BALTIMORE, Feb. 22, 2017 /PRNewswire/ -- Sinclair Broadcast
Group, Inc. (Nasdaq: SBGI), the "Company" or "Sinclair," today
reported financial results for the three months and year ended
December 31, 2016.
"With the spectrum auction coming to an end and the potential
for deregulation on the horizon, we expect 2017 to be a pivotal
year for Sinclair and the broadcast industry," commented
David Smith, Executive
Chairman. "Additionally, the Federal Communications
Commission is in process of conducting a rulemaking proceeding for
the use of ATSC 3.0 (the Next Generation Broadcast Standard), which
we expect will result in its approval later this year. The
new technology is expected to revolutionize the broadcast industry
and provide for new business opportunities, products and
services. We anticipate the long-awaited deregulation of the
industry's antiquated rules and the end of the spectrum quiet
period to spur consolidation; a positive given that our industry
has been prohibited from competing on a level playing field with
other forms of media."
Three Months Ended December 31,
2016 Financial Results:
- Total revenues increased 30.4% to $797.7
million, versus $611.8 million
in the prior year period.
- Operating income was $233.4
million, an increase of 87.9%, versus operating income of
$124.2 million in the prior year
period.
- Net income attributable to the Company was $120.9 million, versus net income of $58.2 million in the prior year period.
- Diluted earnings per common share were $1.32 as compared to $0.61 in the prior year period.
Year Ended December 31,
2016 Financial Results:
- Total revenues increased 23.3% to $2.737
billion, versus $2.219 billion
in the prior year period.
- Operating income was $602.9
million, an increase of 42.6%, versus operating income of
$422.7 million in the prior year
period.
- Net income attributable to the Company was $245.3 million, versus net income of $171.5 million in the prior year
period.
- Diluted earnings per common share were $2.60 as compared to $1.79 in the prior year
period.
Three Months Ended December 31,
2016 Operating Highlights:
- Media revenues, before barter, increased 33.1% to $726.7 million versus $545.9 million in the fourth quarter of
2015.
- Political revenues were $113.2
million versus $11.8 million
in the fourth quarter of 2015.
- Revenues from our digital offerings increased 21% in the fourth
quarter as compared to the fourth quarter of 2015.
Recent Corporate Developments:
Content and Distribution:
- In February 2017, the Company
launched TBD, the first multiscreen TV network in the U.S. market
to bring premium internet-first content to TV homes across America.
TBD will include web series, short films, fashion, comedy,
lifestyle, eSports, music and viral content, through partnerships
with creators.
- In February 2017, the Company
together with Metro-Goldwyn-Mayer ("MGM"), will launch CHARGE!, a
new 24/7 adventure and action-based network featuring more than
2,300 hours of TV series content and more than 2,000 movie
titles.
- In January 2017, Circa launched a
new user-generated platform empowering college students to provide
video content about news and entertainment events on their campuses
via widgets available on Circa's web site and social media
pages.
- Effective February 1, 2017, the
Company reached an agreement in principle to renew its
retransmission consent agreement with Frontier Cable for carriage
of KOMO (ABC in Seattle,
Washington), KATU (ABC in Portland, Oregon), and Tennis
Channel.
- In February 2017, the Company
extended its programming agreement with MyNetworkTV through the
2017-2018 broadcast season.
Spectrum Auction:
- In February 2017, the Company
announced that it expects to receive an estimated $313 million of gross proceeds as a result of the
National Broadband Plan Spectrum Auction. The results of the
auction are not expected to produce any material change in
operations or results for the Company. The proceeds are
expected to be received later this year.
Other:
- The Company announced that it is accepting applications for the
second year of its Broadcast Diversity Scholarship Fund and intends
to distribute up to $50,000 in grants
in 2017 to help minority students finance undergraduate educations
in broadcasting or journalism.
Balance Sheet and Cash Flow Highlights:
- Debt on the balance sheet, net of $260
million in cash and cash equivalents, was $3.944 billion at December
31, 2016 versus net debt of $4.102
billion at September 30,
2016.
- In January, the Company extended the maturity date of its term
B loans (the "Loans") from April 9,
2020 and July 31, 2021 to
January 3, 2024. In connection
with the extension, the Company added additional operating
flexibility, including a reduction in certain pricing terms related
to the Loans and its existing revolving credit facility and
revisions to certain covenant ratio requirements.
