Sinclair Broadcast expects to exceed earnings forecasts

Advertising sales top projections in 3rd quarter

political ads a big factor

October 23, 2002|By Andrea K. Walker | Andrea K. Walker,SUN STAFF

Sinclair Broadcast Group Inc. said yesterday that it expects to beat third-quarter earnings projections because of better-than-expected advertising sales.

Net broadcast revenue is expected to increase 10.3 percent, to $163.9 million from $148.6 million. The Hunt Valley company said last month that it expected revenue to increase 9.4 percent to 9.5 percent.

Broadcast cash flow, a key indicator of success in the industry, has been revised to an increase of 24.2 percent from last year's $57.4 million. Earlier, the company had projected an increase of 18.5 percent to 18.8 percent.

Sinclair benefited from a surge in advertising late in the third quarter, which ended Sept. 30, company officials and analysts said.

"They anticipated the improving environment, and they got the right programming and the right people on the ground selling that to advertisers," said Lee Westerfield, a broadcast analyst with UBS Warburg.

Sinclair executives said that a competitive election year also helped to boost sales.

"The momentum in both political and regular spot advertising was greater than we expected to see it," said David Amy, Sinclair chief financial officer and executive vice president. "Races in both Maine and North Carolina have heated it up and were really driving our political dollars."

Sinclair owns and operates, programs or provides sales services to 62 television stations in 39 markets. One of the country's largest broadcast companies, it reaches 23.9 percent of all television households.

Some analysts said they expected political advertising to remain strong through the fourth quarter as well.

"Political spending is essentially beneficial for companies like Sinclair," said Todd Morgan, an analyst with CIBC World Markets Fixed Inc. "Politicians want to advertise during the news. Sinclair can charge higher rates because it's prime time."

Sinclair also saw increases in automobile advertising and advertising to consumers, analysts said. Company officials said this advertising will help the company keeps its momentum even after election season.

"Advertising in general turned out to be stronger than imagined," Westerfield said.

Sinclair will release official earnings Nov. 7. Its stock closed yesterday at $12.88, up 8 cents.

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