BALTIMORE, Aug. 7, 2019
/PRNewswire/ -- Sinclair Broadcast Group, Inc. (Nasdaq: SBGI),
the "Company" or "Sinclair," today reported financial results for
the three and six months ended June 30,
2019.
CEO Comment:
"We continue to make great strides in the transformation of
Sinclair to a diversified media company," commented Chris Ripley, President and Chief Executive
Officer. "We have closed on the bond financing and
successfully syndicated the bank financing to fund the acquisition
of the FOX RSNs, which we anticipate, subject to regulatory
approval, will close during the third quarter of 2019. On the
broadcast side, we achieved, and in some cases exceeded, our second
quarter guidance in all key financial metrics, and we renewed a
multi-year carriage agreement with one of the country's largest
multi-video program distributors. As a leading news
organization, our stations have won 328 news awards so far this
year."
Three Months Ended June 30,
2019 Financial Results:
- Total revenues increased 5.6% to $771
million versus $730 million in
the prior year period.
- Media expenses, defined as Media Production and Media Selling,
General & Administration expenses, were $500 million versus $452
million in the prior year period.
- Operating income was $106
million, including $28 million
of non-recurring costs for legal, regulatory, and transactions
versus operating income of $132
million in the prior year period, which included
$6 million of non-recurring costs for
legal, regulatory and transactions.
- Net income attributable to the Company was $42 million versus net income of $28 million in the prior year period.
- Diluted earnings per common share was $0.45 as compared to $0.27 in the prior year period. The impact
of non-recurring costs for legal, regulatory and transactions in
2019, on a per-share basis, was $(0.25) and the impact of non-recurring costs for
legal, regulatory, transactions and financing ticking fees in 2018
was $(0.35).
Six Months Ended June 30, 2019
Financial Results:
- Total revenues increased 7.0% to $1,493
million versus $1,395 million
in the prior year period.
- Media expenses, defined as Media Production and Media Selling,
General & Administration expenses, were $979 million versus $887
million in the prior year period.
- Operating income was $200
million, including $30 million
of non-recurring costs for legal, regulatory, and transactions
versus operating income of $239
million in the prior year period, which included
$10 million of non-recurring costs
for legal, regulatory and transactions.
- Net income attributable to the Company was $64 million versus net income of $71 million in the prior year period.
- Diluted earnings per common share was $0.69 as compared to $0.69 in the prior year period. The impact
of non-recurring costs for legal, regulatory and transactions in
2019, on a per-share basis, was $(0.27) and the impact of non-recurring costs for
legal, regulatory, transactions, financing ticking fees and net
gains on asset dispositions in 2018 was $0.29.
Three Months Ended June 30,
2019 Operating Highlights:
- Media revenues increased 3.6% to $721
million versus $696 million in
the second quarter of 2018.
-
- Political revenues were $3
million in the second quarter versus $28 million in the second quarter of 2018, an
election year.
- Distribution revenues were $367
million versus $319 million in
the second quarter of 2018.
- Revenues from our digital businesses increased 30%, as compared
to the second quarter of 2018.
Recent Corporate Developments:
Transactions:
- On August 2, 2019, the Company
announced that in connection with its $9.6
billion pending and previously announced acquisition of a
regional sports networks business ("RSN") from The Walt Disney
Company, its indirect wholly-owned subsidiaries, Diamond Sports
Group, LLC ("Diamond") and Diamond Sports Finance Company, closed
their previously announced private offering of $3.050 billion aggregate principal amount of
Senior Secured Notes due 2026 bearing interest at a rate of 5.375%
and $1.825 billion aggregate
principal amount of Senior Notes due 2027 bearing interest at a
rate of 6.625%. The proceeds have been deposited into escrow.
The RSN acquisition is expected to close in the third quarter of
2019, subject to antitrust regulatory approval.
- Also, in connection with the RSN acquisition and subject to
satisfaction of customary closing conditions, including the
consummation of the RSN acquisition, Diamond raised $3.3 billion of seven-year term B loan
commitments, priced at LIBOR plus 3.25% and a $650 million five-year revolving credit facility,
priced at LIBOR plus 3.00%. In addition, subject to
satisfaction of customary closing conditions, including the
consummation of the RSN acquisition, the Company's wholly-owned
subsidiary, Sinclair Television Group, Inc. ("STG"), raised
$700 million of seven-year
incremental term B loan commitments (the "STG Term Loans"), priced
at LIBOR plus 2.50% and expects to amend and extend its revolving
credit facility from $485 million to
$650 million which will mature five
years after the closing date and is priced at LIBOR plus
2.00%. STG's existing bank credit facility will also be
amended to provide for additional operating flexibility. The
net proceeds of the term loans will be used to fund a portion of
the purchase price for the RSN acquisition.
Content and Distribution:
- In July 2019, the Company
announced a multi-year agreement with Charter Communications, Inc.
for the continued carriage of the Company's broadcast television
stations and Tennis Channel, as well as carriage of Marquee Sports
Network when it launches in the first quarter of 2020. The
agreement also provides for a term extension for the carriage of
currently carried RSNs that is effective upon the closing of the
RSN acquisition.
