CEO Ripley Says Sinclair Worth Double Valuation

CEO Chris Ripley criticized the market’s valuation of Sinclair and touted its planned direct-to-consumer sports offering, but said little about ATSC 3.0 progress, on a Q2 call Wednesday. When Sinclair's assets beyond stations and regional sports networks are considered, the stock should be worth double the current price, said Ripley. “It is becoming painfully obvious the market doesn’t understand Sinclair.” Shares closed 4.1% higher Wednesday at $29.43. The additional assets include a stake in gambling company Bally’s and Sinclair’s licensed spectrum, which Ripley valued at $1.7 billion based on the prices from the broadcast incentive auction. Sinclair’s DTC sports service is to launch in the first half of 2022 and gives the company the opportunity to create a “metaverse” around sports, Ripley said. Sinclair is well-positioned for the service because it owns a panoply of sports rights and its many channels give it access to a large potential subscriber base, he said. The rise of DTC sports offerings and consolidation among the RSNs have “just massive industrial logic,” Ripley said. Sinclair is pursuing financing for the project. It expects any “cannibalization” of MVPD subs from the DTC offering will be “low,” said the CEO. The service is expected to appeal to “a younger cohort,” he said. It would allow targeted advertising and other revenue opportunities around sports gambling, Ripley said. If 5% of RSN customers also subscribe to the app, that's 4.4 million households -- a "very achievable” number, he said. Sinclair launched 3.0 through July in 17 cities, including Baltimore, Grand Rapids and Little Rock, said the company. Total ad revenue for Q2 was $491 million, up 109% from a year earlier, due to the general recovery of the ad market from the pandemic and the resumption of professional sports, said Chief Financial Officer Lucy Rutishauser.