Sinclair Group reports rise in third-quarter profit

November 06, 2008|By From Sun staff and news services

Sinclair Broadcast Group Inc., the Hunt Valley-based operator of 58 U.S. television stations, reported yesterday an unexpected increase in third-quarter profit on higher revenue from political advertising and lower amortization costs.

Net income rose to $11.7 million, or 14 cents a share, from $9.9 million, or 11 cents, a year earlier, the company said. Per-share profit beat the 9-cent average estimate of four analysts surveyed by Bloomberg.

With a sinking economy expected to further hurt advertising, Sinclair said it is cutting costs in areas such as salaries, travel and entertainment as well as promotion expenses and capital spending.

And while the company remains committed to maintaining its dividend, it warned yesterday that a worsening economy or a negative change in dividend tax rates could affect the payment. Sinclair executives offered no additional details.

"The economic recession and financial crisis have clearly impacted advertising budgets," Chief Executive Officer David Smith said in a statement. "On the strength of political advertising," overall ad sales fell only $200,000 from a year earlier, he said.

Political ad revenue rose to $8.7 million from $1.1 million a year earlier, the company said. Advertising revenue declined overall, particularly from the automotive industry. Operating expenses decreased 2.1 percent.

The company revised its Oct. 27 forecast for fourth-quarter net broadcast revenue, predicting a decline by a percentage in the low-single digits from a year earlier. It had previously predicted a low- to-mid-single-digit decrease on a percentage basis. In last year's fourth quarter, net broadcast revenue was $165.7 million.

In the third quarter, local advertising revenue dropped 0.4 percent, while national sales rose 0.4 percent on the gain from political ads. Automotive advertising sales fell 15.4 percent. Retail and restaurants were also among the ad categories that declined, while fast food was up, Sinclair said.

Sinclair lost 26 cents, or 7.5 percent, to close at $3.21 on the Nasdaq yesterday. The shares have dropped 61 percent this year.

Bloomberg News and Baltimore Sun reporter Hanah Cho contributed to this article.

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