Shares of Sinclair Broadcast Group Inc. surged more than 10 percent Wednesday after the Hunt Valley-based company reported that it had turned a $33.1 million profit in the fourth quarter, compared to a $67.8 million loss the year before.
The company also reported revenue for the final quarter of 2010 rose 23.5 percent to $189.9 million, compared to the prior year’s revenue of $153.9 million. The increase was bolstered by an uptick in spending on political ads, which brought in $26.8 million for the quarter ending Dec. 31. This compares to $4.1 million spent on political ads in the fourth quarter of 2009.
For the year, money spent on political ads was $41.9 million, up 35 percent from the previous year. It was also up 2 percent compared to political spending in 2008.
Sinclair’s net income amounted to 40 cents per diluted share, compared to a loss of 85 cents per diluted share during the corresponding period in 2009. This beat earnings estimates for the quarter of 39 cents per share, according to analysts surveyed by Thomson Reuters. For the full year, analysts estimated Sinclair would earn 94 cents a share, and the company matched that.
Outside of political spending, the company saw increased ad buys in the automotive, services, telecommunications, media, furniture and schools sectors. However, the fourth quarter also saw declines in ad spending on religious, medical, home products, pharmacy and fast food.
“2010 ended on an even stronger note than originally anticipated with record levels of political advertising helping to drive net broadcast revenues up 23.5 percent in the quarter,” David Smith, president and CEO of Sinclair, said in a prepared statement. “For the year, excluding political, revenues from our core television business finished up 12 percent led by the automotive recovery. We expect to see continued improvement in our core advertising, driving our top-line in 2011.”
Based on the earnings, Sinclair reinstated its dividend of 12 cents quarterly per share. Additionally, the company will pay a special 43 cents per share cash dividend to those who held shares in the fourth quarter of 2010.
Sinclair owns, operates, programs or provides sales services to 58 television stations in 35 markets. Sinclair’s television group reaches approximately 22 percent of U.S. television households.
Sinclair also provided revenue guidance for the first quarter of 2011, saying it expects station net revenue to be in the $155.7 million to $156.5 million range, excluding barter deals. This is a more than 5 percent increase compared to the first quarter of 2010.
This year, the Feb. 6 broadcast of the Super Bowl on Sinclair’s 20 Fox affiliates generated revenue of $6.2 million, a 26.5 percent increase over 2008, the last time the network had the game. Also, the company wrapped up retransmission agreements for multiple years with Mediacom Communications, Bright House Networks and Time Warner Cable.
Sinclair’s shares gained $1.04, or 10.45 percent, Wednesday to close at $10.99 in Nasdaq trading.