Political Ads Boost TV Station Groups

Feb 14, 2005  •  Post A Comment

The 2004 presidential election continued to leave its mark on television station groups last week as three companies reported strong revenue growth due to political advertising spending, which in some cases helped offset weakness in other businesses.

Sinclair Broadcast Group reported last Thursday that it swung to a loss in the fourth quarter, hurt by a $44.1 million write-down of good will required under accounting rules. Although the Baltimore-based owner of 62 television stations reported that fourth-quarter revenue rose to $188.1 million from $179.2 million a year earlier, the company posted a loss of $2.6 million, driven by that write-down. Last year Sinclair posted a fourth-quarter profit of $18.6 million.

For the year, Sinclair’s profit slipped to $24 million from $24.4 million a year earlier. Revenue rose to $708.3 million from $688.4 million in 2003.

The company’s top-line growth was largely driven by $32 million in political revenue for 2004, which represented a 31 percent increase from the 2002 political season. The company noted that $1.4 million of the political revenue booked in the year came from television stations with newly added news programs.

Meanwhile, Belo Corp. last Thursday reported a 26 percent increase in fourth-quarter profit, since robust political advertising spending more than offset weakness in the newspaper group and a series of charges taken for discontinued operations and severance.

The Dallas-based owner of 19 television stations posted a profit of $53.5 million, up 26 percent from a year-earlier profit of $42.4 million. Revenue was up 6 percent to $412.7 million. Included in Belo’s fourth-quarter results was $1.3 million in charges related to severance from layoffs at the company’s newspaper The Dallas Morning News as well as the reorganization of Texas Cable News. For the year, Belo’s profit rose 3 percent to $132.5 million on a 5 percent revenue increase to $1.5 billion.

Driving the growth at the company was political advertising revenue, which hit $28.4 million in the quarter and $52.8 million for the full year. Excluding political spending, Belo’s TV stations’ local ad revenue rose 0.9 percent for the quarter and 5 percent for the year, while national was off 1.7 percent and 0.6 percent, respectively.

LIN TV Corp. reported that it swung to a profit for the fourth quarter, lifted by strong political advertising revenue. The company posted a fourth-quarter profit of $62.2 million, versus a year-earlier loss of $44.2 million. Revenue advanced 13 percent to $107.7 million, largely the result of strong political spending. For the year, LIN posted a profit of $93 million, compared with a year-earlier loss of $90.4 million. Revenue rose 10 percent to $374.8 million.

The results came as LIN signed a definitive agreement last Wednesday to purchase two UPN-affiliated television stations from Viacom for $85 million as LIN continues to move ahead with its strategy to create duopolies in its markets.

LIN’s purchase of WNDY-TV in Indianapolis and WWHO-TV in Columbus, Ohio, is part of an effort by the company to consolidate its stations around certain cities. The company already owns CBS affiliate WISH-TV and Univision affiliate WIIH-TV, both in Indianapolis. Including Indianapolis, the company owns two or more stations in eight markets.

The sale is also an indication that Viacom is beginning to whittle down the number of stations it owns.