Sinclair Broadcast Group dropped another bombshell on Wall Street Friday, revising its business outlook downward for the remainder of 1999 due to weaker-than-expected ad sales this month.
The stock fell 14% to close at $10.40 after Sinclair said it expects fourth quarter broadcasting revenue to slump 17% to $184 million and cash flow to plunge some 26% to $91 million.
Warned of shortfalls
The company had already warned of shortfalls when it announced its third-quarter financial results in October, but the market response Friday indicated that at least some investors weren’t prepared for the dismal numbers. Some Wall Streeters grumbled that the company should have given a stronger and earlier warning of its slumping revenue and profits.
“We are seeing advertising market conditions … worsen in December in both national and local advertising across most categories,” said Sinclair chief financial officer Patrick Talamantes. Looking into 2000, he added, the Baltimore-based company should start reaping some benefits from its push to increase its sales force, upgrade its programming and promote its stations more effectively.
In a note to clients, Schroder & Co. broadcast analyst Niraj Gupta lowered his fourth-quarter per share earnings estimates for the company to 37¢ from 46¢. While he called the stock inexpensive at its current depressed level, he noted that he has “no confidence in the near-term outlook” and said Sinclair “continues to provide poor guidance to the Street.”
Including all pending acquisitions, Sinclair owns or operates 58 TV stations covering 24% of the U.S. market. The company recently sold all its radio stations to focus on television.