- In July 2019, the Company
released its Compulse360 offering, a new daily OTT reporting
platform for CompulseOTT, providing advertisers near real-time
campaign evaluation so they can optimize their advertising efforts
in-flight.
- Year-to-date, Sinclair's newsrooms have won a total of 328
national and regional journalism awards, including four National
RTDNA Edward R. Murrow awards and the prestigious Investigative
Reporters and Editors award for "Best in Investigative Reporting"
in the Broadcast/Video category for Division III, which spans
television stations in market sizes 21-50.
Community:
- In June, the Company, in partnership with the Salvation Army,
held a nationwide day of giving, with its stations participating in
on-air, digital and social media efforts to encourage viewers to
donate and help local communities recover from damage caused by
tornadoes and floods in the Midwest. In total, the initiative
raised $56,000, with Sinclair
providing an additional donation of $25,000.
- In July, the Company awarded its Broadcast Diversity
Scholarship to eight applicants, distributing $25,000 in aggregate tuition assistance to
students demonstrating a promising future in the broadcast
industry.
ATSC 3.0:
- In July 2019, the Company's ONE
Media 3.0 subsidiary announced an agreement with Saankhya Labs to
accelerate the development of a 5G Next Generation Broadcast
Offload Platform.
Balance Sheet and Cash Flow Highlights:
- Debt on the balance sheet, net of $929
million in cash, cash equivalents and restricted cash, was
$2.859 billion as of June 30,
2019 versus net debt of $2.908
billion as of March 31, 2019.
- The Company announced that STG intends to redeem, in full,
$600.0 million of 5.375% Senior
Unsecured Notes due 2021 (the "2021 Notes") on August 13, 2019. The Notes were called at
100.0% of their par value. The redemption is contingent on
STG's closing of $600 million of
incremental term B loans (the "STG Incremental Term Loans").
The STG Incremental Term Loans will have the same pricing terms as
the STG Term Loans and will become effective upon satisfaction of
customary closing conditions including the concurrent redemption of
the 2021 Notes.
- As of June 30, 2019, 67.0 million Class A common shares
and 25.0 million Class B common shares were outstanding, for a
total of 92.1 million common shares outstanding. During the
three months ended June 30, 2019, the
Company repurchased 0.5 million shares for $20 million. $743
million share repurchase capacity remains outstanding.
- In June 2019, the Company paid a $0.20 per share quarterly cash dividend to its
shareholders.
- Routine capital expenditures in the second quarter of 2019 were
$21 million with another $12 million related to the spectrum repack.
- Program contract payments were $24
million in the second quarter of 2019.
Notes:
Certain reclassifications have been made to prior years'
financial information to conform to the presentation in the current
year.
Outlook:
The Company currently expects to achieve the following results
for the three months ending September 30, 2019 and twelve
months ending December 31, 2019. The outlook does not
include the pending RSN acquisition.
2019 Outlook ($ in
millions)
|
Third
Quarter
|
Full
Year
|
Media
Revenues
|
$695 to
$703
|
No estimate
provided
|
Political Revenues
Included in Media Revenues
|
$3 to $4
|
|
Distribution Revenues
Included in Media Revenues
|
$363 to
$366
|
|
Media Revenue Related
to Revenue-generating Initiatives
|
$19
|
|
Media Production
Expenses and Media Selling, General and Administrative
Expenses (together, "Media Expenses")
|
$500 to
$502
|
$1,979 to
$1,981
|
Media Expenses
Related to Revenue-generating Initiatives
|
$29
|
$111
|
Stock-based
Compensation Expense
|
$4
|
$18
|
Non-media
Revenues
|
$49
|
$197
|
Program Contract
Payments
|
$23
|
$94
|
Corporate
Overhead
|
$56
|
$163
|
Stock-based Compensation
Expense
|
$3
|
$19
|
Non-recurring costs
for legal, regulatory and transactions
|
$34
|
$71
|
Non-media Expenses,
Including ONE Media and Research and Development Costs
|
$47
|
$172
|
Program Contract
Amortization
|
$22
|
$91
|
Depreciation on
Property and Equipment
|
$23
|
$93
|
Amortization of
Acquired Intangibles
|
$44
|
$174
|
Net Gains on Asset
Dispositions
|
$24
|
$63
|
Net Interest
Expense
|
$50
|
$194
|
Net Interest Expense
- Cash Basis
|
$46
|
$185
|
Equity Method
Investments Loss
|
$12
|
$49
|
Effective Tax Rate
Provision (Benefit)
|
(50)%
|
(2)%
|
Net Cash Taxes
Paid
|
Less than
$1
|
$31
|
Total Capital
Expenditures, Including Repack
|
$52
|
$192 to
$202
|
Repack Capital
Expenditures
|
$22
|
$82
|
Sinclair Conference Call:
The senior management of Sinclair will hold a conference call to
discuss its second quarter 2019 results on Wednesday,
August 7, 2019, at 9:00 a.m.
ET. The call will be webcast live and can be accessed
at www.sbgi.net under "Investors/ Webcasts." 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) 428-7458.
