- The Washington Times - Monday, February 19, 2007

Shares of Sinclair Broadcast Group Inc. reached a year’s high last week after the Hunt Valley, Md., media company said it expects to double revenue from television retransmission fees this year.

Sinclair generated a profit of $11.1 million (13 cents) during the fourth quarter, compared with last year’s net loss of $1.8 million (2 cents). The company cited higher-than-expected political advertising revenue.

The company, which owns, operates or programs 58 TV stations in 36 markets, reported political ad revenue of $21.6 million for the three months ended Dec. 31, up from $1.4 million a year ago.

For all of the 2004 presidential election year, Sinclair booked $32 million in political ads.

But it was Sinclair executives’ comments about retransmission fees that attracted most of the attention of analysts during a company conference call. Sinclair has been instrumental among broadcasters in demanding that cable companies pay to carry broadcast signals, a departure from past practice.

This year, the company expects to see a 90-percent jump in transmission fee revenue to $48 million from $25.4 million in 2006.

“There’s no confusion on the part of the consumer about what they watch and what they think has value. I think it’s time for the consumer to let the cable company know it’s OK to pay for content that we choose to watch,” Chief Operating Officer Steven Marks told analysts and investors during a conference call.

Sinclair recently signed agreements with Time Warner Cable Inc. and Mediacom Communications Corp., in addition signing a one-month extension with Comcast Corp.

In early January, Sinclair had pulled its broadcast signals in Mediacom areas, affecting 700,000 customers, during a protracted fight over retransmission fees.

Right now, the company has agreements with cable companies covering 75 percent of households in its markets, which together compose more than one-fifth of all U.S. television households.

“I’d like to think that we’re going to be done in ‘07 with everybody; but having said that, we started with Mediacom just as an example in October of 2005 and it took obviously until 2007 to get it done. I’d like to think that’s not going to happen again, but if it does, it does,” Mr. Marks said, calling on other broadcast companies to follow Sinclair’s example.

Analyst Marci Ryvicker said she credits Sinclair for taking steps to offset the fact its portfolio of stations — including 19 Fox, 17 MyNetwork TV, 10 ABC, nine CW, two CBS and one NBC affiliate — is not as news-heavy as other broadcasters.

“With DVRs and Tivos, the most important type of programming to have is news and sports,” observed Ms. Ryvicker, vice president of equity research for Wachovia Capital Markets in New York. “But I do think one of the reasons why they’re so aggressive with retransmission consent is that they do know this.”

Ms. Ryvicker, whose company does investment banking for Sinclair, noted that the company is facing many of the same challenges as other broadcasters in the industry.

While Sinclair can offset some weaknesses with retransmission fees, challenges remain in its exposure to two unproven networks [the CW and MyNetwork TV], the general decline in television ad spending and the persistent weakness in auto advertising, she said.

Shares of Sinclair closed up 8 cents at $14.11 per share on the Nasdaq Stock Market Friday.

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