BANGALORE, July 14 U.S. TV station owner
Sinclair Broadcast Group Inc (SBGI.O) said a potential
insolvency of its partner, Cunningham Broadcasting, could
trigger its own bankruptcy.
Cunningham Broadcasting, which recently defaulted on
delivering a year-end financial statement under a credit pact,
is Sinclair's local marketing agreement partner for six
Cunningham Broadcasting received a waiver and the bank
group extended payment of $33.5 million, which was due June 30,
by a month, Sinclair said in a conference call with analysts on
Sinclair's marketing agreement with Cunningham was expected
to generate about $77 million in revenue in 2009. Analysts are
expecting total revenue of $634.5 million for the period.
The company, which operates 58 TV stations in 35 U.S.
markets, like most media companies is grappling with a
relentless decline in advertising revenue brought on by the
In a filing with the Securities and Exchange Commission
dated July 10, Sinclair had warned it might have to file for
bankruptcy protection if it fails to refinance its debt.
The company had total outstanding debt of $1.33 billion as
of March 31, it noted in the filing.
Sinclair said negotiations with some of its noteholders on
refinancing options have taken longer than expected due to
Cunningham's financial problems.
The company said it was in talks with Cunningham
Broadcasting to delay or avoid its partner's potential
bankruptcy and may need to amend its marketing agreements.
Cunningham's estimated 2009 direct contribution to
Sinclair's broadcast cash flow was $26.2 million.
Sinclair expects an annual indirect impact of about $24
million to $34 million to its cash flow if it terminates its
agreement with Cunningham.
On July 13, S&P and Moody's lowered their ratings on the
company's debt, saying a default by Cunningham would likely
cause a default under Sinclair's credit facility and accelerate
repayment of debt.
Lower debt ratings make it more expensive for companies to
The Hunt Valley, Maryland-based company said it had
retained CRT as financial adviser and J.P. Morgan as deal
manager to assist with restructuring its debt.
Shares of the company closed down 25 percent at $1.10
Tuesday on Nasdaq. They had touched an all-time low of 85 cents
during the session.
(Reporting by Sayantani Ghosh and Saumyadeb Chakrabarty;
Editing by Vinu Pilakkott)