Why Shares of Local Broadcaster Sinclair Rocketed Higher This Week
Shares of Sinclair (NASDAQ: SBGI) rocketed as much as 35% higher this week before giving up some gains, according to data provided by S&P Global Market Intelligence. The owner of hundreds of local broadcast stations across America shot higher after Disney and Charter Communications came to an agreement over channel distribution along the cable bundle. Plus, there was a leak that Disney is looking to sell its broadcast station ABC. As of the close on Friday, Sept. 15, shares of Sinclair are up 20% this week but down 44% in the past year.
Negotiations came to a boiling point last week when Charter decided to take off ESPN -- Disney's most valuable channel by revenue -- from its cable bundle. After years and years of raising prices on cable providers, distributors such as Charter are now fighting back against the content providers. This is for various reasons, but mainly because of the consumer switch from cable TV to streaming video platforms.
However, on Monday of this week, Charter and Disney announced they were bringing ESPN back to the cable bundle along with some of Disney's streaming services. Investors in broadcast stations such as Sinclair must have taken this in a positive light as the stock shot up earlier this week. While cable subscribers are dwindling, Disney's choice to add some of its new internet-based services to the bundle could extend the life of this shrinking market.
Source Fool.com
