More of the same for Sinclair


Sinclair Broadcast Group’s Steve Marks, COO of the company’s television group, noted how unusual it was for revenues in Q2, normally a stronger quarter, to come in below Q1. After seeing revenues decline 18.8% year-over-year for Q2, Sinclair is projecting more double-digit declines in Q3 and Q4.

Q2 came in at $133 million. Within that 18.8% decline, local was down 21% and national was off 31.4%. Excluding political (only $700K, down from $3.6 million a year ago), local was down 20.1% and national 29.1%.

“For third quarter we are estimating that broadcast revenues will be approximately $126.6 million, or down 15.7%, which has not changed from the estimate provided in our July 10th 8-K filing [with the SEC],” Marks told analysts. “Included in that outlook is approximately $300K of political advertising, as compared to $8.7 million in third quarter of last year,” he added.

Sinclair is expecting the automotive sector to be down in Q3, but down less year-over-year than in Q2, “assuming that the Cash for Clunkers program is renewed.”. In the Q&A with analysts, Marks estimated that Sinclair has gotten about $1 million of advertising sales thus far as a result of the government’s Cash for Clunkers program. Auto was down 46.1% for Sinclair in Q2. The quarter’s biggest ad category, services, was off 11.5%.

CFO David Amy provided an update on debt negotiations and the status of Cunningham Broadcasting, from which Sinclair LMA’s six virtual duopoly stations. As if to emphasize the seriousness of those negotiations, Amy noted that an attorney from Sinclair’s bankruptcy council had joined management for the Wall Street conference call.

Sinclair announced last week that Cunningham had gotten an extension through October 30th of its $33.5 million senior loan facility. “This is temporarily good news for us, as an acceleration of the Cunningham debt would have caused a cross-default in our own secured credit facility,” Amy said. “It also gives us some breathing room to work with our 3% and 4 and 7/8ths% convertible holders on how to resolve those bonds, which the holders can put to us in May 2010 for the 3s and January 2011 for the 4 and 7/8ths,” he added. 

Since Sinclair’s special investor conference call on July 14th, Amy said a representative group of holders of those convertible bonds have formed an ad hoc committee “and we, along with our restructuring advisors, have begun discussions with those holders with respect to various restructuring and exchange alternatives.” Amy said the company will not provide any discussion of potential terms while those talks are taking place.