Analyst on Sinclair: What’s not to like?


SBG / Sinclair Broadcast GroupSinclair Broadcast Group said that it had a very successful Q3, but you don’t need to take Sinclair’s word for it. It has at least one close observer of the Wall Street scene cheering from the sidelines.

Wells Fargo Securities analyst Marci Ryvicker gave the company a glowing review following its Q3 2013 earnings release.

Political was an unsurprising business driver, but Ryvicker said the company far exceeded the results Wells Fargo was expecting, pulling in $27.8M, well ahead of the expected $21M take.

Despite the crowding caused by political, core advertising remained strong as well, another positive surprise. And guidance suggesting a surprisingly strong December in the works is yet another positive for the group.

Ryvicker also praised Sinclair’s cash management. In particular, she said it was amazing that it was able to spend $1B on station acquisitions, all while maintaining leverage that is expected to be at about 4X when 2012 comes to an end.

Finally, Ryvicker praised the intelligence of Sinclair’s moves. She wrote, “M&A is very accretive–and may not be over. We estimate that the Newport stations (likely to close in Dec. 2012) will add $115MM to rev., $57MM to EBITDA and $29.5MM to FCF in ’13. We view the deals SBGI has done as very smart and would not be surprised to see more–at the right price.”

RBR-TVBR observation: 2013 will be very interesting, thanks to the TV rollercoaster effect. It is a given that this year’s political income will create the usual impossible comps – the question is how much growth in core advertising can Sinclair and other television groups scare up to buffer the effect?