Sinclair, Inc. (Nasdaq: SBGI), the "Company" or "Sinclair,"
today reported financial results for the three months ended March
31, 2024.
Highlights:
- Met or exceeded first quarter guidance on Revenue, Media
Expenses and Adjusted EBITDA
- Launched NextGen data solutions platform, Broadspan
- Settled all Diamond Sports Group, LLC (DSG) related outstanding
litigation claims
- As of May 1, the Company has pre-booked $77 million in
political advertising for the second half of the year through
Election Day; this compares to $21 million as of May 1, 2020 and
$28 million as of May 1, 2022
CEO Comment:
"Sinclair delivered solid first quarter results, meeting
guidance expectations in our local media segment and exceeding
Adjusted EBITDA expectations at Tennis Channel in the quarter. Core
advertising trends remain solid in most categories, with our
effective yield management and sales training processes driving
industry-leading core growth over the past several quarters. We
have significant retransmission agreements renewing this year, of
which we are 42% completed as of the beginning of May. We continue
to expect a mid-single digit two-year growth in net retransmission
revenues from 2023 to 2025. We also announced the launch of
Broadspan, our NextGen data solutions platform, that will deliver a
unified suite of products to the marketplace, and at the same time
announced our first NextGen commercial partner, Edgio. The time for
the NextGen data distribution opportunity is now. The broadcast
data distribution model has many benefits, such as a more efficient
distribution of mass-consumption data, improved customer
experience, and lower cost of data delivery compared to traditional
one-to-one wireless solutions. We are very excited to see what the
future holds for NextGen over the coming quarters and years. In
summary, Sinclair is in a strong position for both the short and
long term, with our emphasis on growing net retransmission revenues
and maintaining industry leadership in core advertising revenue
growth. Our strategic focus aligns with the anticipation of a
record-breaking presidential election year, contributing to robust
growth in Adjusted EBITDA throughout 2024. We have laid the
groundwork for a promising future, and we are excited about the
opportunities that lie ahead of us."
Recent Company
Developments:
Content and Distribution:
- In January, Hulu launched carriage of Tennis Channel, T2, Comet
and CHARGE! on Hulu + Live TV.
- In March, the Company reached a comprehensive, multiyear
distribution agreement with Charter Communications, Inc. for
continued carriage of Sinclair’s owned local broadcast stations and
Tennis Channel.
- In May, the Company reached a comprehensive, multiyear
distribution agreement with Cox Communications, Inc. for continued
carriage of Sinclair’s owned local broadcast stations and Tennis
Channel.
- Year-to-date, Sinclair's newsrooms have won a total of 47
journalism awards.
Community:
- In April, the Company held its second annual Sinclair Day of
Service, whereby all employees were encouraged to volunteer that
day for charitable causes. Over 1,300 employees volunteered a total
of more than 3,700 hours that day.
Investment Portfolio:
- During the first quarter, the Company made capital investments
of approximately $2 million in minority investments and received
distributions, including exit payments, of approximately $52
million.
NextGen Broadcasting (ATSC 3.0):
- In April, the Company announced the launch of its Broadspan
datacasting platform to enable data distribution capability across
all current Sinclair NextGen Broadcast (ATSC 3.0) markets where it
serves as the host station. Edgio, Inc., a leading content delivery
network, will become the Company's first NextGen commercial
partner.
- To date, the Company has launched NextGen Broadcast in 44
markets, including the recent launch of Portland, ME. NextGen
Broadcast is now available in 75% of the TV households in
Sinclair's licensed footprint.
Financial Results:
Three Months Ended March 31, 2024 Consolidated Financial
Results:
- Total revenues increased 3% to $798 million versus $773 million
in the prior year period. Media revenues increased 3% to $792
million versus $766 million in the prior year period.
- Total advertising revenues of $321 million increased 4% versus
$309 million in the prior year period. Core advertising revenues,
which exclude political revenues, were down 3% in the first quarter
to $297 million versus $306 million in the prior year period.
- Distribution revenues of $436 million increased versus $426
million in the prior year period.
- Operating income of $42 million, including non-recurring
transaction, implementation, legal, regulatory and other costs
("Adjustments") of $6 million, increased versus an operating income
of $21 million in the prior year period, which included Adjustments
of $6 million. Operating income, when excluding the Adjustments,
was $48 million compared to operating income, excluding the
Adjustments, of $27 million in the prior year period.