About Sinclair:
Sinclair is one of the largest and most diversified television
broadcasting companies in the country. The Company owns,
operates and/or provides services to 191 television stations in 89
markets. Sinclair is a leading local news provider in the
country and is dedicated to impactful journalism with a local
focus. The Company has multiple national networks, live local
sports production, as well as stations affiliated with all the
major networks. 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, risks associated with the ability to
consummate the pending RSN acquisition and the timing of the
closing thereof; the risk that a regulatory approval that may be
required for the pending RSN acquisition is delayed; the impact of
changes in national and regional economies, the completion of the
FCC spectrum repack, the volatility in the U.S. and global
economies and financial credit markets which impact our ability to
forecast or refinance our indebtedness as it 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, the impact of pending and
future litigation claims against the Company, 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 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
June 30,
|
|
Six Months
Ended
June 30,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
REVENUES:
|
|
|
|
|
|
|
|
Media
revenues
|
$
|
720,898
|
|
|
$
|
695,862
|
|
|
$
|
1,394,262
|
|
|
$
|
1,339,513
|
Non-media
revenues
|
49,821
|
|
|
34,281
|
|
|
98,560
|
|
|
55,983
|
Total
revenues
|
770,719
|
|
|
730,143
|
|
|
1,492,822
|
|
|
1,395,496
|
|
|
|
|
|
|
|
|
OPERATING
EXPENSES:
|
|
|
|
|
|
|
|
Media production
expenses
|
335,162
|
|
|
300,858
|
|
|
654,206
|
|
|
589,407
|
Media selling,
general and administrative expenses
|
164,755
|
|
|
150,794
|
|
|
324,678
|
|
|
297,693
|
Amortization of
program contract costs and net realizable value
adjustments
|
22,084
|
|
|
24,710
|
|
|
46,021
|
|
|
51,660
|
Non-media
expenses
|
39,210
|
|
|
31,021
|
|
|
78,510
|
|
|
52,244
|
Depreciation of
property and equipment
|
22,305
|
|
|
23,117
|
|
|
45,325
|
|
|
50,442
|
Corporate general and
administrative expenses
|
51,655
|
|
|
29,685
|
|
|
79,381
|
|
|
54,281
|
Amortization of
definite-lived intangible and other assets
|
43,537
|
|
|
43,117
|
|
|
87,001
|
|
|
86,722
|
Gain on asset
dispositions and other, net of impairment
|
(13,988)
|
|
|
(4,741)
|
|
|
(21,897)
|
|
|
(25,850)
|
Total operating
expenses
|
664,720
|
|
|
598,561
|
|
|
1,293,225
|
|
|
1,156,599
|
Operating
income
|
105,999
|
|
|
131,582
|
|
|
199,597
|
|
|
238,897
|
|
|
|
|
|
|
|
|
OTHER INCOME
(EXPENSE):
|
|
|
|
|
|
|
|
Interest expense and
amortization of debt discount and deferred
financing costs
|
(53,678)
|
|
|
(92,271)
|
|
|
(108,304)
|
|
|
(162,013)
|
Loss from equity
method investments
|
(11,844)
|
|
|
(17,690)
|
|
|
(25,481)
|
|
|
(30,277)
|
Other income,
net
|
5,533
|
|
|
4,391
|
|
|
7,728
|
|
|
7,772
|
Total other expense,
net
|
(59,989)
|
|
|
(105,570)
|
|
|
(126,057)
|
|
|
(184,518)
|
Income before income
taxes
|
46,010
|
|
|
26,012
|
|
|
73,540
|
|
|
54,379
|
INCOME TAX
(PROVISION) BENEFIT
|
(2,627)
|
|
|
3,297
|
|
|
(7,386)
|
|
|
18,925
|
NET INCOME
|
43,383
|
|
|
29,309
|
|
|
66,154
|
|
|
73,304
|
Net income
attributable to the noncontrolling interests
|
(1,086)
|
|
|
(1,268)
|
|
|
(2,185)
|
|
|
(2,139)
|
NET INCOME
ATTRIBUTABLE TO SINCLAIR BROADCAST
GROUP
|
$
|
42,297
|
|
|
$
|
28,041
|
|
|
$
|
63,969
|
|
|
$
|
71,165
|
EARNINGS PER COMMON
SHARE ATTRIBUTABLE TO SINCLAIR
BROADCAST GROUP:
|
|
|
|
|
|
|
|
Basic earnings per
share
|
$
|
0.46
|
|
|
$
|
0.27
|
|
|
$
|
0.70
|
|
|
$
|
0.70
|
Diluted earnings per
share
|
$
|
0.45
|
|
|
$
|
0.27
|
|
|
$
|
0.69
|
|
|
$
|
0.69
|
Weighted average
common shares outstanding
|
91,764
|
|
|
102,224
|
|
|
92,032
|
|
|
102,062
|
Weighted average
common and common equivalent shares outstanding
|
93,163
|
|
|
102,986
|
|
|
93,189
|
|
|
102,952
|
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SOURCE Sinclair Broadcast Group, Inc.