Sinclair Broadcast Group, Inc. (Nasdaq: SBGI), the "Company" or
"Sinclair," today reported financial results for the three months
ended March 31, 2023.
First Quarter
Highlights:
- Exceeded key financial metrics
- Repurchased approximately 3.6 million common shares
CEO Comment:
"Sinclair is seeing a solid start to 2023, meeting or beating
guidance on all key financial metrics," said Chris Ripley,
Sinclair's President & Chief Executive Officer. "Nonetheless,
we remain cautious for the full year on expectations for a weaker
economy. As we continue our evolution from a traditional broadcast
company to a diversified content and data distributor, we have
begun the process of reorganizing our company structure to increase
transactional flexibility and transparency around the
sum-of-the-parts and to unlock value for our organization. Our end
goal is to create an even more efficient company, designed to use
the breadth of our assets to identify and accelerate growth."
Ripley continued, "This year, we are allocating capital towards
technology that will transform our operational workflow, both
strengthening our returns on investment and improving operational
outcomes. At the same time, the last few months have presented an
opportunity to allocate capital to buying back our shares."
Recent Company
Developments:
- In April, the Company announced that it intends to implement a
reorganization in which a new holding company, Sinclair, Inc.,
would become the publicly-traded parent of Sinclair Broadcast and
its subsidiaries, which will hold the pure-play broadcast assets.
In addition, the Company will create Sinclair Ventures, a
subsidiary of Sinclair Inc., to hold non-broadcast assets. The
reorganization requires shareholder approval scheduled for May 24,
2023.
Content and Distribution:
- Year-to-date, Sinclair's newsrooms have won a total of 44
journalism awards, including two Investigative Reporters and
Editors (IRE) awards.
- In April, the Company announced a distribution agreement with
YouTube TV to add carriage of Tennis Channel, T2, CHARGE! and TBD
to YouTube TV’s service offerings. The agreement also extended
YouTube TV’s existing carriage of Sinclair’s CBS and MyNetworkTV
affiliated television broadcast stations.
- In March, the Company entered into an agreement with fuboTV for
carriage of its CBS stations.
- In April, the Company entered into an agreement with Hulu to
resume carriage of its ABC stations.
Community:
- On April 12, 2023, the Company celebrated its first Sinclair
Day of Service whereby all employees were encouraged to volunteer
that day for charitable causes. Thousands of employees eagerly
turned out to help out in their communities.
- In March, the Company announced a multi-year, national
agreement with USC Shoah Foundation—The Institute for Visual
History and Education to assist with the recording of interviews
with genocide survivors as part of the Institute’s Last Chance
Testimony Collection Initiative, an effort to collect testimonies
from the last living survivors and witnesses to the Holocaust and
other genocides. Under the agreement, Sinclair will provide its
production facilities to film testimonies via high-definition video
and audio recordings taken with state-of-the-art equipment at its
broadcast television stations around the US.
Investment Portfolio:
- As of March 31, 2023, 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 $1.3 billion, or
approximately $19 per share.
- During the first quarter, Sinclair made investments of
approximately $33 million in its portfolio of investments and
received distributions, including exit payments, of approximately
$36 million.
NextGen Broadcasting (ATSC 3.0):
- As of the end of April, the Company launched NextGen Broadcast
in 39 markets, including recent launches in Rochester, NY and Des
Moines, IA. To date, NextGen Broadcast is available in 68% of the
TV households in Sinclair's licensed footprint.
- In April, the Metropolitan Washington Council of Governments
(COG) and Sinclair's ONE Media 3.0 subsidiary, launched the
nation’s first pilot project to use Next Generation Broadcast to
disseminate Advanced Emergency Information. The pilot program
provides an efficient, instantaneous and simultaneous delivery of
emergency messaging sent by local governments to all users for
free, utilizing the over-the-air broadcast platform. The pilot also
demonstrated delivery of enhanced, rich media supplements to those
emergency messages that meet its newsworthy criteria.
- In April, the Company and its partners CAST.ERA, SK Telecom,
and Saankhya Labs, announced they will build and operate an
innovative and interconnected broadcast platform to provide
commercial services and solutions for national data distribution
using NextGen Broadcast (ATSC 3.0) network technology. The NextGen
Broadcast Data Distribution Core Network will provide a wireless
broadcast backbone for IP (Internet Protocol) data delivery across
the country.
Financial Results:
The results below 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 quarter-to-date 2023
consolidated financial results do not include any results of
operations of the Local Sports segment, while the consolidated
financial results for the comparable 2022 period include two months
results of operations of the local sports segment.