- Net income attributable to the Company was $23 million versus
net income of $185 million in the prior year period. Excluding
Adjustments, the Company had net income of $27 million.
- Adjusted EBITDA increased 13% to $136 million from $120 million
in the prior year period.
- Diluted earnings per common share was $0.35 as compared to
diluted earnings per common share of $2.64 in the prior year
period. On a per-diluted-share basis, the impact of Adjustments was
$(0.07), and the impact of Adjustments in the prior year period was
$(0.07).
Segment financial information is included in the following
tables for the periods presented. The Local Media segment consists
primarily of broadcast television stations, which the Company owns,
operates or to which the Company provides services, and includes
multicast networks and original content. The Local Media segment
assets are owned and operated by Sinclair Broadcast Group, LLC
(SBG). The Tennis segment consists primarily of Tennis Channel, a
cable network which includes coverage of most of tennis' top
tournaments and original professional sport and tennis lifestyle
shows; the Tennis Channel International subscription and streaming
service; Tennis Channel Plus streaming service; T2 FAST, a 24-hours
a day free ad-supported streaming television channel; and
Tennis.com. Other includes non-broadcast digital solutions,
technical services, and other non-media investments. For periods
presented subsequent to June 1, 2023 (the date of the
reorganization), the assets of the Tennis segment and Other are
owned and operated by Sinclair Ventures, LLC (Ventures). The
highlights below include the divestiture of Stadium (May 2,
2023).
Three months ended March 31,
2024
Local Media
Tennis
Other
Corporate and
Eliminations
Consolidated
($ in millions)
Distribution revenue
$
384
$
52
$
—
$
—
$
436
Core advertising revenue
284
10
6
(3
)
297
Political advertising revenue
24
—
—
—
24
Other media revenue
35
1
—
(1
)
35
Media revenues
$
727
$
63
$
6
$
(4
)
$
792
Non-media revenue
—
—
9
(3
)
6
Total revenues
$
727
$
63
$
15
$
(7
)
$
798
Media programming and production
expenses
$
383
$
25
$
—
$
—
$
408
Media selling, general and administrative
expenses
183
12
5
(4
)
196
Non-media expenses
2
—
12
(2
)
12
Program contract payments
22
—
—
—
22
Corporate general and administrative
expenses
41
1
—
16
58
Stock-based compensation
25
—
—
3
28
Non-recurring transaction, implementation,
legal, regulatory and other costs
7
—
(1
)
—
6
Adjusted EBITDA(a)
$
128
$
25
$
(3
)
$
(14
)
$
136
Interest expense (net)(b)
$
69
$
—
$
(4
)
$
—
$
65
Capital expenditures
21
—
—
—
21
Distributions to the noncontrolling
interests
2
—
—
—
2
Cash distributions from equity
investments
26
—
51
—
77
Net cash taxes paid
—
Note: Certain amounts may not summarize to
totals due to rounding differences.
(a)
Adjusted EBITDA is defined as earnings
before interest, tax, depreciation and amortization, and
non-recurring transaction, implementation, legal, regulatory and
other costs, as well as certain non-cash items such as stock-based
compensation expense and other gains and losses; less program
contract payments. Refer to the reconciliation at the end of this
press release and the Company’s website. In the above table,
Adjusted EBITDA equals total revenues minus media programming and
production expenses, media selling, general and administrative
expenses, non-media expenses, program contract payments, and
corporate general and administrative expenses; plus stock-based
compensation and non-recurring transaction, implementation, legal,
regulatory and other costs.
(b)
Interest expense (net) excludes deferred
financing costs, original issue discount amortization, and other
non-cash interest expense, and is net of interest income.
Three months ended March 31,
2023
Local Media
Tennis
Other
Corporate and
Eliminations
Consolidated
($ in millions)
Distribution revenue
$
381
$
45
$
—
$
—
$
426
Core advertising revenue
293
9
6
(2
)
306
Political advertising revenue
3
—
—
—
3
Other media revenue
28
1
3
(1
)
31
Media revenues
$
705
$
55
$
9
$
(3
)
$
766
Non-media revenue
—
—
8
(1
)
7
Total revenues
$
705
$
55
$
17
$
(4
)
$
773
Media programming and production
expenses
$
371
$
22
$
8
$
(3
)
$
398
Media selling, general and administrative
expenses
175
10
6
—
191
Non-media expenses
6
—
6
—
12
Program contract payments
23
—
—
—
23
Corporate general and administrative
expenses
32
—
—
26
58
Stock-based compensation
13
1
—
9
23
Non-recurring transaction, implementation,
legal, regulatory and other costs
4
—
—
2
6
Adjusted EBITDA(a)
$
115
$
24
$
(3
)
$
(16
)
$
120
Interest expense (net)(b)
$
64
$
—
$
(5
)
$
—
$
59
Capital expenditures
19
—
—
1
20
Distributions to the noncontrolling
interests
4
—
—
—
4
Cash distributions from equity
investments
—
—
36
—
36
Net cash taxes paid
2
Note: Certain amounts may not summarize to
totals due to rounding differences.