- As of December 31, 2016, 64.6
million Class A common shares and 25.7 million Class B common
shares were outstanding, for a total of 90.2 million common shares
outstanding.
- The Company repurchased $10.5
million or 0.4 million shares of its Class A common stock
since its last quarterly reported earnings on November 2, 2016. As of December 31, 2016, $119
million of remaining buyback authorization exists.
- In December 2016, the Company
paid a $0.18 per share quarterly cash
dividend to its shareholders.
- Capital expenditures in the fourth quarter of 2016 were
$26 million.
- Program contract payments were $27
million in the fourth quarter of 2016.
Notes:
Presentation of financial information for the prior year has
been reclassified to conform to the presentation of generally
accepted accounting principles for the current year.
Outlook:
"2017 is off to a productive start with the launch of two
emerging multicast networks, TBD and CHARGE!, which join our
already successful multicast network, COMET," commented
Chris Ripley, President and Chief
Executive Officer. "Our other platforms continue to grow with
increased distribution of Tennis Channel and double digit percent
growth in our digital revenues. In addition, the auction
proceeds will provide us additional optionality to further grow the
Company and create value for our shareholders."
The following transactions closed during 2016 and, therefore,
the results of these transactions were not included in the
corresponding 2016 pre-transaction periods: the acquisition of the
South Bend station and sale of the Marquette station (February 15, 2016), the acquisition of Tennis
Channel (March 1, 2016), the
acquisition of the Lincoln stations (May 1,
2016), the acquisition of the Salt Lake City station, KJZZ
(IND) (June 17, 2016), and the swap
of the ABC and CW affiliation in Peoria for the Fox affiliation in
South Bend (August 1, 2016).
The Company currently expects to achieve the following results
for the three months ending March 31,
2017 and year ending December
31, 2017. Unless noted, anticipated results exclude
the Spectrum Auction results and the upcoming FCC spectrum
repack.
First Quarter 2017
- Media revenues, before barter, are expected to be approximately
$602.0 million to $606.7 million, up
13% to 14% year-over-year. Embedded in these anticipated
results are:
- $1.5 million to $2.0 million in
political revenues as compared to $24
million in the first quarter of 2016.
- Barter and trade revenue are expected to be approximately
$23 million in the first quarter of
2017.
- Barter expense is expected to be approximately $19 million. $4
million of trade expense is included in television expenses
(defined below).
- Media production expenses and media selling, general and
administrative expenses (together, "media expenses"), excluding
barter expense but including trade expense, are expected to be
approximately $387 million, including
$2 million in stock-based
compensation expense.
- Program contract amortization expenses are expected to be
approximately $31 million.
- Program contract payments are expected to be approximately
$29 million.
- Corporate overhead is expected to be approximately $20 million, including $5
million of stock-based compensation expense.
- Research and development costs related to ONE Media are
expected to be $2 million.
- Other non-media revenues less other non-media expenses are
expected to be $4 million, assuming
current equity interests.
- Depreciation on property and equipment is expected to be
approximately $23 million, assuming
the capital expenditure assumption below.
- Amortization of acquired intangibles is expected to be
approximately $47 million.
- Net interest expense is expected to be approximately
$58 million ($56 million on a cash basis), assuming no changes
in the current interest rate yield curve and changes in debt levels
based on the assumptions discussed in this "Outlook" section.
This amount includes $6 million in
financing costs related to the January
2017 amend and extend of the term B loans.
- Net cash taxes paid are expected to be approximately
$1 million, based on the assumptions
discussed in this "Outlook" section. The Company's effective
tax rate is expected to be approximately 35%.
- Capital expenditures are expected to be approximately
$27 million.
Full Year 2017
- Barter and trade revenue is expected to be approximately
$116 million.
- Barter expense is expected to be approximately $100 million. $16
million of trade expense is included in television
expenses.
- Media production expenses and media selling, general and
administrative expenses (together, "media expenses"), excluding
barter expense but including trade expense, are expected to be
approximately $1.588 billion,
including $8 million of stock-based
compensation expense, and $220
million related to acquisitions, revenue-generating
initiative costs, and system upgrades.
- Program contract amortization expense is expected to be
approximately $115 million.
- Program contract payments are expected to be approximately
$112 million.
- Corporate overhead is expected to be approximately $70 million, including $8
million of stock-based compensation expense.
- Research and development costs related to ONE Media are
expected to be $16.
