Sinclair Broadcast Group, Inc. (Nasdaq: SBGI), the "Company" or
"Sinclair," today reported financial results for the three and
twelve months ended December 31, 2022. The results reflect the
deconsolidation of the local sports segment comprised of the
regional sports networks (RSNs), which are owned and operated by
Diamond Sports Group ("DSG") and its direct and indirect
subsidiaries, from the Company's financial statements and accounted
for under equity method of accounting, effective March 1, 2022. As
such, the year-to-date 2022 consolidated financial results only
include two months results of operations of the local sports
segment, while the consolidated financial results for the
comparable 2021 periods include results of operations of the local
sports segment for the full periods.
Highlights:
- Record 2022 Broadcast and other media revenue increased 10%
compared to 2021
- Record 2022 Broadcast and other total advertising revenue
increased 22% compared to 2021
- Record fourth quarter media revenue of $952 million increased
19% from the same period a year ago
- Record fourth quarter Broadcast and other total advertising
revenue of $503 million increased 58% from the same period a year
ago
CEO Comment:
"Sinclair had a solid finish to 2022, setting records for our
Broadcast and other advertising and distribution revenues. Strong
political revenues were a big factor in the record results,
demonstrating the strong value proposition TV continues to offer in
reaching the masses," said Chris Ripley, Sinclair's President &
Chief Executive Officer. "We entered 2023 financially strong and
are well-positioned to weather whatever economic environment we
face in the year ahead."
Ripley continued, "Our focus remains on raising the bar of the
viewing experience, through providing higher quality programming
and increased functionality and interactivity, engaging the viewer
at a whole new level. We are ramping up our investment in several
areas this year to help drive our business forward, including
investments in technology and in our four growth pillars -
multi-platform content, marketing services, data distribution, and
community & interactivity. We continue to build on our progress
in developing the ATSC 3.0 broadcasting standard which we believe
will offer numerous incremental business use cases for the entire
industry, creating an important diversified revenue stream into the
future. Our leadership position in helping develop the technology
and in validating its market potential position us well to
capitalize on this exciting next chapter of broadcasting."
Recent Company
Developments:
Content and Distribution:
- In 2022, Sinclair's newsrooms won a total of 290 journalism
awards.
- In February 2023, the Company announced that its free,
over-the-air multicast networks COMET, CHARGE!, and TBD will add
2.4 million households through upgraded local broadcast affiliates
and linear carriage. This brings the total new coverage since the
start of 2022 to nearly 17 million households.
Community:
- In January 2023, the Company began taking applications for its
2023 Broadcast Diversity Scholarship, which has awarded more than
$250,000 in tuition assistance since 2013.
Investment Portfolio:
- As of December 31, 2022, the Company estimated the fair market
value of its investment portfolio, which includes investments in
real estate, private equity and venture capital funds, as well as
direct investments in companies, at approximately $1,200 million,
or approximately $17 per share.
- During the fourth quarter 2022, Sinclair made investments of
approximately $8 million into its portfolio of investments and
received distributions, including exit payments, of approximately
$23 million.
- For 2022, the Company’s investment portfolio generated $119
million of cash distributions to Sinclair, with $38 million
attributable to returned capital and $81 million attributed to
gains from sales and distributions of excess profits.
NextGen Broadcasting (ATSC 3.0):
- In November 2022, the Company entered into a Memorandum of
Understanding with Hyundai Mobis, one of the world’s largest
automotive parts and services companies, to collaborate on the
development and implementation of ATSC 3.0-enabled automotive
business models in both Korea and the United States.
- To date, the Company has launched NextGen TV in 36 markets,
including recent launches in Champaign & Springfield - Decatur,
IL and Birmingham/Tuscaloosa, AL. NextGen TV is available in
approximately 65% of the households in Sinclair’s licensed
footprint.
Three Months Ended December 31, 2022
Consolidated Financial Results:
- Total revenues decreased 35% to $960 million versus $1,476
million in the prior year period. Media revenues decreased 35% to
$952 million versus $1,460 million in the prior year period
primarily due to the deconsolidation of DSG on March 1, 2022 (the
‘Deconsolidation’). Excluding DSG, total revenues increased 18% and
media revenues increased 19% compared to the prior year
period.
