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How Drew Carey can be blamed for this broadcaster's woes
Don Cornwell picked a great name when he created Granite Broadcasting. Projecting an image of stability could only help as he asked Wall Street for support in building a portfolio of TV stations.
If only Granite had lived up to that image. Sixteen years later, the broadcaster is a crumbled mess. Profits are a trickle, while debt is a tsunami. Operating cash flow doesn't come anywhere close to covering Granite's interest costs. The company is living with the legacy of bad deals and poor operating decisions. NASDAQ delisted Granite's stock in August.
All that gives Granite the unfortunate distinction of being this year's single worst stock in the TV and radio business. Of all the public media companies B&C tracks, Granite is running dead last, off 75% from the beginning of the year.
That could conceivably change in the remaining days of the year (Paxson Communications is close behind), but Deutsche Bank TV analyst Drew Marcus has a sell rating on Granite. Even assuming Cornwell could sell some stations he wants to unload, Marcus estimates the value of Granite stock at zero.
Granite's sales are expected to grow 5% to $113 million, and its cash-flow margins are substantially lower than its peers'. Its $7.3 million in cash flow for 2004 will fall well...