U.S. ad slump hurts Sinclair

cash flow off 17%

April 27, 2001|By Dan Thanh Dang | Dan Thanh Dang,SUN STAFF

Hurt by a slump in national advertising spending, Sinclair Broadcast Group Inc. said yesterday that the key indicator of its financial performance fell by 17.6 percent in the first quarter of this year, but still exceeded expectations.

In the three months that ended March 31, broadcast cash flow for the Baltimore-based chain of independent television stations was $54 million, compared with $65.6 million in the first quarter of 2000.

Sinclair also said a slowing economy contributed to its net loss of $39.2 million, or 46 cents per share, compared with $4.4 million, or 5 cents per share, in the year-ago quarter.

"It's much better than my estimates and what Wall Street was expecting, given the difficult economic environment," said analyst Peter D. Lerner with Arnhold & S. Bleichroeder Inc. in New York. "Advertising has also been weak, and that trend is continuing into the second quarter. But Sinclair has held the line on costs, they've been trying to restructure, and they've gained local market share.

"They need to continue doing what they're doing. They're moving in the right direction."

Sinclair reported $165.6 million in total revenue for the first quarter, a 6.5 percent reduction from the year earlier. Net broadcast revenue, another important measure, fell by 6.9 percent to $149.7 million from $160.8 million in the first quarter of 2000.

Sinclair incurred a $2.4 million restructuring charge in the first quarter of 2001, which relates to a reduction in its work force of 186 people. Company officials said earnings were hurt because last year's presidential election sent political advertising revenue soaring to $2.8 million for the first quarter of 2000 compared with just $200,000 in the most recent quarter.

Also, local advertising revenue decreased just 2.6 percent while national advertising revenue was down 17.4 percent compared with the first quarter of 2000. The decline in national was due primarily to a slowdown in advertising from the automotive, pharmaceutical/cosmetic and fast food sectors.

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