Bear Stearns analyst Victor Miller made it clear during Wednesday’s quarterly conference call (11/1/07 TVBR #214) that he doesn’t approve of Sinclair Broadcast Group investing in non-TV businesses like real estate and a sign-making company. A day later, he put out a note to investors taking the company to task for the strategy. "During its conference call, SBGI management suggested that 33% of its EBITDA could come from non-TV broadcast operations. We do not believe investors own SBGI shares for its investment prowess. SBGI is a TV broadcaster. Its forays into auto dealerships (2.5% CAGR return; and SBGI CEO David Smith on both the sell and buy side of the transactions) and direct mail (EBITDA not near 40mn initial company expectations) did not pay big shareholder dividends. The company should be sticking to a) acquiring TV stations, b) repurchasing shares or c) de-levering (especially with a weaker auto ad market). Investors can buy REITS/real-estate development companies rather than buy SBGI shares. Had the company not announced these sales, we believe shares would have been up, not down on Wednesday," Miller concluded.
Sinclair shares fell 12 cents on Wednesday, despite beating expectations with its Q3 results and announcing a dividend increase.