- Total advertising revenues of $503 million increased 31% versus
$383 million in the prior year period. Excluding DSG, total
advertising revenues increased 58% from $319 million in the prior
year period. Core advertising revenues, which excludes political
revenues, of $331 million were down 9% versus $364 million in the
prior year period. Excluding DSG, core advertising revenues
increased 10% from $301 million in the prior year period. The prior
year period was impacted by a cyber incident which reduced revenues
by an estimated $63 million. Excluding the cyber incident and DSG
results, core advertising revenues for the fourth quarter would
have decreased 9%.
- Distribution revenues of $415 million decreased versus $1,048
million in the prior year period due to the Deconsolidation.
Excluding DSG, distribution revenues decreased 2% from $425 million
in the prior year period.
- Operating income of $253 million, including non-recurring costs
for transaction and transition services, COVID, legal, and
regulatory costs ("Adjustments") of $10 million, increased 52%
versus operating income of $165 million in the prior year period,
which included Adjustments of $19 million. Operating income, when
excluding the Adjustments, was $263 million compared to an
operating income of $184 million in the prior year period.
Excluding DSG, operating income, excluding Adjustments, increased
110% from $125 million in the prior year period.
- Net income attributable to the Company was $55 million versus
net loss of $89 million in the prior year period. Excluding
Adjustments, net income was $63 million. Net loss from DSG in the
prior year period was $69 million.
- Adjusted EBITDA increased 32% to $309 million from $234 million
in the prior year period. Adjusted EBITDA from DSG in the prior
year period was $34 million.
- Diluted earnings per common share was $0.79 as compared to
diluted loss per common share of $1.18 in the prior year period. On
a diluted per-share basis, the impact of Adjustments was ($0.11)
and the impact of Adjustments in the prior year period was ($0.19).
Diluted loss per common share from DSG in the prior year period was
$0.94.
Twelve Months Ended December 31, 2022
Consolidated Financial Results:
- Total revenues decreased 36% to $3,928 million versus $6,134
million in the prior year period. Media revenues decreased 36% to
$3,894 million versus $6,083 million in the prior year period
primarily due to the Deconsolidation. Excluding DSG, total revenues
increased 9% to $3,470 million from $3,187 million in the prior
year period and media revenues increased 10% to $3,436 million from
$3,136 million in the prior year period.
- Total advertising revenues of $1,614 million decreased 5%
versus $1,691 million in the prior year period primarily due to the
Deconsolidation. Excluding DSG, total advertising revenues
increased 22% to $1,570 million from $1,282 million in the prior
year period. Core advertising revenues, which excludes political
revenues, of $1,283 million, were down 22% versus $1,651 million in
the prior year period. Excluding DSG, core advertising revenues
decreased less than 1% to $1,238 million from $1,243 million in the
prior year period.
- Distribution revenues were $2,143 million versus $4,288 million
in the prior year period, decreasing primarily due to the
Deconsolidation. Excluding DSG, distribution revenues increased 3%
to $1,711 million from $1,669 million in the prior year
period.
- Operating income of $3,980 million, including Adjustments of
$33 million and a $3,357 million gain on asset dispositions
relating to deconsolidating DSG's net liability ("Gain on
Deconsolidation"), increased versus operating income of $95 million
in the prior year period, which included Adjustments of $113
million. Operating income excluding the Adjustments and Gain on
Deconsolidation was $656 million compared to an operating income,
excluding Adjustments, of $208 million in the prior year period.
Excluding DSG, operating income excluding Adjustments increased 46%
to $663 million from $454 million in the prior year period.
- Net income attributable to the Company was $2,652 million
versus net loss of $414 million in the prior year period. Excluding
Adjustments and the Gain on Deconsolidation, the Company had a net
income of $74 million. Net loss from DSG in the first two months of
2022 was $94 million and in the prior year twelve month period was
$756 million.
- Adjusted EBITDA decreased 27% to $944 million from $1,300
million in the prior year period. Adjusted EBITDA from DSG in the
first two months of 2022 was $54 million and in the prior year
twelve month period was $547 million.
