Sinclair Reports Third Quarter 2010 Results; Board Declares $0.43 Per Share Dividend

Sinclair Reports Third Quarter 2010 Results; Board Declares $0.43 Per Share Dividend

BALTIMORE, Nov. 3, 2010 /PRNewswire-FirstCall/ -- Sinclair Broadcast Group, Inc. (Nasdaq: SBGI), the "Company" or "Sinclair," today reported financial results for the three months and nine months ended September 30, 2010.

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"Political advertising of $9.8 million in the third quarter came in higher than expected and that trend has continued in the fourth quarter where we expect $26.8 million in political revenues," commented David Smith, President and CEO of Sinclair. "For the year, political revenues are expected to be approximately $41.9 million, a record amount for us. This would represent a 34.7% increase over 2006's $31.1 million in political revenues and a 1.9% increase over the 2008 presidential year's $41.1 million. Looking ahead to 2011, early indications are that the core business will be stronger than normal non-political years driven by the Super Bowl on the FOX network, of which we have 20 affiliates, and the continued economic recovery. We believe that the core business in 2011 will grow versus 2010."

Mr. Smith continued, "Given the expected 2010 results and our optimistic outlook for 2011, our Board of Directors has decided to declare and pay a special dividend in the amount of $0.43 per share. As you may recall, Sinclair had been a regular dividend payer since 2004, but had halted the dividend in the first quarter of 2009 in response to the recession, so we are pleased to once again be able to distribute a portion of our cash flow and return value to our shareholders. Our objective is to once again become a regularly paying dividend Company, as well as have the ability to repurchase shares, if warranted."

Financial Results:

Net broadcast revenues from continuing operations were $158.8 million for the three months ended September 30, 2010, an increase of 16.4% versus the prior year period result of $136.4 million. The Company had operating income of $56.1 million in the three-month period, as compared to operating income of $35.7 million in the prior year period. The Company had net income attributable to the parent company of $14.3 million in the three-month period versus net income attributable to the parent company of $14.9 million in the prior year period.

The Company reported diluted earnings per common share of $0.18 for the three-month period versus diluted earnings per common share of $0.19 in the prior year period.

Net broadcast revenues from continuing operations were $465.4 million for the nine months ended September 30, 2010, an increase of 16.1% versus the prior year period result of $400.7 million. The Company had operating income of $159.0 million in the nine-month period versus the prior year period operating loss of $45.2 million. Excluding the impairment charges related to goodwill and other intangible assets, operating income in 2009 would have been $85.2 million in the nine-month period. The Company had net income attributable to the parent company of $43.1 million in the nine-month period versus a net loss attributable to the parent company of $67.9 million in the prior year period.

The Company had diluted earnings per common share of $0.54 in the nine-month period versus a diluted loss per common share of $0.85 in the prior year period.

Operating Statistics and Income Statement Highlights:

-- Political revenues were $9.8 million in the third quarter 2010 versus
$1.9 million in third quarter 2009.
-- Local net broadcast revenues, which include local time sales,
retransmission revenues, and other broadcast revenues, were up 11.9% in
the third quarter 2010 while national net broadcast revenues, which
include national time sales and other national broadcast revenues, were
up 30.0% versus the third quarter 2009. Excluding political revenues,
local net broadcast revenues were up 9.8% and national net broadcast
revenues were up 13.8% in the third quarter.
-- Advertising spending categories that were up the most in the quarter
were media, furniture, schools, medical, and telecommunications while
paid programming, religious, retail, and fast food ad spending were down
the most. Automotive, our largest category, was up 43.9%, while
services, our second largest category, was up 16.2% in the quarter.
-- Interest expense in the third quarter includes a one-time expense of
$3.7 million associated with issuance fees related to the amendment and
refinancing of the term B loans.
-- During the third quarter, the Company entered into an agreement with The
Country Network (TCN), a country television music video network, to air
on the digital tier in 28 of Sinclair's markets with the option to add
another 6 markets. Currently, 18 markets are broadcasting and another
10 markets are expected to be on-air in the next 30 days.