(a)
Adjusted EBITDA is defined as earnings
before interest, tax, depreciation and amortization, and
non-recurring transaction, implementation, legal, regulatory and
other costs, as well as certain non-cash items such as stock-based
compensation expense and other gains and losses; less program
contract payments. Refer to the reconciliation at the end of this
press release and the Company’s website. In the above table,
Adjusted EBITDA equals total revenues minus media programming and
production expenses, media selling, general and administrative
expenses, non-media expenses, program contract payments, and
corporate general and administrative expenses; plus stock-based
compensation and non-recurring transaction, implementation, legal,
regulatory and other costs.
(b)
Interest expense (net) excludes deferred
financing costs, original issue discount amortization, and other
non-cash interest expense, and is net of interest income.
Consolidated Balance Sheet and Cash
Flow Highlights of the Company:
- Total Company debt as of March 31, 2024 was $4,149 million, of
which $4,134 million is SBG debt and $15 million is Ventures
debt.
- In January, the Company repurchased $27 million of Term B Loans
due 2026 for $25 million in cash.
- Cash and cash equivalents for the Company as of March 31, 2024
was $655 million, of which $337 million is SBG cash and $318
million is Ventures cash.
- As of March 31, 2024, 42.3 million Class A common shares and
23.8 million Class B common shares were outstanding, for a total of
66.1 million common shares.
- In March, the Company paid a quarterly cash dividend of $0.25
per share.
- Capital expenditures for the first quarter of 2024 were $21
million.
- In March, the Company paid $50 million toward the total $495
million global settlement amount related to the litigation filed by
Diamond Sports Group, LLC and DSG’s wholly-owned subsidiary,
Diamond Sports Net, LLC, in July 2023, which settlement includes an
amendment to the management services agreement between Sinclair
Television Group, LLC (STG) and DSG. The initial $50 million was
funded by Ventures.
- In April, the Company settled in cash the remaining $445
million global settlement amount, settling all claims associated
with the litigation, without admitting fault or wrongdoing. Of the
$445 million payment, $347 million was funded by STG and $98
million by Ventures. After factoring in corresponding tax benefits,
additional management services agreement payments to STG of
approximately $26 million to $62 million, and other miscellaneous
items to be received by Sinclair in connection with the settlement,
the net cost to Sinclair is expected to be approximately $250
million to $325 million. Including value to be received, the net
amount for STG is expected to be approximately 55% to 60% of the
total net cost with Ventures funding the remainder.
Notes:
Certain reclassifications have been made to prior years'
financial information to conform to the presentation in the current
year.
Outlook:
The Company currently expects to achieve the following results
for the three months ending June 30, 2024 and the twelve months
ending December 31, 2024.
For the three months ending June 30,
2024 ($ in millions)
Local Media
Tennis
Other
Corporate and
Eliminations
Consolidated
Core advertising revenue
$294 to 304
$16
$8
$(5
)
$312 to 323
Political advertising revenue
$29 to 35
$29 to 35
Advertising revenue
$323 to 339
$16
$8
$(5
)
$341 to 358
Distribution revenue
$383 to 385
$52
—
—
$435 to 437
Other media revenue
$38
$1
—
$(2
)
$37
Media revenues
$744 to 763
$68
$8
$(7
)
$813 to 832
Non-media revenue
—
—
$11
$(1
)
$10
Total revenues
$744 to 763
$68
$19
$(7
)
$823 to 843
Media programming & production
expenses and media selling, general and administrative expenses
$571 to 574
$62
$6
$(7
)
$632 to 635
Non-media expenses
$2
—
$15
—
$17
Program contract payments
$20
—
—
—
$20
Corporate overhead
$26
—
$1
$13
$40
Stock-based compensation
$10
—
—
—
$10
Non-recurring transaction and transition
services, implementation, legal, and regulatory costs
$10
—
$1
—
$11
Adjusted EBITDA(a)
$142 to 164
$6
$(3
)
$(13
)
$132 to 155
Interest expense (net)(b)
$71
—
$(4
)
—
$67
Total capital expenditures
$27 to 29
$1
—
—
$28 to 30
Distributions to the noncontrolling
interests
$3
—
—
—
$3
Cash distributions from equity
investments
—
—
$4
—
$4
Net cash tax payments
$7
Note: Certain amounts may not summarize to
totals due to rounding differences.
