After insider buying binge, broadcaster Sinclair soars on plans for a strategic review
The company said it would review its operations, potentially leading to mergers or divestitures, sending shares higher.
Sinclair Inc. shares surged after the third-largest US local broadcaster — and owner of the Tennis Channel — announced a strategic review of key business divisions.
In a statement, the company said it “will evaluate all value-enhancing opportunities, including acquisitions, strategic partnerships, and business combinations, with potential partners in the broadcast and the broader media and technology ecosystem.”
The stock was up 15% in early trading.
The company also announced that it would simultaneously consider a spin-off or other options for its Ventures unit, which owns real estate, private equity, and technology assets.
A few months back, we spotlighted a stock-buying binge by Sinclair’s chairman and CEO, David D. Smith, as a potential sign that perhaps some sort of dealmaking could be on the horizon.
The Trump administration — and it’s worth noting that Sinclair stations have a long track record of running pro-Trump content — has signaled that it wants to loosen regulations that have constrained dealmaking in the media business.
The market seemed to like the idea that Sinclair is getting serious about making a major change to its business. And for good reason: the stock price is down 40% over the past five years, while rival broadcaster Nexstar Media has doubled.
But an announcement is not the same thing as a deal. Further, making a public announcement that you’ll evaluate any and all ideas for turning around a core part of your business isn’t your move if the phone is ringing off the hook with buyers clamoring to pay top dollar for your assets. (The company’s most recent earnings report was not received well. The stock had its worst day in more than three years as a result, falling nearly 13%.)
“There is no assurance that the strategic review will result in any transaction or other strategic change, and Sinclair does not intend to disclose developments unless and until the Board approves a specific course of action or the Company otherwise determines that further disclosure is appropriate or required by law,” Sinclair acknowledged in its statement.
