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Sinclair Beats Street With 1Q Results

HUNT VALLEY, MD.: Sinclair Broadcast Group showed a profit during the first three months of the year, though impairment charges drove it to post a loss. The 58 TV stations in the Sinclair (NASDAQ: SBGI) stable generated revenues of $131.3 million, compared to $160.9 million a year ago. Including barter deals, revenues were $154.7 million compared to $186.7 million. Net loss was $87.1 million compared to a profit of nearly $15 million last year, driven largely by a $130.1 million impairment charge ($100.8 million after taxes).

Excluding impairment, net income would have been $15.2 million or 19 cents a share, better than analyst expectations that Sinclair would post a loss of 6 cents a share on revenues of around $142 million. Shares jumped from around $1.25 yesterday to a high of more than $1.50 today, both on a wider market rally and the news that SBGI beat the Street--evident from the spike in volume of trades.

SBGI said it collected $21.1 million from retransmission compared to $19.6 million last year. Political revenues were $300,000 compared to $3.2 million for the first quarter of 2008. Excluding political, local ad revenues--comprising nearly 71 percent of time sales--fell 17 percent; national was down 29 percent.

Ad spending fell in automotive, services, movies and fast food categories, and services exceeded automotive as the largest category. Services represented nearly 17 percent of time sales and was down about 19 percent for the quarter. Automotive comprised 14 percent of times sales and fell 46 percent.

Cash and equivalents stood at $11.2 million, compared to $16.5 million at the end of 2008. Long-term debt was $1.26 billion, down from $1.29 billion Dec. 31, 2008.

“While first quarter net broadcast revenues exceeded our guidance, we are still not seeing any meaningful improvements in the economy or increased visibility on the revenue side in the second quarter,” said David Smith, president and CEO of Sinclair. “As such, our expectation is for net broadcast revenues in the second quarter to finish down by high teen percents, similar to our first quarter results.”

Smith also said it was not clear how the Chrysler bankruptcy, and a potential filing by General Motors, would affect Sinclair through 2009.

“Nonetheless, we continue to be disciplined on the cost side and look for additional ways to offset the declines in revenues,” he said. “First-quarter television station operating expenses, which were down 10.4 percent, was largely due to the cost cutting measures we implemented in the fourth quarter of 2008.” – Deborah D. McAdams