Three Months Ended March 31, 2023
Consolidated Financial Results:
- Total revenues decreased 40% to $773 million versus $1,288
million in the prior year period. Media revenues also decreased 40%
to $766 million versus $1,275 million in the same period a year
ago. Excluding DSG, total revenues decreased 7% from $831 million
in the prior year period and media revenues decreased 6% from $818
million.
- Total advertising revenues of $309 million decreased 17% versus
$371 million in the prior year period. Excluding DSG, total
advertising revenues decreased 6% from $328 million in the prior
year period. Core advertising revenues, which excludes political
revenues, were down 14% in the first quarter to $306 million versus
$354 million in the prior year period. Excluding DSG, core
advertising revenues decreased 2% from $311 million in the prior
year period.
- Distribution revenues of $426 million decreased versus $873
million in the same period a year ago. Excluding DSG, distribution
revenues decreased 3% from $440 million in the prior year
period.
- Operating income of $21 million, including non-recurring costs
for transaction and transition services, COVID, legal, and
regulatory costs ("Adjustments") of $6 million, declined versus an
operating income of $3,466 million in the prior year period, which
included Adjustments of $6 million and a $3,357 million gain on
asset dispositions relating to deconsolidating DSG's net liability
("Gain on Deconsolidation"). Operating income, when excluding the
Adjustments, was $27 million compared to an operating income,
excluding Adjustments and Gain on Deconsolidation, of $115 million
for the same prior year period. Excluding DSG, operating income,
excluding Adjustments, decreased 77% from $117 million in the prior
year period.
- Net income attributable to the Company was $185 million versus
net income of $2,587 million in the prior year period. Excluding
Adjustments, the Company had net income of $189 million. Net loss
from DSG in the first two months of 2022 was $94 million.
- Adjusted EBITDA decreased 53% to $120 million from $254 million
in the prior year period. Adjusted EBITDA from DSG in the first two
months of 2022 was $54 million.
- Diluted earnings per common share was $2.64 as compared to
diluted earnings per common share of $35.84 in the prior year
period. On a diluted share basis, the impact of Adjustments was
$(0.07), and the impact of Adjustments and Gain on Deconsolidation
in the prior year period was $35.54.
Segment financial information is included in the following
tables for the periods presented. The Broadcast segment consists
primarily of broadcast television stations, which the Company owns,
operates or to which the Company provides services. Other and
Corporate includes corporate, original networks and content,
including Tennis Channel, non-broadcast digital and internet
solutions, technical services, and other non-media investments.
Three months ended March 31,
2023
Broadcast
Other and Corporate
Eliminations
Consolidated
($ in millions)
Revenue Highlights:
Distribution revenue
$
380
$
46
$
—
$
426
Advertising revenue
268
46
(5
)
309
Other media revenue
28
(a)
4
(1
)
31
Media revenues
$
676
(a)
$
96
$
(6
)
$
766
Non-media revenue
—
8
(1
)
7
Total revenues
$
676
(a)
$
104
$
(7
)
$
773
Expense Highlights:
Media programming & production
expenses and media selling, general and administrative expenses
$
518
$
77
$
(6
)
$
589
Non-media expenses
—
12
—
12
Corporate general and administrative
expenses
33
25
—
58
Other Highlights:
Program contract payments
19
4
—
23
Capital expenditures
19
1
—
20
Interest expense (net) (b)
—
62
(3
)
59
Adjusted EBITDA(c)
120
(a)
Broadcast segment other media revenue
includes $10 million of management and incentive fees for services
provided by the Broadcast segment to DSG and Marquee under
management services agreements which are not eliminated due to the
deconsolidation of the Local Sports segment as of March 1,
2022.
(b)
Interest expense excludes deferred
financing costs, original issue discount amortization, and other
non-cash interest expense, and is net of interest income.
(c)
Adjusted EBITDA is defined as earnings
before interest, tax, depreciation and amortization, and
non-recurring transaction, COVID, legal, and regulatory costs, as
well as certain non-cash items such as stock-based compensation
expense; less program contract payments. Refer to the
reconciliation on the last page of this press release and the
Company's website.
The Broadcast segment presented below consists primarily of
broadcast television stations, which the Company owns, operates or
to which the Company provides services. The Local Sports segment
consists primarily of the RSNs and is included in the first quarter
2022 results only, due to the March 1, 2022 deconsolidation of the
segment from the Company's financial statements. Other and
Corporate includes corporate, original networks and content,
including Tennis Channel, non-broadcast digital and internet
solutions, technical services, and other non-media investments.