(a)
Adjusted EBITDA is defined as earnings
before interest, tax, depreciation and amortization, and
non-recurring transaction, implementation, legal, regulatory and
other costs, as well as certain non-cash items such as stock-based
compensation expense and other gains and losses; less program
contract payments. In the above table, Adjusted EBITDA equals total
revenues minus media programming and production expenses, media
selling, general and administrative expenses, non-media expenses,
program contract payments, and corporate general and administrative
expenses; plus stock-based compensation and non-recurring
transaction, implementation, legal, regulatory and other costs.
(b)
Interest expense (net) excludes deferred
financing costs, original issue discount amortization, and other
non-cash interest expense, and is net of interest income
For the twelve months ending December
31, 2024 ($ in millions)
Consolidated
Media programming & production
expenses and media selling, general and administrative expenses
$2,481 to 2,484
Non-media expenses
$59
Program contract payments
$80
Corporate overhead
$168 to 169
Stock based compensation included in
corporate, media, and non-media expenses above
$53
Non-recurring transaction, implementation,
legal, and regulatory costs included in corporate, media, and
non-media expenses above
$34
Interest expense (net)(a)
$270
Total capital expenditures
$105 to 110
Distributions to noncontrolling
interests
$10
Cash distributions from equity
investments
$83
Net cash tax payments
$165 to 175
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.
Sinclair Conference Call:
The senior management of Sinclair will hold a conference call to
discuss the Company's first quarter 2024 results on Wednesday, May
8, 2024, at 4:30 p.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 195393.
About Sinclair:
Sinclair, Inc. 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!, TBD., and The Nest;
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, Inc. and Subsidiaries
Preliminary Unaudited Consolidated
Statements of Operations
(In millions, except share and per
share data)
Three Months Ended
March 31,
2024
2023
REVENUES:
Media revenues
$
792
$
766
Non-media revenues
6
7
Total revenues
798
773
OPERATING EXPENSES:
Media programming and production
expenses
408
398
Media selling, general and administrative
expenses
196
191
Amortization of program contract costs
19
22
Non-media expenses
12
12
Depreciation of property and equipment
25
24
Corporate general and administrative
expenses
58
58
Amortization of definite-lived intangible
assets
38
41
Loss on asset dispositions and other, net
of impairment
—
6
Total operating expenses
756
752
Operating income
42
21
OTHER INCOME (EXPENSE):
Interest expense including amortization of
debt discount and deferred financing costs
(76
)
(74
)
Gain on extinguishment of debt
1
—
Income from equity method investments
14
31
Other income, net
40
11
Total other expense, net
(21
)
(32
)
Income (loss) before income taxes
21
(11
)
INCOME TAX BENEFIT
4
204
NET INCOME
25
193
Net loss attributable to the redeemable
noncontrolling interests
—
4
Net income attributable to the
noncontrolling interests
(2
)
(12
)
NET INCOME ATTRIBUTABLE TO SINCLAIR
$
23
$
185
EARNINGS PER COMMON SHARE ATTRIBUTABLE TO
SINCLAIR:
Basic earnings per share
$
0.35
$
2.65
Diluted earnings per share
$
0.35
$
2.64
Basic weighted average common shares
outstanding (in thousands)
64,156
69,744
Diluted weighted average common and common
equivalent shares outstanding (in thousands)
64,403
69,864
The Company considers Adjusted EBITDA to be an indicator of the
Company's operating performance and the ability to service its
debt. The Company also believes that Adjusted EBITDA is frequently
used by industry analysts, investors and lenders as a measure of
valuation and ability to service its debt. The Company also
discloses segment Adjusted EBITDA as an indicator of the operating
performance of its segments in accordance with ASC 280, Segment
Reporting.
