Sinclair Broadcast Group beats expectations


The news lately from Sinclair Broadcast Group has been good for investors. It pulled off a financial restructuring and has now announced Q3 results which, while still down from a year ago, beat Wall Street expectations. And, the company’s Q4 guidance was also better than expected.

Q3 net revenues from continuing operations were down 9.1% to $136.4 million. Wells Fargo Securities analyst Marci Ryvicker proudly notes that she was right on the mark, while the Street consensus had been that Sinclair’s revenues would be down 13%.

But even Ryvicker underestimated EBITDA, which came in down only 7% at $51 million. The company’s previous guidance had been for a 12% decrease, which is what Ryvicker and other analysts had penciled into their calculations.

With the higher EBITDA, earnings per share also came in higher than expected, at 18 cents per share. The consensus had been only eight cents and even Ryvicker’s more optimistic 11 cents proved not to be optimistic enough.

“We have started to see signs that perhaps the worst of the recession is over. While we still do not expect to see an immediate robust recovery, improvements in the business are occurring as advertisers are beginning to buy with longer lead times and declines in the core business are getting smaller,” said CFO David Amy.

Here is Sinclair’s official revenue guidance for Q4:

“The Company expects fourth quarter 2009 station net broadcast revenues from continuing operations, before barter, to be approximately $143.3 million to $146.3 million, an 11.0% to 12.8% decline as compared to fourth quarter 2008 station net broadcast revenues of $164.4 million. This assumes $3.0 million in political revenues as compared to $25.6 million in fourth quarter 2008. For the full year, the Company is estimating net broadcast revenues of $544.1 million to $547.1 million, down 14.4% to 14.9% 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.”

That also is better than Wall Street had been expecting. “Management is guiding net broadcast revenue to $143-$146M (-13% to -11%), which is better than our $140M (-15%) forecast due to higher than expected political ($3M vs. our $1M).  EBITDA (excl. FAS123) is expected to be $50-$53M (-20% to -15%) – also higher than our $48M forecast (-23%) due to the higher than expected revenue,” noted Ryvicker.

For CEO David Smith, it was a day to relish in good news after some trying months. “We are pleased to report that we have successfully restructured our balance sheet and addressed our cash flow needs. With the proceeds of our new $500 million senior secured second lien notes offering due 2017, we will be able to fund the tender offers of our 3% and 4.875% senior convertible bonds and repay a portion of our bank debt. The bank credit facility was also amended and restated to allow for $75.4 million of the $135.9 million revolving commitments to be extended until 2013 and to raise $330 million of a new term loan B tranche due 2015 which was used to repay the term loan A tranches. The potential cross-default with our LMA partner, Cunningham Broadcasting, was also resolved as they were successful in renegotiating their bank credit facility to obtain a three-year amortizing extension which will be funded through purchase option deposits made by Sinclair over the next three years. This was a necessary step to provide the liquidity we need to continue to compete and to be in position to capitalize on the opportunities that may come before us under the new digital regime of the television broadcasting industry,” Smith said, tying all of the recent developments into one package of happy news.