Three months ended March 31,
2022
Broadcast
Other and Corporate
Local Sports
Eliminations
Consolidated
($ in millions)
Revenue Highlights:
Distribution revenue
$
392
$
48
$
433
$
—
$
873
Advertising revenue
282
68
44
(23
)
371
Other media revenue
47
(a)
4
5
(25
)
(a)
31
Media revenues
$
721
(a)
$
120
$
482
$
(48
)
(a)
$
1,275
Non-media revenue
—
14
—
(1
)
13
Total revenues
$
721
(a)
$
134
$
482
$
(49
)
(a)
$
1,288
Expense Highlights:
Media programming & production
expenses and media selling, general and administrative expenses
$
506
$
89
$
431
(a)
$
(48
)
(a)
$
978
Sports rights amortization included in
media production expenses
—
—
326
—
326
Non-media expenses
—
14
—
(1
)
13
Corporate general and administrative
expenses
43
3
1
—
47
Other Highlights:
Sports rights payments
—
—
325
—
325
Program contract payments
22
4
—
—
26
Capital expenditures(b)
16
2
2
—
20
Interest expense (net)(c)
1
42
68
(3
)
108
Adjusted EBITDA(d)
254
Note: The highlights above include the
divestiture of Ring of Honor (May 3, 2022).
(a)
Broadcast segment other media revenue
includes $24 million of management and incentive fees for services
provided by the Broadcast segment to the Local Sports segment in
January and February under a management services agreement. Local
Sports segment media expenses include $24 million of management and
incentive fees for services provided by the Broadcast segment to
the Local Sports segment in January and February under a management
services agreement. Such amounts are eliminated in consolidation.
Broadcast segment other media revenue includes $5 million of
management and incentive fees for services provided by the
Broadcast segment to DSG in March under a management services
agreement which are not eliminated due to the deconsolidation of
the Local Sports segment as of March 1, 2022.
(b)
Capital expenditures exclude $1 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 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,
litigation and regulatory costs, as well as certain non-cash items
such as stock-based compensation expense, sports rights
amortization; less sports rights payments, program contract
payments and non-cash gain on asset dispositions. Refer to the
reconciliation on the last page of this press release and the
Company’s website.
Consolidated Balance Sheet and Cash
Flow Highlights of the Company:
- Total Company debt as of March 31, 2023 was $4,258
million.
- Cash and cash equivalents for the Company as of March 31, 2023
was $623 million.
- As of March 31, 2023, 44.4 million Class A common shares and
23.8 million Class B common shares were outstanding, for a total of
68.1 million common shares. During the quarter, the Company
repurchased approximately 3.6 million shares with another
approximate 5.2 million shares repurchased to date in the second
quarter 2023.
- In March, the Company paid a quarterly cash dividend of $0.25
per share.
- In February, the Company purchased the remaining 175,000
outstanding Preferred Units of Diamond Sports Holdings LLC for an
aggregate purchase price of $190 million, representing 95% of the
sum of the remaining unreturned capital contribution of $175
million, and accrued and unpaid dividends up to, but not including,
the date of purchase.
- Routine capital expenditures for the first quarter of 2023 were
$20 million.
Notes:
Certain reclassifications have been made to prior years'
financial information to conform to the presentation in the current
year.
Outlook:
The Company currently expects to achieve the following results
for the three months ending June 30, 2023 and the twelve months
ending December 31, 2023. The expected results for the three months
ending June 30, 2023 do not include the Company's former Local
Sports segment, which was deconsolidated as of March 1, 2022.
For the three months ending June 30,
2023 ($ in millions)
Consolidated
Revenue Highlights:
Advertising revenue
$302 to $313
Distribution revenue
414 to 419
Other media revenue
34
Media revenues
750 to 766
Non-media revenue
7
Total revenues
$757 to $773
Expense Highlights:
Media programming & production
expenses and media selling, general and administrative expenses
$613 to $617
Non-media expenses
$14
Corporate overhead
$42
Stock-based compensation and non-recurring
costs for transaction, legal, and regulatory fees included in
corporate and media expenses above
$23
Depreciation, intangible & programming
amortization
$84
Other Highlights:
Program contract payments
$23
Interest expense (net)(a)
$62
Net cash tax payments
$1
Other items(b)
$3
Total capital expenditures
$28 to $30
Adjusted EBITDA(c)
$84 to $104
Note: Certain amounts may not summarize to
totals due to rounding differences.
(a)
Interest expense excludes deferred
financing costs, original issue discount amortization, and other
non-cash interest expense, and is net of interest income.
(b)
Other items include cash distributions
from equity investments, cash payments made to non-controlling
interest holders, and other cash income and expenses.
