TV Margins Rise 11 Points to 35% In 1Q

Rising revenue and lower costs in the first quarter contributed to a 11-point year-over-year rebound in the profit margins of publicly traded TV station groups, says investment firm M.C. Alcamo & Co. Revenue in the quarter was up 15.3%. Sinclair boasts the highest margin among "pure plays" at 45%, even though its revenue grew at a subpar 9.6%.
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TVNewsCheck,

The profit margins of TV station groups shot up 11 points to 35% in the first quarter of 2010 on top-line, year-over-year growth of 15.3%, according to an analysis of publicly traded groups by M.C. Alcamo & Co., a New York-based investment firm.

"The Great Recovery of 2010 is underway, and in broadcasting, it is strong," said President Michael Alcamo in a prepared statement. "Not all broadcasters are recovering equally, however," he said. "Some have already shown sharply higher profitability margins, while others will no doubt catch up in coming quarters."

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The 11-point gain in margin (the ratio of EBITDA to revenue) was the result of two factors, Alcamo said. "First, revenue was up 15.3% on the strength of many major categories. This was then magnified by cost controls across the industry."

The analysis is based at the first-quarter earnings of 14 TV station companies, seven so-called pure plays (Belo, Entravision, Fisher, Gray, LIN, Nexstar and Sinclair) and seven "integrated media companies" with substantial businesses other than broadcast TV (Gannett, Journal, Meredith, Media General, Saga, Scripps and Washington Post).

Among the pure plays, Sinclair led the way, posting a 45% margin, up 6 points from 39% in the first quarter of 2009, even though it was a revenue laggard with a subpar 9.6% quarter-over-quarter gain.

Close behind were Nexstar, whose margin increased 15 point to 41%, and Belo, whose margin was up 16 points to 34%.

The margins of the other four pure plays (and their gain over last year): LIN, 35% (up 11 points); Gray, 28% (up 9 points); Entravision, 22% (up 8 points); and Fisher, 14% (up 13 points).

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