Sinclair Swings to Profit

HUNT VALLEY, MD.: Sinclair Broadcast Group posted a profit for the first quarter of 2010 following sequential and year-over-year losses. The TV station collective had net income of $11.5 million versus a net loss of $85.7 million in 1Q09 when it took a $130.1 million (pre-tax) impairment. Net loss for the final quarter of 2009 was $67.8 million.

Diluted earnings per share were 14 cents in 1Q10 versus $1.06 a year ago. TV station revenues were $147.9 million, up nearly 13 percent over last year. Operating income was $46.2 million compared to an operating loss of $106.7 million a year ago.

“The automotive category showed the largest growth, increasing 35.6 percent in the first quarter as compared to the same period last year,” Sinclair chief David Smith said. “This was a stronger performance than the approximate 20 percent growth we estimated.”

Of Sinclair’s top 10 categories representing about 77 percent of time sales, only telecommunications and paid programming were down, he said.

- Political revenues were $1.5 million compared to $300,000 last year.
- Local net broadcast revenues, including local time sales, retransmission, and other local revenues, were up 14.1 percent.
- National net broadcast revenues, comprising national time sales and other national revenues, were up 8.2 percent.

Deal activity in the quarter included an extension of Sinclair’s outsourcing agreements on WYZZ-TV in Peoria, Ill., and WUHF-TV in ;Rochester, N.Y.,with Nexstar Broadcasting, through until Dec. 31, 2013. It also cut a multicast deal with TheCoolTV music diginet for stations in 34 markets. Retrans was extended for a year with Mediacom, and Sinclair’s affiliation agreement with ABC was renewed through Aug. 31. 2015.

Cash and equivalents were $90.2 million as of March 31; long-term debt was $1.28 billion.

Anticipating the second quarter, Smith said the recovery would likely continue.

“As consumer confidence improves and corporate profits increase, we believe they will have a positive impact on businesses marketing budgets and ultimately broadcast revenues,” he said. “For the second quarter, we continue to see strong growth as both the majority of our advertising categories pace positive and the number of new advertisers increases.”

Sinclair expects 2Q10 station net broadcast revenues from to total more than $156 million, compared to $133 million in 2Q09. Political is expected to contributed $3.1 million versus $700,000 last year.

The company expects to spend approximately $8 million in capital expenditures in the second quarter and approximately& $19 million in 2010.
--Deborah D. McAdams