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, 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,
2024
2023
Reconciliation of Net Income to
Adjusted EBITDA
Net income attributable to Sinclair
$
23
$
185
Add: Loss from redeemable noncontrolling
interests
—
(4
)
Add: Income from noncontrolling
interests
2
12
Add: Income tax benefit
(4
)
(204
)
Add: Other income
(28
)
—
Add: Income from equity method
investments
(14
)
(31
)
Add: (Income) loss from other investments
and impairments
(2
)
1
Add: Gain on extinguishment of
debt/insurance proceeds
(2
)
—
Add: Interest expense
76
74
Less: Interest income
(9
)
(12
)
Less: Loss on asset dispositions and
other, net of impairment
—
6
Add: Amortization of intangible assets
& other assets
38
41
Add: Depreciation of property &
equipment
25
24
Add: Stock-based compensation
28
23
Add: Amortization of program contract
costs
19
22
Less: Cash film payments
(22
)
(23
)
Add: Non-recurring transaction,
implementation, legal, regulatory and other costs
6
6
Adjusted EBITDA
$
136
$
120
Three months ended March 31,
2024
Local Media
Tennis
Other
Corporate and
Eliminations
Consolidated
($ in millions)
Total revenues
$
727
$
63
$
15
$
(7
)
$
798
Media programming and production
expenses
383
25
—
—
408
Media selling, general and administrative
expenses
183
12
5
(4
)
196
Depreciation and amortization expenses
58
5
1
(1
)
63
Amortization of program contract costs
19
—
—
—
19
Corporate general and administrative
expenses
41
1
—
16
58
Non-media expenses
2
—
12
(2
)
12
Operating income (loss)
$
41
$
20
$
(3
)
$
(16
)
$
42
Reconciliation of GAAP Operating Income
to Adjusted EBITDA:
Operating income (loss)
$
41
$
20
$
(3
)
$
(16
)
$
42
Depreciation and amortization expenses
58
5
1
(1
)
63
Amortization of program contract costs
19
—
—
—
19
Program contract payments
(22
)
—
—
—
(22
)
Stock-based compensation
25
—
—
3
28
Adjustments
7
—
(1
)
—
6
Adjusted EBITDA
$
128
$
25
$
(3
)
$
(14
)
$
136
Three months ended March 31,
2023
Local Media
Tennis
Other
Corporate and
Eliminations
Consolidated
($ in millions)
Total revenues
$
705
$
55
$
17
$
(4
)
$
773
Media programming and production
expenses
371
22
8
(3
)
398
Media selling, general and administrative
expenses
175
10
6
—
191
Depreciation and amortization expenses
59
5
2
(1
)
65
Amortization of program contract costs
22
—
—
—
22
Corporate general and administrative
expenses
32
—
—
26
58
Non-media expenses
6
—
6
—
12
(Gain) loss on asset dispositions and
other, net of impairment
(1
)
—
7
—
6
Operating income (loss)
$
41
$
18
$
(12
)
$
(26
)
$
21
Reconciliation of GAAP Operating Income
to Adjusted EBITDA:
Operating income (loss)
$
41
$
18
$
(12
)
$
(26
)
$
21
Depreciation and amortization expenses
59
5
2
(1
)
65
Amortization of program contract costs
22
—
—
—
22
(Gain) loss on asset dispositions and
other, net of impairment
(1
)
—
7
—
6
Program contract payments
(23
)
—
—
—
(23
)
Stock-based compensation
13
1
—
9
23
Adjustments
4
—
—
2
6
Adjusted EBITDA
$
115
$
24
$
(3
)
$
(16
)
$
120
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 and virtual multi-channel video programming
distributors (“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 Distributor affiliation agreements; the Company’s
ability to identify and consummate acquisitions and investments, to
manage increased financial leverage resulting from acquisitions and
investments, and to achieve anticipated returns on those
investments once consummated; the Company’s ability to compete for
viewers and advertisers; pricing and demand fluctuations in local
and national advertising; the appeal of the Company’s programming
and volatility in programming costs; material legal, financial and
reputational risks and operational disruptions resulting from a
breach of the Company’s information systems; the impact of FCC and
other regulatory proceedings against the Company; compliance with
laws and uncertainties associated with potential changes in the
regulatory environment affecting the Company’s business and growth
strategy; the impact of pending and future litigation claims
against the Company; the Company’s limited experience in operating
or investing in non-broadcast related businesses; 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/20240508569746/en/
Investor Contacts: Christopher C. King, VP, Investor Relations
Billie-Jo McIntire, AVP, Investor Relations (410) 568-1500
Media Contact: Sinclair@5wpr.com
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