- Diluted earnings per common share was $37.54 as compared to
diluted loss per common share of $5.51 in the prior year period. On
a diluted per-share basis, the impact of Adjustments and the Gain
on Deconsolidation was $36.49 and the impact of Adjustments in the
prior year period was ($1.16). Diluted loss per common share from
DSG in the prior year period was $10.09.
Consolidated and Segment
Highlights
The highlights below include the divestiture of WDKA and KBSI in
the Cape Girardeau MO/Paducah KY market (February 1, 2021), the
acquisition of ZypMedia (February 5, 2021), the divestiture of the
license assets in Harlingen, TX (May 24, 2021), the divestiture of
Triangle Sign and Service (June 2, 2021), the divestiture of
Sinclair's radio stations in the Seattle, WA market (September 27,
2021), and the divestiture of Ring of Honor (May 3, 2022).
Segment financial information is included in the following
tables for the periods presented. The Broadcast segment consists
primarily of broadcast television stations, which the Company owns,
operates or to which the Company provides services. The Local
Sports segment consisted primarily of the RSNs and is included in
the fourth quarter 2021 results only, due to the March 1, 2022
deconsolidation of the segment from the Company's financial
statements. Other and Corporate includes corporate, original
networks and content, including Tennis Channel, non-broadcast
digital and internet solutions, technical services, and other
non-media investments.
Three months ended December 31,
2022
Broadcast
Other and Corporate
Eliminations
Consolidated
($ in millions)
Revenue Highlights:
Distribution revenue
$
372
$
43
$
—
$
415
Advertising revenue
462
49
(8
)
503
Other media revenue
31
(a)
3
—
34
Media revenues
$
865
(a)
$
95
$
(8
)
$
952
Non-media revenue
—
10
(2
)
8
Total revenues
$
865
(a)
$
105
$
(10
)
$
960
Expense Highlights:
Media programming & production
expenses and media selling, general and administrative expenses
$
527
$
73
$
(8
)
$
592
Non-media expenses
—
10
(1
)
9
Corporate general and administrative
expenses
24
21
—
45
Other Highlights:
Program contract payments
19
6
—
25
Capital expenditures
30
1
—
31
Interest expense (net) (b)
1
55
(3
)
53
Adjusted EBITDA (c)
$
309
(a)
The Broadcast segment other media revenue
includes $12 million of management and incentive fees for services
provided by the Broadcast segment to DSG under a management
services agreement which are not eliminated due to the
deconsolidation of the Local Sports segment as of March 1,
2022.
(b)
Interest expense (net) excludes deferred
financing costs, original issue discount amortization, and other
non-cash interest expense, and is net of interest income.
(c)
Adjusted EBITDA is defined as earnings
before interest, tax, depreciation and amortization, and
non-recurring transaction, COVID, legal, and regulatory costs, as
well as certain non-cash items such as stock-based compensation
expense; less program contract payments. Refer to the
reconciliation on the last page of this press release and the
Company's website.
Three months ended December 31,
2021
Broadcast
Other and Corporate
Local Sports
Eliminations
Consolidated
($ in millions)
Revenue Highlights:
Distribution revenue
$
379
$
46
$
623
$
—
$
1,048
Advertising revenue
276
68
64
(25
)
383
Other media revenue
49
(a)
4
4
(28
)
(a)
29
Media revenues
$
704
$
118
$
691
$
(53
)
$
1,460
Non-media revenue
—
18
—
(2
)
16
Total revenues
$
704
$
136
$
691
$
(55
)
$
1,476
Expense Highlights:
Media programming & production
expenses and media selling, general and administrative expenses
$
512
$
70
$
606
(a)
$
(54
)
(a)
$
1,134
Sports rights amortization included in
media production expenses
—
438
—
438
Non-media expenses
—
16
—
(1
)
15
Corporate general and administrative
expenses
33
3
2
—
38
Other Highlights:
Sports rights payments
—
—
496
—
496
Program contract payments
20
5
—
—
25
Capital expenditures(b)
11
3
2
—
16
Interest expense (net) (c)
1
44
102
(4
)
143
Adjusted EBITDA (d)
$
234
(a)
The Broadcast segment includes $29 million
of revenue for services provided by the Broadcast segment to the
Local Sports segment and Other; the Local Sports segment includes
$29 million of selling, general, and administrative expenses for
services provided by the Broadcast segment to the Local Sports
segment; and Other includes less than $1 million of selling,
general, and administrative expenses for services provided by the
Broadcast segment to Other. Such amounts are eliminated in
consolidation.
