Sinclair Broadcast Group of Hunt Valley, Md., the country's largest television station owner and the soon-to-be owner of Little Rock ABC affiliate KATV-TV, Channel 7, reported second-quarter earnings on Wednesday, showing profit dragged down by a one-time loss and broadcast revenue on the rise.
The company, which is buying KATV and six other ABC stations from Allbritton Communications of Arlington, Va., reported quarterly profit of $17.8 million, down 41 percent from the same time last year. But earnings from the most recent quarter include a one-time loss of $16 million tied to extinguishing debt.
Meanwhile, net broadcast revenue from continuing operations reached $279.3 million, up 28 percent from the same time last year. And operating income hit $84.3 million, up 17 percent from last year.
Local net broadcast revenues, which includes local time sales, retransmission revenues and other broadcast revenues, were up 35.9% in the second quarter. National broadcast revenues were up 7%. Political revenues declined in the non-election year: the company reported $1.5 million this quarter, compared to $11.4 million for the year-ago quarter.
Looking ahead, Sinclair EVP and CFO David Amy said the company continues "to see growth in local and national advertising, excluding political, in the third quarter, as well as continued advertising spending by the automotive sector on our stations, which is estimated to be up high single-digit percents."
(Speaking of political spending, it's certainly a good time for Sinclair to be getting into the Arkansas TV market, given the big-spending Mark Pryor/Tom Cotton race that's unfolding as we speak.)
And of course, the Allbritton deal isn't the only acquisition the company's made lately. From the Sinclair news release:
Since April 1, 2013, we have announced definitive agreements for the acquisition of 35 additional stations bringing the total number of acquired or announced stations in the past two years to 91. The effect is to not only grow our national footprint and reach, but to unlock operating synergies, gain access to valuable spectrum, and build a platform whereby we can expand content offerings and shape the future of the broadcast industry. We are excited about the successes we have achieved and the additional value that we have created and anticipate creating for our shareholders.
Today's also earnings report day for another Arkansas TV owner: Nexstar Broadcasting Group of Irving, Texas, which owns NBC affiliates KNWA-TV in northwest Arkansas and KARK-TV, Channel 4, in Little Rock and their respective sister stations, and controls Fox affiliate KLRT-TV, Channel 16, in Little Rock via services agreement.
Nexstar reported second-quarter profit of $6.4 million, down 27 percent from the same time last year. But revenue reached $126.2 million, up 42 percent from last year:
Local and national core revenue was up 44% compared to the second quarter of 2012, with local revenues up 40.9% and national revenues up 51.8%. E-media revenues and retransmission revenues were also up significantly for the quarter, increasing 73.2% and 63.1%, respectively. Political revenues fell 69.5% in the non-election year.
Like Sinclair, Nexstar's been on a buying spree. With its partner Mission Broadcasting (which owns KLRT), it announced a deal in April to buy 19 TV stations and seven associated digital sub-channels in 10 markets for $270 million from Communications Corporation of America and White Knight Broadcasting.
That deal will add seven duopolies to Nexstar's operating base, giving it 91 stations in 48 markets -- 33 of which will be duopoly markets.
Gannett Co. of McLean, Va., which owns Little Rock CBS affiliate KTHV-TV, Channel 11, and recently announced a deal to buy TV stations owned by Belo, reported its earnings on July 22. Profit was down 5 percent due to restructuring costs, but the company reported growth in its broadcast and digital divisions. It also reported growth from the subscription content model it's rolling out to its newspapers.
One thing all these companies have in common: significant growth in retransmission fee revenue. That's the revenue television stations receive from cable and satellite broadcasters who pay to rebroadcast those local affiliates. And those fees are also what's driving these sweeping television station buys by companies like Sinclair, Nexstar and Gannett.
(Arkansas Business has a news-sharing partnership with KTHV, and Lance Turner appears regularly on KTHV newscasts.)
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