Sinclair Broadcast lowers profit estimate for 1Q

War coverage pre-empts ads at its TV outlets

April 04, 2003|By Andrea K. Walker | Andrea K. Walker,SUN STAFF

Sinclair Broadcast Group Inc. said yesterday that it was lowering its first-quarter earnings estimates because of a slowdown in advertising sales resulting from the war in Iraq.

The Hunt Valley company now estimates first-quarter net broadcast revenue of $152 million to $152.3 million rather than the $154.1 million to $154.8 million it had initially predicted.

The new estimate is 5.1 percent to 5.4 percent more than last year's revenue of $144.5 million. Sinclair will release its first-quarter results May 8.

Sinclair executives said in the first quarter that ended March 31 that they experienced about $2.2 million in advertising cancellations and in ads pre-empted by war coverage.

"The effect was almost immediate," said David B. Amy, Sinclair executive vice president and chief financial officer.

Companies have canceled commercials on television stations throughout the nation, prompting at least seven broadcast companies to lower or retract their earnings estimates, said James B. Boyle, an analyst with Wachovia Securities.

"Most of the companies have said that the slowdown started to show up in March and then it accelerated," Boyle said.

Sinclair, which owns, operates or programs 62 television stations in 39 markets, said it's too early to determine if the slowdown will affect end-of-year earnings estimates.

Amy said he has already seen an improvement in the advertising environment. "We're seeing advertising starting to normalize," he said.

Analysts said how quickly the war is resolved will determine the impact on broadcasting companies.

"If the war is successfully resolved, both sides seem to believe the pent-up demand would be released at that point," Boyle said.

Sinclair stock closed yesterday at $8.30, up 33 cents.

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