Revenue increased 8.5% at Sinclair Broadcast Group in Q1, but tougher comparisons with the prior year meant a decline in profits at the broadcaster during the period, according to financial documents filed with the Securities and Exchange Commission Wednesday.
Revenue at the broadcaster, which earlier this week agreed to purchase 21 regional sports networks from The Walt Disney Co. in a deal valued at $10.6 billion, rose to $722.1 million in Q1, compared to $665.4 million in the prior year. Operating income was down 12.1% to $93.6 million in the first quarter compared to $107.3 million in Q1 2018. Sinclair said the prior year period included $21 million of gains on asset dispositions, making comparisons difficult. Net income for the period was $21.7 million, down 49.7% from $43.1 million in the prior year.
Political revenue was down to $2 million in the quarter, compared to $7 million in Q1 2018, an election year. Distribution revenue, which includes retransmission consent fees and affiliate fees from its cable networks, was up 12% to $352 million in the quarter, compared to $314 million in the first quarter of 2018.
Sinclair offered guidance for the second quarter, expecting revenue to be in the $716 to $725 million range in the period. Of that total the company expects to report political revenue of between $4 million and $5 million and distribution revenue of $365 million to $368 million in Q2.
"This is a very exciting time for Sinclair led by our recent announcement to acquire 21 regional sports networks, industry collaboration on the implementation of the ATSC 3.0 broadcast standard, and continued success of our local news organization," Sinclair CEO Chris Ripley said in a press release. "We are transforming the company, diversifying our content sources and revenue mix, and building a leading local news and sports organization on all platforms. In addition, during the first quarter, we launched our free, linear and on-demand multi-channel streaming service, STIRR, which is exceeding initial expectations. We announced a joint venture with the Chicago Cubs for the launch in 2020 of Marquee Sports Network, and entered into a definitive agreement to purchase 21 RSNs for a very attractive and accretive $9.6 billion purchase price, representing a $10.6 billion enterprise value. Meanwhile, we also exceeded our guidance for the first quarter in the key financial metrics."