(b)
Capital expenditures exclude $2 million of
repack capital expenditures expected to be reimbursed in the future
from the TV Broadcaster Relocation Fund administered by the
FCC.
(c)
Interest expense (net) excludes deferred
financing costs, original issue discount amortization, and other
non-cash interest expense, and is net of interest income.
(d)
Adjusted EBITDA is defined as earnings
before interest, tax, depreciation and amortization, and
non-recurring transaction and transition service, COVID, legal, and
regulatory costs, as well as certain non-cash items such as
stock-based compensation expense and sports rights amortization;
less sports rights payments and program contract payments. Refer to
the reconciliation on the last page of this press release and the
Company's website.
Consolidated Balance Sheet and Cash
Flow Highlights:
- Total Company debt as of December 31, 2022 was $4,265
million.
- Cash and cash equivalents for the Company as of December 31,
2022 was $884 million.
- As of December 31, 2022, 45.8 million Class A common shares and
23.8 million Class B common shares were outstanding, for a total of
69.6 million common shares. During the quarter, the Company
repurchased approximately 300 thousand shares under a Rule 10b5-1
plan.
- In December, the Company paid a quarterly cash dividend of
$0.25 per share.
- Capital expenditures for the fourth quarter of 2022 were $31
million.
Notes:
Certain reclassifications have been made to prior years'
financial information to conform to the presentation in the current
year.
Outlook:
The Company currently expects to achieve the following selected
results for the three months ending March 31, 2023 and twelve
months ending December 31, 2023. All figures shown in the outlook
tables below are rough estimates and presentation with or without
ranges is not meant to suggest precision.
For the three months ending March 31,
2023 ($ in millions)
Consolidated
Revenue Highlights:
Advertising revenue
$297 to 312
Distribution revenue
418 to 423
Other media revenue
33
Media revenues
749 to 768
Non-media revenue
19
Total revenues
$768 to 787
Expense Highlights:
Media programming & production
expenses and media selling, general and administrative expenses
$604 to 610
Non-media expenses
22
Corporate overhead
54
Stock-based compensation and non-recurring
costs for transaction, legal, litigation and regulatory fees
included in corporate and media expenses above
35
Depreciation, intangible & programming
amortization
86
Other Highlights:
Program contract payments
23
Interest expense (net)(a)
60
Net cash tax payments
Less than $1 million
Total capital expenditures
27 to 29
Adjusted EBITDA(b)
$99 to 113
Note: Certain amounts may not summarize to
totals due to rounding differences.
(a)
Interest expense (net) excludes deferred
financing costs, original issue discount amortization, and other
non-cash interest expense, and is net of interest income.
(b)
Adjusted EBITDA is defined as earnings
before interest, tax, depreciation and amortization, and
non-recurring transaction, COVID, legal, litigation and regulatory
costs, as well as certain non-cash items such as stock-based
compensation expense; less programming payments. Refer to the
reconciliation on the last page of this press release and the
Company's website.
For the twelve months ending December 31, 2023 ($ in
millions)
Consolidated
Expense Highlights:
Media programming & production
expenses and media selling, general and administrative expenses
$2,392 to 2,407
Non-media expenses
64
Corporate overhead
159
Stock-based compensation and non-recurring
costs for transaction, legal, litigation and regulatory fees
included in corporate and media expenses above
78
Depreciation, intangible & programming
amortization
338
Other Highlights:
Program contract payments
91
Interest expense (net)(c)
253
Net cash tax payments
8
Total capital expenditures
$115 to 125
Note: Certain amounts may not summarize to
totals due to rounding differences.
