Acquisitive television group Nexstar swam against the political off-year tide by having more stations contributing to its bottom line, and so did Sinclair. However, special expenses knocked a hole in operating income, which came home in the red. And of course, encouraging core advertising results were not helped by the loss of millions in the political category.
Wells Fargo analyst Marci Ryvicker noted that one of the drivers of a big increase in net broadcast revenue – it grew 34.7% to $303M – was an earlier-than-expected close on the group’s acquisition of Fisher Communications.
Operating income suffered a 7.1% loss to $72.8. It concluded $4.3M in severance expense related to the Fisher closing, an adverse event that won’t be repeated.
As with all broadcast television groups, the political hole is enormous. In Sinclair’s case, it brought in only $2.7 million this time around, compared to $27.8 million in Q3 2012.
Excluding political and on a same-station basis, local revenues were up 14% and national were up 0.7%. Strong growth categories included automotive, services, grocery, media, furniture and home products.
“Our third quarter 2013 results showed an increase of 11.0% in net broadcast revenues on a same station basis, excluding political revenues, which was driven by growth in our retransmission revenues and core business,” commented David Smith, President and CEO of Sinclair. “We are pleased with our solid third quarter results and expect to continue to grow our revenue share and provide additional value to our shareholders through our station acquisitions and the synergies and efficiencies of scale that we are creating as we continue to consolidate. Including all pending station acquisitions, we are the largest and one of the most diversified TV broadcasters in the country and have been the most active TV broadcasting consolidator with over $3.0 billion in assets purchased and announced. Television continues to be the preferred medium for advertisers and consumers top choice for news and entertainment. As we look ahead, we are beginning to assess other possible avenues for growth after the industry consolidates, including enhancing our original content offerings and distribution, the pursuit of strategic partnerships and monetizing spectrum holdings, all with the intent of creating additional value for our shareholders.”
Executive Vice President and Chief Financial Officer David Amy discussed the group’s prospects for the immediate future. He said, “For the fourth quarter of 2013, we expect to see continued growth in core local and national advertising. While we expect our political revenues to benefit from the implementation of the Affordable Care Act, the uncertainty surrounding the government’s computer enrollment issues has resulted in slower than expected state spending on related advertising. Advertising in the automotive sector, however, continues to be robust, growing 9.3% in the third quarter over the same period last year, as sales of new cars hit their highest levels since 2007. That momentum is carrying through to the fourth quarter with auto advertising, on a same station basis, expected to grow by high single digits over the fourth quarter last year.”
Political is going to provide the usual off-year comp hurdle – this time to the tune of $54.1M raked in last year – Sinclair expects only $5.9M out of the category this time around.