Sinclair Beats Street

November 4, 2009

BALTIMORE: Third-quarter broadcast revenues for Sinclair were in line with analyst estimates at $136.4 million, down 9 percent from last year’s $150.1 million. Net broadcasting income was $14.9 million versus $10.2 million a year ago.

Total revenues, including barter and other operations, were $160 million, down 10 percent and beating the Street’s expected 13 percent slide.

Political revenues were $1.9 million compared to $8.7 million last year, offset by retransmission revenues of $28 million versus $17.9 million last year.

Local advertising revenues fell 14 percent; national was down 26.7 percent versus. Excluding political, local was down 13.2 percent and national fell 16.2 percent. Advertising spending categories down the most were automotive, services, paid programming, movies and telecommunications.

Services, Sinclair’s largest category representing 15.6 percent of time sales, was down 10.9 percent. Automotive, now its second largest category representing 15.3 percent of time sales, was down 31.4 percent. Local advertising revenues, excluding political revenues, represented approximately 69 percent of advertising revenues in Sinclair’s (NASDAQ: SBGI) third quarter ending Sept. 20.

Sinclair managed to restructure its balance sheet its balance sheet over the last few months, raising $500 million due 2017 to fund convertible bonds aimed at repaying a portion of bank debt. Terms of part of SBGI’s bank debt were also extended. The arrangement allowed Sinclair to prop up Cunningham Broadcasting, a local marketing partner owned by a member of the Smith family that controls SBGI.

Sinclair said it invested $4.3 million net of cash distributions in various ventures during the quarter. Capex spending was $2.1 million. Debt, net of $10.2 million cash, was $1.289 billion a of Sept. 30 compared to $1.305 billion June 30.

Looking ahead to 4Q09, SBGI expects broadcast revenues to come in between $143.3 million and $146.3 million, down 11 to 12.8 percent from last year. Anticipated results assume $3 million in political versus $25.6 million last year.

For the full year, SBGI expects net broadcast revenues of $544.1 million to $547.1 million, down 14.4 to 14.9 percent to 2008 net broadcast revenues of $639.2 million. The 2009 full year estimate includes $5.9 million of political revenues versus $41.1 million in 2008.

More on Sinclair:
November 2, 2009: “Sinclair Refinances Part of its Bank Credit Line”
The amendment was necessary for Sinclair’s $500 million convertible note tender offer, which closes Thursday unless extended or terminated.

October 16, 2009: “Sinclair Increases Private Offering to $500 Million”
Sinclair intends to use the net proceeds to fund tender offers for its 3 percent and 4.875 percent senior convertible notes, to pay down its senior secured bank credit facility, and to pay down $33.5 million for its operations partner, Cunningham Broadcasting.

October 13, 2009: “Sinclair Revises 3Q Expectations Upward”
The broadcaster said it expects net broadcast revenues for the three months ended Sept. 30, 2009 to come in at $136 million, down 9.4 percent from last year. In early August, Sinclair was shooting for $126.6 million, down 15.7 percent from 3Q08.
October 12, 2009: “Moody’s Reviews Sinclair for Upgrade”
Moody’s Investor Service placed Sinclair on review for a potential upgrade after the broadcaster commenced a debt refinance and a new agreement with an operational partner.

October 8, 2009: “Sinclair Commences Tender Offer”
Sinclair also announced that it has entered into a MoU with Cunningham Broadcasting Corp., contingent upon the refinancing of the notes.

August 5, 2009: “Sinclair Reports Time Sales Dip in 2Q”
Sinclair Broadcast Group said today that time sales fell $1 million between the first and second quarters, a reversal of the typical trend.

August 3, 2009: “Sinclair’s LMA Partner Gets Extension”
Cunningham Broadcasting, a management partner of Sinclair Broadcast Group, received an extension on its $33.5 million loan due July 31.

July 15, 2009: “Analyst Deems Sinclair Bankruptcy ‘Remote’”
“To be blunt, we think management is posturing. We believe that management is painting the most dire scenario in a public forum as part of its negotiations with convert holders.”

July 14, 2009: “Sinclair Positions for Bankruptcy”
Sinclair Broadcasting group may have to file for bankruptcy if it can’t renegotiate the terms of some of its debt.

June 19, 2009 “Standard & Poor’s Cuts Sinclair”
“We believe that sluggish TV advertising in a nonelection, recession year will cause Sinclair’s EBITDA to decline further and leverage to continue to rise.”