This company, which primarily owns and operates television stations earning revenue from advertising and re-transmission fees of paid network, has been grouped into TV station service sector in video &audio goods and service industry.
It seems that demand for local TV AD service that companies in this sector provide has been weak and declining in the past three years as a result of ad’s moving away from traditional TV media. Increasing retransmission fees, as a result of increasing rate, seems to offset the decrease in commercial ad revenue. However, it seems revenue of most companies in this sector may be declining. Political ad has been a strong revenue resource in this sector and helps maintain an about 3% annual growth rate in revenue in the past three years.
The struggling demand for commercial ad and increasing programing costs has been hurting those companies’ profitability. Increasing consolidation activities seem to help little in maintain their margins. The typical company in this sector has an about gross margin of 43% in 2018, with a SG&A as percentage of sales of about 27% , the typical operating margin is 16% down about 600 basis points compared with that in 2015.
The typical enterprise price/EBI ratio is 34 (12 months trailing).
It seems that the demand for commercial TV ad service has been declining fast in the past three years. The revenue growth of this company seems to have been driven by revenue from paid TV and OTT network but the growth has been slowing.
The first quarter of fiscal 2018 compared with 2017(ended Mar 31, 2018)
Total revenue increased about 1% driven by increase in retransmission revenue offset by decrease in commercial ad revenue.
Fiscal 2017 compared with fiscal 2016
Total revenue decreased about 5% driven by decrease in commercial ad revenue offset by increase in retransmission revenue.
Fiscal 2016 compared with fiscal 2015
Total revenue increased about 8% driven by increase in retransmission and commercial ad revenue.
Its gross margin has been down to about 36% from about 46% in 2018 (12 month trailing) due to continuingly increased programing costs (affiliation fees). With improved SG&A as percentage of sales (about 28%), we have seen that its operating margin was slightly down to about 8% in 2018.
Stock performance
According its acquisition agreement with SINCLAIR BROADCAST GROUP, INC, at May 2017, the company was valued at about $35+$8 at that moment, which implied an about 55 multiple at that moment.
