Sinclair Broadcast Lurches Toward Bankruptcy
Sinclair Broadcast Group Inc. (SBGI) is close to bankruptcy, the company announced yesterday. The Baltimore-based company owns 58 TV stations and is currently crushed under nearly $500 million of debt that must be repaid within the next 18 months. Almost another $1 billion will remain even after paying back the time-sensitive debt.
One of Sinclair’s local marketing partners, Cunningham Broadcasting Corp, which has been labeled a shell corporation Sinclair uses to get around FCC ownership regulations, is in big trouble, too, and could end up bringing down Sinclair with it. In a conference call today, Sinclair leaders said that Cunningham owes $33.5 million and must repay it by the end of this month. If not, Cunningham, which operates six TV stations, could go into bankruptcy, and the subsequent loss of revenue for Sinclair could trigger Sinclair’s bankruptcy at all.
An anonymous analyst on the conference call asked, frustration evident in his voice, “Given the severity that this has … why are we talking about this now? Why was this not discussed earlier?
EVP and CFO David Amy (we think) replied, “I guess it all has to do with the fact that none of us were expecting the degree of this recession.”
No, nobody ever is. And it sounds like despite the fact that Sinclair’s debt is magnitudes more than Cunningham’s, that $30 million is going to bring down a 2500-person company.
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