(c)
Adjusted EBITDA is defined as earnings
before interest, tax, depreciation and amortization, and
non-recurring transaction, legal, and regulatory costs, as well as
certain non-cash items such as stock-based compensation expense;
less programming payments. Refer to the reconciliation on the last
page of this release and the Company's website.
For the twelve months ending December
31, 2023 ($ in millions)
Consolidated
Expense Highlights:
Media programming & production
expenses and media selling, general and administrative expenses
$2,383 to $2,395
Non-media expenses
$65
Corporate overhead
$168
Stock-based compensation and non-recurring
costs for transaction, legal, and regulatory fees included in
corporate and media expenses above
$78
Depreciation, intangible & programming
amortization
$338
Other Highlights:
Program contract payments
$90
Interest expense (net)(a)
$255
Net cash tax payments
$4
Other items(b)
$37
Total capital expenditures
$115 to $120
Note: Certain amounts may not summarize to
totals due to rounding differences.
(a)
Interest expense excludes deferred
financing costs, original issue discount amortization, and other
non-cash interest expense, and is net of interest income.
(b)
Other items include cash distributions
from equity investments, cash payments made to non-controlling
interest holders, and other cash income and expenses.
Sinclair Conference Call:
The senior management of Sinclair will hold a conference call to
discuss the Company's first quarter 2023 results on Wednesday, May
3, 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 471852.
About Sinclair:
Sinclair 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
March 31,
2023
2022
REVENUES:
Media revenues
$
766
$
1,275
Non-media revenues
7
13
Total revenues
773
1,288
OPERATING EXPENSES:
Media programming and production
expenses
398
758
Media selling, general and administrative
expenses
191
220
Amortization of program contract costs
22
25
Non-media expenses
12
13
Depreciation of property and equipment
24
28
Corporate general and administrative
expenses
58
47
Amortization of definite-lived intangible
assets
41
93
Gain on deconsolidation of subsidiary
—
(3,357
)
Loss (gain) on asset dispositions and
other, net of impairment
6
(5
)
Total operating expenses (gains)
752
(2,178
)
Operating income
21
3,466
OTHER INCOME (EXPENSE):
Interest expense including amortization of
debt discount and deferred financing costs
(74
)
(115
)
Income from equity method investments
31
12
Other income (expense), net
11
(60
)
Total other expense, net
(32
)
(163
)
(Loss) income before income taxes
(11
)
3,303
INCOME TAX BENEFIT (PROVISION)
204
(687
)
NET INCOME
193
2,616
Net loss (income) attributable to the
redeemable noncontrolling interests
4
(4
)
Net income attributable to the
noncontrolling interests
(12
)
(25
)
NET INCOME ATTRIBUTABLE TO SINCLAIR
BROADCAST GROUP
$
185
$
2,587
EARNINGS PER COMMON SHARE ATTRIBUTABLE TO
SINCLAIR BROADCAST GROUP:
Basic earnings per share
$
2.65
$
35.85
Diluted earnings per share
$
2.64
$
35.84
Basic weighted average common shares
outstanding (in thousands)
69,744
72,164
Diluted weighted average common and common
equivalent shares outstanding (in thousands)
69,864
72,176
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
March 31,
2023
2022
Adjusted EBITDA
Net income attributable to Sinclair
Broadcast Group
$
185
$
2,587
Add: (Loss) income from redeemable
noncontrolling interests
(4
)
4
Add: Income from noncontrolling
interests
12
25
Add: Income tax (benefit) provision
(204
)
687
Add: Other expense
—
6
Add: Income from equity method
investments
(31
)
(12
)
Add: Loss from other investments and
impairments
1
54
Add: Interest expense
74
115
Less: Interest income
(12
)
(1
)
Less: Gain on deconsolidation of
subsidiary
—
(3,357
)
Less: Loss (gain) on asset dispositions
and other, net of impairment
6
(5
)
Add: Amortization of intangible assets
& other assets
41
93
Add: Depreciation of property &
equipment
24
28
Add: Stock-based compensation
23
24
Add: Amortization of program contract
costs
22
25
Less: Cash film payments
(23
)
(26
)
Add: Amortization of sports programming
rights
—
326
Less: Cash sports programming rights
payments
—
(325
)
Add: Transaction and transition service,
COVID, legal and other non-recurring expense
6
6
Adjusted EBITDA
$
120
$
254
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/20230503005403/en/
Investor Contacts: Billie-Jo McIntire, AVP, Investor Relations
(410) 568-1500
Media Contact: Sinclair@5wpr.com
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