Sinclair unveils stock buyback plan Chain of TV stations has seen price fall from $31 to below $17

November 18, 1995|By Michael Dresser | Michael Dresser,SUN STAFF

Aiming to halt what it called an "unwarranted" 46 percent drop in its stock price, Sinclair Broadcast Group Inc. said yesterday that it would buy back as much as $50 million of its common stock.

The Baltimore-based chain of independent television stations has seen its share price plunge from a high of $31 on Sept. 8 to a new low of $16.25 Thursday -- $4.75 less than the initial offering price of $21 in June, when it sold 5 million shares for $105 million. The stock closed yesterday at $16.75.

The announcement that Sinclair, which owns Channel 45 (WBFF) and operates Channel 54 (WNUV) in Baltimore, would repurchase stock came after the market closed yesterday.

David Amy, the company's chief financial officer, said the stock price has continued to erode even though Smith Barney issued a "buy" recommendation a week ago.

"The direction of the stock value is not making any sense to anybody relative to the strength of the business," Mr. Amy said.

Mr. Amy said the company had reported a strong third quarter, with broadcast cash flow up 20 percent over the same quarter a year ago.

Company officials contend, and most analysts agree, that cash flow is a better measure of the company's performance than earnings per share. Sinclair's net loss for the quarter was $4.9 million, or 14 cents a share.

Sinclair's advertising revenue has shown a drop during the fourth quarter, in line with an industrywide trend, Mr. Amy said.

However, he contended that Sinclair's stock price drop was far out of line with the decline at other publicly traded broadcast companies.

Mr. Amy speculated that investors might have overreacted to this week's news that the Fox Network would drop its affiliation with the company's Norfolk station in 1998.

He said the move will not have a major impact on Sinclair.

The Sinclair executive further contended that investors were failing to recognize the value of some company assets, including its agreements to operate several television stations for their licensees.

Sinclair owns the licenses for seven TV stations and operates four on behalf of the licensees, including WNUV. Last week it bought the assets of WDBB in Tuscaloosa, Ala., and acquired an option to purchase the license if federal restrictions on broadcast license ownership are loosened.

Sinclair is controlled by the four sons of the late Julian S. Smith, the company's founder. The family, led by company Chief Executive David D. Smith, controls about 85 percent of the company.

The stock slide has reduced the value of the family's combined holdings from about $1 billion to closer to $500 million.

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