- Other non-media revenues less other non-media expenses are
expected to be $26 million, assuming
current equity interests.
- We expect to record a pre-tax gain on the proceeds from the
Auction of approximately $310 million
for the year.
- Depreciation on property and equipment is expected to be
approximately $95 million, assuming
the capital expenditure assumption below.
- Amortization of acquired intangibles is expected to be
approximately $184
million.
- Net interest expense is expected to be approximately
$216 million (approximately
$208 million on a cash basis),
assuming no changes in the current interest rate yield curve, and
changes in debt levels based on recent corporate developments and
the assumptions discussed in this "Outlook" section. This
amount includes $6 million in
financing costs related to the January
2017 amend and extend of the term B loans.
- Net cash taxes paid are expected to be approximately
$133 million, excluding taxes on the
gross proceeds from the Auction and based on the assumptions
discussed in this "Outlook" section. The Company's effective
tax rate is expected to be approximately 35%.
- Capital expenditures are expected to be $90 million, excluding capital expenditures that
may be incurred for the FCC's spectrum repack.
Sinclair Conference Call:
The senior management of Sinclair will hold a conference call to
discuss its fourth quarter 2016 results on Wednesday, February 22, 2017, at 9:30 a.m. ET. After the call, an audio
replay will be available at www.sbgi.net under "Investors/Earnings
Webcast." The press and the public will be welcome on the
call in a listen-only mode. The dial-in number is (877)
407-8033.
About Sinclair:
Sinclair is one of the largest and most diversified television
broadcasting companies in the country. The Company currently owns,
operates and/or provides services to 173 television stations in 81
markets, broadcasting 505 channels and having affiliations with all
the major networks. Sinclair is a leading local news provider in
the country, as well as a producer of live sports content.
Sinclair's content is delivered via multiple-platforms, including
over-the-air, multi-channel video program distributors, and digital
platforms. The Company regularly uses its website as a key source
of Company information which can be accessed at www.sbgi.net.
Forward-Looking Statements:
The matters discussed in this news release, particularly those
in the section labeled "Outlook," include forward-looking
statements regarding, among other things, future operating
results. When used in this news release, the words "outlook,"
"intends to," "believes," "anticipates," "expects," "achieves,"
"estimates," and similar expressions are intended to identify
forward-looking statements. Such statements are subject to a
number of risks and uncertainties. Actual results in the
future could differ materially and adversely from those described
in the forward-looking statements as a result of various important
factors, including and in addition to the assumptions set forth
therein, but not limited to, the impact of changes in national and
regional economies, the length of time it takes for the FCC to
complete the remaining steps in the auction, the volatility in the
U.S. and global economies and financial credit markets which impact
our ability to forecast or refinance our indebtedness as its comes
due, successful execution of outsourcing agreements, pricing and
demand fluctuations in local and national advertising, volatility
in programming costs, the market acceptance of new programming, the
CW Television and MyNetworkTV programming, our news share strategy,
our sales initiatives, the execution of retransmission consent
agreements, our ability to identify and consummate investments in
attractive non-television assets and to achieve anticipated returns
on those investments once consummated, uncertainties associated
with potential changes in the regulatory environment affecting our
business and growth strategy, and any risk factors set forth in the
Company's recent reports on Form 8-K, Form 10-Q and/or Form 10-K,
as filed with the Securities and Exchange Commission.. There
can be no assurances that the assumptions and other factors
referred to in this release will occur. The Company
undertakes no obligation to publicly release the result of any
revisions to these forward-looking statements except as required by
law.
