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Stations Feel the Political Ad Void

May 9, 2005  •  Post A Comment

The latest round of quarterly station-group earnings results reflect the varied effects of the sharp slowdown in political advertising revenue on the reporting companies.

The lone bright spot proved to be Sinclair Broadcast Group, which swung to a first-quarter profit thanks to cost-cutting and investment gains. The Baltimore-based owner of 61 television stations reported a profit of nearly $9 million, compared with a year-ago loss of $2.3 million. Revenue was generally flat at $164.7 million.

The company said its results included the positive impact of Sinclair’s Fox stations carrying this year’s Super Bowl, which contributed $4 million in advertising revenue, compared with $100,000 booked against 2004’s big game, which aired on CBS. Overall, local advertising sales were generally flat, while national advertising sales fell 3.5 percent, largely due to the lack of political advertising. Excluding political, national advertising revenue was generally flat as well.

Liberty Corp., a South Carolina-based owner of 15 network-affiliated television stations, reported a 24 percent decline in first-quarter profit, hurt by the absence of political advertising revenue, which hit $2.2 million in the year-ago period. The company posted a first-quarter profit of $3.5 million, compared with a year-earlier figure of $4.6 million. Revenue slipped 3 percent to $46.5 million.

The lack of political revenue contributed to Granite Broadcasting’s reported widened first-quarter loss of $19.5 million, compared with a loss of $17.4 million a year ago. Revenue fell 1 percent to $25.7 million.

The company said its revenue decline would have been worse had it not been for the consolidation of two Malara Broadcasting stations, one in Fort Wayne, Ind., and one in Duluth, Minn., with which Granite has a shared-services agreement. Excluding those stations, the revenue decline would have been 4 percent.

But both figures beat the company’s forecast issued earlier this year that revenue would decline as much as 7.5 percent. Granite said local advertising was stronger in the quarter due to robust local ad revenue, which rose 7.5 percent at the Big 3 networks and was up 20 percent at Granite’s WB affiliate in Detroit. The Detroit station also posted a 6 percent rise in national ads, largely due to its carriage of Detroit Pistons games.

Meanwhile, Nexstar, which owns 46 television stations, posted a narrowed first-quarter loss of $12.8 million, compared with red ink of $16.7 million a year ago. Revenue fell 3 percent to $52.7 million as an increase in several key advertising categories was offset by a $3.1 million drop in political advertising revenue.

According to Nexstar Chairman Perry Sook, effects of an ongoing standoff between Nexstar and cable operators Cox Communications and Cable One over retransmission fees has been minimal.