Sinclair Broadcast Group reported a surge of profit in the fourth quarter, which it attributed to changes in U.S. tax law making the advertising climate more favorable for companies advertising on its local stations.
The No. 1 local TV station owner also provided an update on its long-awaited acquisition of Tribune Media, projecting it will close during the spring quarter. The $3.9B deal, closely watched by a cross-section of investors, politicos and media types, has been moving sideways lately after breezing through early regulatory review. The FCC is still widely expected to OK the merger, but the Department of Justice has come at it from its own antitrust perspective and is applying more scrutiny.
Sinclair’s total revenues for the quarter ending December 31 dropped 8% from the year-earlier period, to $734 million, due to the lack of political advertising compared with 2016. But net income attributable to the company came in at $443.5 million versus net income of $120.9 million in the prior-year period. The profit figure included a $272 million non-recurring tax benefit related to re-measurement of deferred tax assets and liabilities as a result of the reduction of the federal income tax rate from 35% to 21% pursuant to the U.S. Tax Cuts and Jobs Act. It also included a $225 million gain recognized for vacating spectrum in certain markets.
James Murdoch And Tech Investor Reid Hoffman Talk Dark Side Of Social Media And How To Monitor "The Discourse"
On a diluted, per-share basis, earnings were $4.32, up from $1.32 a year ago.
“While first quarter of 2018 is off to a slower than expected start due to our low percentage of NBC affiliates which is the network that aired the Super Bowl and Olympics,” said president and CEO Chris Ripley, “we are looking forward to growth drivers from the upcoming mid-term elections and the positive effects from tax reform and a growing economy.”
The FCC has been assessing Sinclair’s acquisition with Tribune, which on paper would give the combined company reach into more than 70% of U.S. households, a remarkable level that is nearly double the current regulatory limit. Last week, the company spelled out its plans for divestitures it would make in order to get the portfolio down to the longstanding 39% ownership cap. Fox has also entered talks to snap up some of the stations from Sinclair.
Uncertainty about the timing of and final ingredients in the Tribune deal appeared to be a major factor in the morning decline in Sinclair’s stock, which was off 5% in early trading at $34.30.
Subscribe to Deadline Breaking News Alerts and keep your inbox happy.