Why Sinclair Broadcasting Shares Jumped
Mar 1st 2013 4:54PM
Updated Mar 1st 2013 5:40PM
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of Sinclair Broadcast Group gained as much as 14% today, after the media company announced plans to buy 18 TV stations for $370 million from Barrington Broadcasting Group.
So what: Sinclair is apparently on the warpath, as this acquisition comes just three days after it spent $99 million on four Cox stations. To avoid FCC conflict rules, Sinclair will sell one of its stations in Syracuse, and another in Peoria -- locations where it's gaining stations from Barrington. The market also seemed to like that Sinclair reached an agreement with DirecTV on a retransmission consent agreement.
Now what: Already one of the biggest independent television broadcasting companies, Sinclair will gain a further hold on the national audience with these deals. Currently, the group reaches 29.8% of American households. At a P/E under nine, and a dividend yield near 4%, Sinclair looks like a solid value play, and the new acquisitions should only help fuel growth. Shares should continue to move higher from here.
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