(a)
Interest expense (net) excludes deferred
financing costs, original issue discount amortization, and other
non-cash interest expense, and is net of interest income.
(b)
Adjusted EBITDA is defined as earnings
before interest, tax, depreciation and amortization, and
non-recurring transaction, COVID, legal, litigation and regulatory
costs, as well as certain non-cash items such as stock-based
compensation expense; less programming payments. Refer to the
reconciliation on the last page of this press release and the
Company's website.
Sinclair Conference Call:
The senior management of Sinclair will hold a conference call to
discuss its fourth quarter 2022 results on Wednesday, February 22,
2023, at 9:00 a.m. ET. The call will be webcast live and can be
accessed at www.sbgi.net under "Investor Relations/Events and
Presentations." After the call, an audio replay will remain
available at www.sbgi.net. The press and the public will be welcome
on the call in a listen-only mode. The dial-in number is (888)
506-0062, with entry code 793656.
About Sinclair:
Sinclair Broadcast Group, Inc. (Nasdaq: SBGI) is a diversified
media company and a leading provider of local news and sports. The
Company owns, operates and/or provides services to 185 television
stations in 86 markets affiliated with all the major broadcast
networks; owns Tennis Channel and multicast networks Comet, CHARGE!
and TBD; and owns and provides services to 21 regional sports
network brands. Sinclair’s content is delivered via multiple
platforms, including over-the-air, multi-channel video program
distributors, and the nation’s largest streaming aggregator of
local news content, NewsON. The Company regularly uses its website
as a key source of Company information which can be accessed at
www.sbgi.net.
Sinclair Broadcast Group, Inc. and
Subsidiaries
Preliminary Unaudited Consolidated
Statements of Operations
(In millions, except share and per
share data)
Three Months Ended December
31,
Twelve Months Ended December
31,
2022
2021
2022
2021
REVENUES:
Media revenues
$
952
$
1,460
$
3,894
$
6,083
Non-media revenues
8
16
34
51
Total revenues
960
1,476
3,928
6,134
OPERATING EXPENSES:
Media programming and production
expenses
385
901
1,942
4,291
Media selling, general and administrative
expenses
207
233
812
908
Amortization of program contract costs
22
26
90
93
Non-media expenses
9
15
44
57
Depreciation of property and equipment
24
30
100
114
Corporate general and administrative
expenses
45
38
160
170
Amortization of definite-lived intangible
and other assets
42
113
221
477
Gain on deconsolidation of subsidiary
—
—
(3,357
)
—
Gain on asset dispositions and other, net
of impairment
(27
)
(45
)
(64
)
(71
)
Total operating expenses (gains)
707
1,311
(52
)
6,039
Operating income
253
165
3,980
95
OTHER (EXPENSE) INCOME:
Interest expense including amortization of
debt discount and deferred financing costs
(68
)
(152
)
(296
)
(618
)
(Loss) gain from extinguishment of
debt
—
(7
)
3
(7
)
Income from equity method investments
8
22
56
45
Other income (expense), net
26
(73
)
(129
)
(14
)
Total other expense, net
(34
)
(210
)
(366
)
(594
)
Income (loss) before income taxes
219
(45
)
3,614
(499
)
INCOME TAX (PROVISION) BENEFIT
(157
)
4
(913
)
173
NET INCOME (LOSS)
62
(41
)
2,701
(326
)
Net income attributable to the redeemable
noncontrolling interests
(6
)
(5
)
(20
)
(18
)
Net income attributable to the
noncontrolling interests
(1
)
(43
)
(29
)
(70
)
NET INCOME (LOSS) ATTRIBUTABLE TO SINCLAIR
BROADCAST GROUP
$
55
$
(89
)
$
2,652
$
(414
)
EARNINGS PER COMMON SHARE ATTRIBUTABLE TO
SINCLAIR BROADCAST GROUP:
Basic earnings (loss) per share
$
0.79
$
(1.18
)
$
37.54
$
(5.51
)
Diluted earnings (loss) per share
$
0.79
$
(1.18
)
$
37.54
$
(5.51
)
Basic weighted average common shares
outstanding (in thousands)
69,680
74,996
70,653
75,050
Diluted weighted average common and common
equivalent shares outstanding (in thousands)
69,680
74,996
70,656
75,050
The Company considers Adjusted EBITDA to be an indicator of the
operating performance of its assets. The Company also believes that
Adjusted EBITDA is frequently used by industry analysts, investors
and lenders as a measure of valuation.