Sinclair Broadcast
Group, Inc. and Subsidiaries
Preliminary
Unaudited Consolidated Statements of Operations
(In thousands,
except per share data)
|
|
|
Three Months
Ended
December 31,
|
|
Twelve Months
Ended
December 31,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
REVENUES:
|
|
|
|
|
|
|
|
Media
revenues
|
$
|
726,689
|
|
|
$
|
545,858
|
|
|
$
|
2,499,549
|
|
|
$
|
2,011,946
|
|
Revenues realized
from station barter arrangements
|
42,992
|
|
|
31,387
|
|
|
135,566
|
|
|
111,337
|
|
Other non-media
revenues
|
28,010
|
|
|
34,544
|
|
|
101,834
|
|
|
95,853
|
|
Total
revenues
|
797,691
|
|
|
611,789
|
|
|
2,736,949
|
|
|
2,219,136
|
|
OPERATING
EXPENSES:
|
|
|
|
|
|
|
|
Media production
expenses
|
250,712
|
|
|
192,645
|
|
|
953,089
|
|
|
733,199
|
|
Media selling,
general and administrative expenses
|
131,420
|
|
|
120,640
|
|
|
501,589
|
|
|
431,728
|
|
Expenses realized
from barter arrangements
|
37,589
|
|
|
26,306
|
|
|
116,954
|
|
|
93,204
|
|
Amortization of
program contract costs and net realizable
value adjustments
|
31,158
|
|
|
34,605
|
|
|
127,880
|
|
|
124,619
|
|
Other non-media
expenses
|
22,702
|
|
|
24,815
|
|
|
80,648
|
|
|
71,803
|
|
Depreciation and
amortization of property and equipment
|
24,199
|
|
|
27,495
|
|
|
98,529
|
|
|
103,433
|
|
Corporate general and
administrative expenses
|
18,884
|
|
|
18,173
|
|
|
73,556
|
|
|
64,246
|
|
Amortization of
definite-lived intangible and other assets
|
46,598
|
|
|
42,015
|
|
|
183,795
|
|
|
161,454
|
|
Research and
development expenses
|
1,030
|
|
|
881
|
|
|
4,085
|
|
|
12,436
|
|
(Gain) loss on asset
disposition
|
(47)
|
|
|
(28)
|
|
|
(6,029)
|
|
|
278
|
|
Total operating
expenses
|
564,245
|
|
|
487,547
|
|
|
2,134,096
|
|
|
1,796,400
|
|
Operating
income
|
233,446
|
|
|
124,242
|
|
|
602,853
|
|
|
422,736
|
|
OTHER INCOME
(EXPENSE):
|
|
|
|
|
|
|
|
Interest expense and
amortization of debt discount and
deferred financing costs
|
(54,324)
|
|
|
(48,569)
|
|
|
(211,143)
|
|
|
(191,447)
|
|
Loss from
extinguishment of debt
|
—
|
|
|
—
|
|
|
(23,699)
|
|
|
—
|
|
(Loss) Income from
equity investments and cost method
|
(1,054)
|
|
|
(4,441)
|
|
|
1,735
|
|
|
964
|
|
Other income,
net
|
789
|
|
|
320
|
|
|
3,144
|
|
|
1,540
|
|
Total other
expense
|
(54,589)
|
|
|
(52,690)
|
|
|
(229,963)
|
|
|
(188,943)
|
|
Income before income
taxes
|
178,857
|
|
|
71,552
|
|
|
372,890
|
|
|
233,793
|
|
INCOME TAX
PROVISION
|
(56,357)
|
|
|
(10,723)
|
|
|
(122,128)
|
|
|
(57,694)
|
|
NET INCOME
|
122,500
|
|
|
60,829
|
|
|
250,762
|
|
|
176,099
|
|
Net income
attributable to the noncontrolling interests
|
(1,603)
|
|
|
(2,630)
|
|
|
(5,461)
|
|
|
(4,575)
|
|
NET INCOME
ATTRIBUTABLE TO SINCLAIR
BROADCAST GROUP
|
$
|
120,897
|
|
|
$
|
58,199
|
|
|
$
|
245,301
|
|
|
$
|
171,524
|
|
Dividends declared
per share
|
$
|
0.180
|
|
|
$
|
0.165
|
|
|
$
|
0.705
|
|
|
$
|
0.660
|
|
EARNINGS PER COMMON
SHARE ATTRIBUTABLE
TO SINCLAIR BROADCAST GROUP:
|
|
|
|
|
|
|
|
Basic earnings per
share
|
$
|
1.34
|
|
|
$
|
0.62
|
|
|
$
|
2.62
|
|
|
$
|
1.81
|
|
Diluted earnings per
share
|
$
|
1.32
|
|
|
$
|
0.61
|
|
|
$
|
2.60
|
|
|
$
|
1.79
|
|
Weighted average
common shares outstanding
|
90,507
|
|
|
94,580
|
|
|
93,567
|
|
|
95,003
|
|
Weighted average
common and common equivalent shares
outstanding
|
91,357
|
|
|
95,405
|
|
|
94,433
|
|
|
95,728
|
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/sinclair-reports-fourth-quarter-2016-financial-results-300411174.html
SOURCE Sinclair Broadcast Group, Inc.