Sinclair Broadcast Group Inc. had set itself up for a whipping, and yesterday the whipping came.
The Cockeysville broadcasting company's stock lost 28.5 percent of its value yesterday, falling $4.1875 to close at $10.50. The steep decline came after Sinclair warned late Tuesday that its new campaign to invest in television-station personnel, programming and promotion would help drag down its financial numbers for the rest of the year.
Investors exchanged 11.33 million Sinclair shares, making the stock the 12th most active on U.S. markets yesterday.
Yesterday's tumble continued a long string of daily declines for Sinclair. Since Sept. 10, when the company's stock gained a quarter to close at $18.4375, it has not enjoyed a daily gain and has fallen by 43 percent.
Sinclair seemed acutely sensitive to the potential impact of its bombshell, opting to hurl it after the close of markets Tuesday and in advance of an analysts' conference call yesterday.
After the announcement, Sinclair Chief Financial Officer Patrick J. Talamantes said, "We see our stock at a $15 share price."
It stands at considerably less than that now, and Leland Westerfield, an analyst with PaineWebber Inc. in New York, said it may be a while before Sinclair's shares recover.
"Investors will need to have proof to regain conviction in the stock," he said. "This won't be brushed aside within a short number of months."
However, Westerfield added that while Sinclair's investment plan is poison for its stock in the short term, it stands to bolster the company's status as an industry heavyweight.
"Over time, the increasingly important competitive advantage in television will be scale, having large numbers of stations and selling that footprint to advertisers. Sinclair is ahead in that footrace," Westerfield said.
When all pending transactions are done, Sinclair will own or program 59 television stations in 38 markets. Locally, the company owns Fox affiliate WBFF-45 and programs WB Network affiliate WNUV-54.
Pub Date: 9/23/99