its revenue mix.”
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The 2020 presidential cycle will bring “a record-breaking” year in political spots for the company, Ripley said. The election cycle is expected to begin “driving sales” starting at the end of 2019, Chief Financial Officer Steven Marks said on the call. Ripley praised the company’s digital businesses and new multichannel streaming service Stirr, which he said “is exceeding initial expectations.” Sinclair digital revenue rose 10 percent.
The recent DOJ workshop (see 1905030058) on broadcast competition was “forward-looking” and “excellent,” Ripley said in response to an analyst question. Broadcasters made “a strong case” for unifying disparate video markets into one, he said. “We’ll just have to see what impact that may have.” The earnings release briefly mentioned the ruling by the FCC administrative law judge dismissing the Sinclair/Tribune proceeding that had been designated for hearing over possible candor issues with the deal. Sinclair would likely need to resolve that candor issue to buy other broadcast stations.
Sinclair is “learning quite a bit” from “the actual RF capabilities” of its ATSC 3.0 single-frequency network in Dallas now that it’s “fully operational,” Ripley said. By adding three more SFN sites to the Dallas deployment, “we dramatically enhance the quality of reception through the entirety” of the designated market area, “to the level of quality that you’d expect from a wireless carrier,” he said. “Most of the testing right now is actually on the physical characteristics of that RF signal and reception.”
Sinclair’s work with Korean joint-venture partner SK Telecom to develop 3.0 services globally (see 1901080045) is launching “as we speak,” said Ripley. “There’ll be more coming out of that venture in terms of the consumer-facing iterations of 3.0,” he said. “It will undoubtedly be an app-based experience that will include much more in the way of programming choice and VOD assets and targeted advertising,” plus “premium subscriber-based content,” he said. Many in the industry are working to develop similar 3.0 services, he said. “Our horse in the race there is our joint venture with SK.”
Sinclair is “on plan to initiate” 3.0's deployment in 20-30 markets this year as part of the industry’s drive to debut 3.0 services in the top 40 U.S. TV markets by the end of 2020 (see 1904080071), said Ripley. “Great strides are being made” in 3.0 with “broad support from leaders within the NAB and the FCC,” he said.