Popular Fox Broadcasting Co. television programs, the Super Bowl and a flood of political advertising helped boost first-quarter net income for Sinclair Broadcast Group, the Hunt Valley-based company said yesterday.
The broadcasting company reported net income of $16.4 million for the three months that ended March 31, turning around a $2.3 million loss reported in the first quarter of 2007. On a per-share basis, earnings were 19 cents compared with a loss of 3 cents in the prior year.
TV station broadcast revenues grew 8.5 percent, to $161 million, in the first quarter from $148 million in the corresponding period of 2007, the company said. Sinclair owns and operates television stations in 35 markets, including affiliates of Fox, MyTV, ABC, CW, CBS and NBC.
"Despite the economic challenges facing many commercial and consumer sectors, we were successful in growing our net broadcast revenues by $12.6 million," said David Smith, president and chief executive officer of Sinclair.
He attributed the growth to increased spending by the automotive, services and media sectors, which helped boost local advertising revenue even as retail advertising has decreased, and to airing the most-watched Super Bowl ever on Sinclair's 20 Fox stations. The event had aired in 2007 on CBS, a network of which Sinclair owns just two affiliates.
"I'm struck by the ability to grow revenue as strongly in the first quarter, relative to what we've heard for the rest of the industry, which has been dour," Victor Miller, a broadcast analyst for Bear Stearns, said during a conference call with analysts yesterday.
Steven M. Marks, vice president and chief operating officer for Sinclair's television division, said during that call that broadcast revenue has grown partly on the strength of the Fox stations, which saw a boost in sales to advertisers for slots during local news programs and also gained an additional $4.9 million in Super Bowl-related revenue.
Advertisers have also responded to the popularity of programs such as Fox's Family Guy and CBS' Two and a Half Men.
Marks said the broadcasting company is still expecting record levels of political spending to follow a quarter in which political revenues reached $3.2 million. That compares with $600,000 in political spending in the first quarter of last year.
"Being a Fox affiliate and having Super Bowl and college championships really boosted us, and clearly we hit it out of the ballpark," Marks said. "We have shows, Two and a Half Men and Family Guy, both are legitimate hits. We have not seen hit situation comedies in eight years. These are huge home runs, and should help increase revenue shares through the remainder of the year."
ABC-affiliated stations, meanwhile, lost momentum as a result of the writers strike that ended in February, Sinclair said.
The company said it expects second-quarter 2008 station net broadcast revenues from continuing operations to be about $165 million to $167 million, as compared with second-quarter 2007 revenues of $159.2 million, a 3.6 percent to 4.9 percent increase. That projection assumes $3.7 million in political revenue, compared with $1.1 million in the second quarter of 2007.
Sinclair's stock closed at $9.75 a share in trading yesterday, up 37 cents.