Non-GAAP measures are not formulated in accordance with GAAP,
are not meant to replace GAAP financial measures and may differ
from other companies’ uses or formulations. The Company does not
provide reconciliations on a forward-looking basis. Further
discussions and reconciliations of the Company's non-GAAP financial
measures to comparable GAAP financial measures can be found on its
website www.SBGI.net.
Sinclair Broadcast Group, Inc. and
Subsidiaries
Reconciliation of Non-GAAP Measurements
- Unaudited
All periods reclassified to conform
with current year GAAP presentation
(in millions)
Three Months Ended December
31,
Twelve Months Ended December
31,
2022
2021
2022
2021
Adjusted EBITDA Reconciliation
Net income (loss) attributable to Sinclair
Broadcast Group
$
55
$
(89
)
$
2,652
$
(414
)
Add: Income from the redeemable
noncontrolling interests
6
5
20
18
Add: Income from the noncontrolling
interests
1
43
29
70
Add: Provision (benefit) for income
taxes
157
(4
)
913
(173
)
Add: Other (income) expense
(2
)
(21
)
9
(21
)
Add: Income from equity method
investments
(8
)
(22
)
(56
)
(45
)
Add: (Income) loss from other investments
and impairments
(11
)
94
143
36
Add: Loss (gain) from extinguishment of
debt/insurance proceeds
—
7
(3
)
7
Add: Interest expense
68
152
296
618
Less: Interest income
(13
)
(1
)
(23
)
(1
)
Less: Gain on deconsolidation of
subsidiary
—
—
(3,357
)
—
Less: Gain on asset dispositions and
other, net of impairment
(27
)
(45
)
(64
)
(71
)
Add: Amortization of intangible assets
& other assets
42
113
221
477
Add: Depreciation of property &
equipment
24
30
100
114
Add: Stock-based compensation
10
10
43
65
Add: Amortization of program contract
costs
22
26
90
93
Less: Cash film payments
(25
)
(25
)
(103
)
(102
)
Add: Amortization of sports programming
rights
—
438
326
2,350
Less: Cash sports programming rights
payments
—
(496
)
(325
)
(1,834
)
Add: Transaction and transition service,
COVID, legal and other non-recurring expense
10
19
33
113
Adjusted EBITDA
$
309
$
234
$
944
$
1,300
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 rate of decline in the number of subscribers to services
provided by traditional multi-channel video programming
distributors; the Company’s ability to generate cash to service its
substantial indebtedness; the successful execution of outsourcing
agreements; the successful execution of retransmission consent
agreements; the successful execution of network and MVPD
affiliation agreements; the Company’s ability to compete for
viewers and advertisers; pricing and demand fluctuations in local
and national advertising; volatility in programming costs; the
potential impacts of the war in Ukraine and the COVID-19 pandemic
on the Company’s business operations, financial results and
financial position and on the world economy; the market acceptance
of new programming; the Company’s ability to identify and
consummate acquisitions and investments, to manage increased
leverage resulting from acquisitions and investments, and to
achieve anticipated returns on those investments once consummated;
the impact of any loss of key personnel, including talent; the
impact of pending and future litigation claims against the Company;
material legal, financial and reputational risks and operational
disruptions resulting from a breach of the Company’s information
systems, including due to the cybersecurity event in October 2021;
the impact of FCC and other regulatory proceedings against the
Company; uncertainties associated with potential changes in the
regulatory environment affecting the Company’s business and growth
strategy, and any risk factors set forth in the Company's recent
reports on 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.
Category: Financial
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230222005315/en/
Investor Contacts: Steve Zenker, SVP, Investor Relations
Billie-Jo McIntire, AVP, Investor Relations (410) 568-1500
Media Contact: Sinclair@5wpr.com
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