Even a 26% boost in retransmission consent money can’t offset a 21% drop in revenue from local advertising and a 31% decrease in national.
Sinclair Broadcast Group today reported financial results for the three months ended June 30, and said its net broadcast revenues from continuing operations were $133.0 million for the three months ended June 30, 2009, a decrease of 18.8 percent versus the prior year period result of $163.7 million.
The company had operating income of $25.8 million in the three-month period, as compared to operating income of $43.3 million in the prior year period, a decrease of 32.2 percent.
Sinclair reported net income of $2.8 million in the three-month period versus net income of $11.8 million in the prior year period, a 76.3 percent drop.
- Political revenues were $700,000 in the second quarter versus $3.6 million in second quarter 2008.
- Revenues from retransmission consent agreements were $23.6 million in the second quarter 2009 as compared to $18.7 million in the second quarter 2008, an increase of 26.2 percent.
- Local advertising revenues were down 21% in the second quarter 2009 while national advertising revenues were down 31.4% versus the second quarter 2008. Excluding political revenues, local advertising revenues were down 20.1% and national advertising revenues were down 29.1% in the second quarter. Advertising spending categories that were down the most were automotive, services, paid programming, fast food, home products, retail, telecommunications and pharmacy. Services, Sinclair’s largest category representing 16.7% of time sales, was down 11.5% while automotive, its second largest category representing 14.7% of time sales, was down 46.1% in the quarter. Local advertising revenues, excluding political revenues, represented approximately 70% of advertising revenues in the second quarter.
- Time sales on Sinclair’s Fox, ABC, MyNetworkTV, CW, CBS and NBC affiliates were down 23.9%, 27.1%, 18.7%, 27.9%, 23.9% and 20.7%, respectively.
- With all but three markets reporting, its stations grew their average local time sales in the second quarter on both an including and excluding political basis. In addition, the stations held their average total market share at approximately 19%, as compared to second quarter last year.
- During the quarter, the company received digital equipment at 10 stations in exchange for comparable analog equipment as a result of vacating certain analog spectrum to be used for public safety. As a result, Sinclair recorded a $1.3 million non-cash gain on the equipment exchange.
- During the second quarter 2009, the company invested $2.2 million, net of cash distributions, in various ventures.
Commenting on the quarter, David Smith, Sinclair president-CEO, said: “In a normal economic environment, we would typically generate some of our highest advertising revenues for the year in the second quarter. However, this was not the case this year. Second quarter time sales of $109.8 million were about $1 million lower than the first quarter, an indication that Sinclair continues to be adversely affected by the economic recession. Despite this, we still outperformed the industry, based on third party data, a sign that our sales force continues to aggressively work accounts. On the expense side, we have been working with our station management to find areas where we can cut costs and create efficiencies for the longer-term.”
Smith continued, “We were notified by Cunningham Broadcasting Corp., our LMA partner in six markets, that their secured lenders granted them an extension to Oct. 30, 2009, on the repayment of a $33.5 million term loan facility which cross defaults to our secured credit facility. Cunningham and its lenders continue to seek a resolution to satisfy the debt maturity. This resolution may have a financial impact on Sinclair.”