How Gannett Co., Inc. (GCI)’s Investment in TV Stations Will Payoff

Sinclair Broadcast Group, Inc. (NASDAQ:SBGI)’s largest affiliate contingency is FOX with 24 at the end of March. It also owns a sizable number of MyNetworkTV and CW stations. Although these three station groups combined have only shown modest ad sales increases of late, sales are on the rise. However, expense hikes are likely to hurt profits versus 2012 results this year, partly a reflection of this being a cyclically slow year.

The run up in Sinclair’s share price has reduced its appeal. Still, seeing how the station owner is building its asset base, it is largely justified.

A Fool’s take

Gannett Co., Inc. (NYSE:GCI)’s pending purchase of Belo should have positive ramifications with regard to its profitability and cash flows. Traditional publishing revenue and earnings are retreating, while digital businesses take hold. As of now, Gannett’s digital business is about a third the size of its publishing unit in terms of revenue, with modest margins. The Belo assets should benefit from Gannett’s resources, while it continues to grow its digital operations as well. The station ownership companies on their own are limited in price appreciation potential, but offer good dividend yields.

Damon Churchwell has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Damon is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

The article How Gannett’s Investment in TV Stations Will Payoff originally appeared on Fool.com and is written by Damon Churchwell.

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