Sinclair Broadcast Group Inc. reported its third-quarter earnings yesterday, posting higher revenue but a decline in broadcast cash flow, a critical industry benchmark.
The Cockeysville-based broadcasting company had revenue of $176.1 million for the quarter that ended Sept. 30, 3.3 percent more than in the corresponding period last year, when the company garnered $170.4 million.
Broadcast cash flow, which is calculated by subtracting operating expenses from total sales, was $76.5 million, down 3.1 percent from the $78.9 million posted in the third quarter last year. The company said the decline resulted from a lag in contract payments related to Sinclair's acquisitions of Sullivan Broadcast Holdings Inc. and Max Media Properties LLC, and to Fox Broadcasting Co.'s plan to take over prime-time commercial space from its affiliates, several of which are owned by Sinclair.
The company had a quarterly net loss of $11.3 million, or 14 cents a share. In the same period last year, the net loss was $2.2 million, or 5 cents a share.
The company warned on Sept. 21 that its financial numbers for the latter part of this year would be dragged down by a nationwide investment in television stations. Barry Drake, the chief executive officer of Sinclair's television and radio divisions, said that the new earnings report is "very much in range" with what the company had anticipated and that company officials are "still very optimistic."
Analysts agreed that Sinclair's performance was what they had anticipated, but they did not share the company's optimism. Niraj A. Gupta, an analyst with Schroder & Co. in New York, said, "I think Sinclair's numbers were soft, relatively weak, but in line with expectations. The company is in a period of reinvestment, and it will take some time before the effect [of that reinvestment] is felt."
Sinclair said its board of directors has authorized the purchase of up to $300 million worth of the company's common stock. The company declined to offer details of the size and timing of the stock buyback.
Sinclair Chief Financial Officer Patrick J. Talamantes said a key reason for the purchase would be to boost Sinclair's stock, widely seen as an underperformer.
"I think we are substantially undervalued," he said. "We think we have a float [of publicly available stock] that is simply too large at this point."
Sinclair announced its earnings sheet and stock purchase plan after the stock markets closed. During the trading day, Sinclair shares edged up 75 cents to close at $9.9375.