Sinclair sees Q3 at low end of guidance


Sinclair Broadcast Group has updated its guidance to Wall Street, saying Q3 net broadcast revenues will be at the low end of the guidance the company provided in August when it reported Q2 results. That guidance had been for Q3 revenues to be up by a high teens percentage or into the low 20s.

The updated guidance came as Sinclair announced a private offering of $250 million in new senior unsecured notes due 2018 and tender offers for two issues of debt securities due in 2012.
“Our expectation to be at the low end of our guidance should not reflect negatively on our business as advertising demand remains very strong.  We are seeing more than expected growth in services, our second largest category, and auto, our largest category, is pacing up approximately 46%, despite the tougher year-over-year comparisons due to last year’s ‘Cash for Clunkers’ program.  Even at the lower end of our guidance, third quarter net broadcast revenues will outperform third quarter 2008 both including and excluding political revenues. In addition, our general and administrative, sales and engineering expenses are running less than our prior expense estimates,” said David Amy, Executive Vice President and CFO of Sinclair, stated,

Two categories were cited for guiding to the low end of the range: paid/religious programming and political advertising.

“Paid and religious programming, which have been down all year, have yet to pick up as expected.  We also expect political revenues to be approximately $9.0 million for the third quarter as compared to $9.5 million as provided in our prior guidance. Political advertising, which is difficult to forecast because such advertising is generally purchased close to the air date, is currently pacing at approximately $7.7 million with two weeks remaining in the quarter,” Amy said in Monday’s statement.

RBR-TVBR observation: Predicting political is like predicting the weather – you can’t do it very well more than a short time out. So, the news from Sinclair was not particularly surprising to Wells Fargo Securities analyst Marci Ryvicker, who noted that “From the television companies (both public and private) that we have spoken with over the past few weeks, it sounds like political started the quarter off slower than anticipated.  Political is still expected to be strong but below expectations.” She added: “Growth is still strong at SBGI – we are not overly concerned about the guidance update, which was not a huge surprise given what we had been hearing from our contacts.”