Broadcaster credits increased national and local ad money; says reduction in news expenses will save it $5 million this year.
Sinclair Broadcast Group Inc. today reported financial results for the three months ended March 31, 2006. Its net broadcast revenues from continuing operations were $147.9 million, an increase of 2.4% versus the prior year period result of $144.4 million. Operating income was $35.4 million in the three-month period as compared to $32.6 million in the prior year period, an increase of 8.5%
The company had net income of $11.2 million in the three-month period versus $8.8 million in the prior year period. Sinclair reported diluted earnings per common share of $0.13 for the quarter versus $0.10 in the prior year period.
“Despite the Olympics, which only one of our stations participates in, and despite the Super Bowl’s broadcast moving from Fox to ABC, we had only one category, automotive, which advertised less in any meaningful way as compared to five industry sectors that advertised significantly during the quarter,” commented David Smith, president and CEO of Sinclair.
“On the expense side, we redefined the mission of our News Central operations and re-launched many of its newscasts through news share arrangements. Based on the changes we have made to date, we expect our news costs to decline by approximately $5 million this year.”
“We also secured affiliation agreements with Fox, My Network TV and the CW television network, bringing closure to any uncertainty about those stations’ longer-term affiliations and programming models. We believe the net impact from the My Network TV and CW agreements could be an increase to our net broadcast revenues of $10 million on an annualized basis, of which $3.5 million could be realized this year.”
Sinclair reported the following statistics and income statements:
The quarter’s revenues were positively affected by increased ad spending, primarily in the services, telecommunications, schools, fast food and retail categories. Automotive, which represents 21% of its revenue, was the primary category that was down in the quarter. Political revenue in the quarter was $700,000 versus $100,000 in the first quarter of last year.
Local ad revenue increased 6.6% in the quarter versus the year-earlier quarter, while national advertising revenue decreased 7.5%, in part due to the Olympics. Excluding political revenue, local ad revenue was up 6.6% while national was down 8.5%. Local revenue, excluding political, represented 66% of total ad revenue.
Excluding political revenue, Sinclair’s ABC stations were up 10.3%, its UPN stations were up 4.1%, its WB stations were flat and its Fox stations—on a same station basis excluding its Rochester, N.Y., station, which is operated under a joint sales agreement—were down 4.4% due to not having the Super Bowl this year.
With all but five markets reported, and despite its stations hot having the Olympics and the Super Bowl moving from Fox to ABC, “share survey results reflect that our stations’ share of the television advertising market in the first quarter 2006 decreased only slightly to a 17.6% share versus a 17.8% share in the same period last year.”
Sinclair “redefined its News Central operations which will now devote resources to increasing the amount of editorial and support content fed to Sinclair’s 18 locally produced news stations, provide daily feeds of news content, coordinate coverage of major events, serve as a creative production hub for convergence and provide Internet and digital news solutions to improve the quality and competitiveness of our local newscasts.”
The company re-launched local news programming in Buffalo, Cincinnati, Flint, Las Vegas and Raleigh under news share arrangements and discontinued news in Milwaukee, Syracuse and Tampa. Sinclair now airs local news on 31 stations (18 stand-alone productions and 13 through news share arrangements).
Thirty of Sinclair’s TV stations will carry the Tube Music Network on their digital channels beginning this summer. Sinclair’s WBFF Baltimore went live with WBFF-DT-45.2, “the market’s first multi-digital channel to carry syndicated and other local programming,” according to Sinclair.