Key earnings measure rises 9.2% for Sinclair Savings from merger boost operating cash flow in fourth quarter

February 11, 1997|By Timothy J. Mullaney | Timothy J. Mullaney,SUN STAFF

Sinclair Broadcast Group Inc. said yesterday that it raised its key earnings measure 9.2 percent during the fourth quarter, as the Baltimore-based owner of television and radio stations got big cost savings from a 1996 merger but missed the year's two big advertising bonanzas -- the elections and the Olympics.

Sinclair owns or provides programming and management services for 28 television stations and 33 radio stations. In Baltimore, the list includes WBFF-TV (Fox-45) and WNUV-TV (Channel 54). Its roster expanded by 10 TV stations last year when Sinclair bought St. Louis-based River City Broadcasting L.P. for $1.2 billion. River City also controlled all of the radio stations Sinclair now owns.

The merged company had revenue of $59.1 million in the fourth quarter and $141.3 million for all of 1996. That led to a net profit of $4.4 million in the quarter and $2.9 million for the year, as the company partially made up for a poor third quarter.

"The fourth quarter was actually at the upper end of expectations," said John Reidy, media analyst for Smith Barney in New York.

But Sinclair executives said another figure, operating cash flow, is the right one to track because it cuts through the financial complications -- especially the big interest bills from the mostly borrowed purchase price -- surrounding the merger.

The company said fourth-quarter revenues were 4.6 percent higher than they would have been if the merger had been in place during the same months of 1995. Operating cash flow rose 9.2 percent, also compared to the results the merged company would have posted in late 1995.

"The revenue growth is more modest. They have done an excellent job on cost control," said Reidy, who credited much of the cost discipline to the fact that the merged Sinclair has more stations and thus more bargaining power with the production companies that sell syndicated programming.

Sinclair uses lots of syndicated shows because its station lineup is heavily concentrated in emerging TV networks like Fox and Warner Brothers that don't offer day-long network schedules.

Sinclair does not have a lot of stations affiliated with the Big Three networks and led by strong local news operations. Its shortage of NBC affiliates cost it a shot at Olympic programming during the third quarter, and the fact that only seven Sinclair stations have local news operations cost the company political advertising during the fourth quarter, Sinclair corporate finance director Patrick Talamantes said.

"Political campaigns tend to focus more of their [advertising] money on the No. 1 news" show in a given city, Talamantes said. "We try to run more profitable news operations, and that doesn't always mean you're going to be first in audience share."

Pub Date: 2/11/97

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