Balance Sheet and Cash Flow Highlights:

-- The Board of Directors of the Company has declared a special one-time
dividend of $0.43 per share, or approximately $34.5 million, on all
classes of common stock outstanding, payable on December 15, 2010 to
holders of record on December 1, 2010.
-- Debt on the balance sheet, net of $46.6 million in cash and restricted
cash, was $1,199.8 million at September 30, 2010 versus net debt of
$1,232.1 million at June 30, 2010. Included in the September 30, 2010
cash balance is approximately $5.1 million held in an escrow account to
redeem the remainder of the 4.875% senior convertible notes which
holders have the right to put to the Company in January 2011.
-- In August 2010, the Company amended certain terms of its Bank Credit
Agreement and refinanced its term B loans. Among the changes, the
Company paid down $35.0 million of its tranche B term loans for a
remaining outstanding balance of $270.0 million. The rate of interest
on the tranche B term loans was reduced by 50 basis points to a revised
rate of LIBOR plus 4.00% with a 1.50% LIBOR floor. The Company also
amended certain terms to provide more flexibility, including the ability
to pay dividends and repurchase shares, to use cash to redeem
subordinated debt, and to provide for a larger incremental term loan
facility.
-- In September 2010, the Company closed on a new $250.0 million private
offering of senior unsecured notes due 2018. The Notes were priced at
98.567% of their par value and bear interest at a rate of 8.375% per
annum. The proceeds of the note offering were used to tender for the
Company's 8.0% senior subordinated notes due 2012 and a portion of the
Company's 6.0% convertible debentures due 2012.
-- On October 19, 2010, the Company announced that holders of approximately
78.2% ($175.7 million) of the Company's 8.0% senior subordinated notes
tendered their notes. On that same date, the Company announced it was
calling, at par value, the remaining $49.0 million of notes outstanding
for settlement on November 19, 2010. The call will be funded from the
8.375% Notes offering proceeds, cash on hand and/or a draw under the
revolving line of credit.
-- On October 19, 2010, the Company announced that holders of approximately
45.3% ($58.0 million) of the Company's 6.0% convertible debentures
tendered their bonds, leaving $70.0 million outstanding.
-- During the third quarter, the Company repurchased in a private
transaction $17.0 million face amount of the 4.875% convertible
debentures using cash held in escrow. The remaining $5.7 million of
outstanding 4.875% convertible debentures can be put by the holders to
the Company in January 2011 at par value.
-- In conjunction with the amendment of the Bank Credit Agreement, the
8.375% Notes issuance, and the 6% and 8% Note tenders, both Moody's and
Standard & Poor's raised the Company's credit ratings.
-- As of September 30, 2010, 49.3 million Class A common shares and 31.0
million Class B common shares were outstanding, for a total of 80.3
million common shares outstanding.
-- Capital expenditures in the third quarter were $5.1 million.
-- Program contract payments for continuing operations were $20.2 million
in the third quarter.

Notes:

Prior year presentation has been reclassified to conform to the presentation of current year generally accepted accounting principles.

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," 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 identified in this release, but not limited to, the impact of changes in national and regional economies, the volatility in the U.S. and global economies and financial credit markets which impact our ability to forecast, 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 Network and MyNetworkTV programming, our news share strategy, our local 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, and the other risk factors set forth in the Company's most recent reports on Form 10-Q, Form 10-K and Form 8-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.

Outlook:

In accordance with Regulation FD, Sinclair is providing public dissemination through this news release of its expectations for certain components of its fourth quarter 2010 and full year 2010 financial performance. The Company assumes no obligation to update its expectations. All matters discussed in the "Outlook" section are forward-looking and, as such, readers should not place any undue reliance on this information and should refer to the "Forward-Looking Statements" section above.

"The fourth quarter is expected to provide a record year for us in terms of political revenues, which is significant given that this year was a non-presidential election year," commented David Amy, EVP and CFO. "With that kind of demand on our inventory, we experienced some crowding out of our normal advertisers in October, which is to be expected. In addition, on a year-over-year comparison basis, fourth quarter of 2009 is when we saw that the advertising recession bottomed out and business began to improve, and so we are expecting a smaller percentage growth rate in fourth quarter of this year than in prior quarters of this year. This is not a reflection or implication that advertising spending has slowed. Looking ahead to the first quarter of 2011, we will benefit from having the Super Bowl broadcast on the 20 FOX affiliates we own or operate, as well as the effect of a continued economic recovery."

-- The Company expects fourth quarter 2010 station net broadcast revenues
from continuing operations, before barter, to be approximately $181.5
million to $185.5 million, an increase of 18.0 to 20.6% percent as
compared to fourth quarter 2009 station net broadcast revenues of $153.9
million. This assumes approximately $26.8 million in political revenues
in the fourth quarter as compared to $4.1 million in fourth quarter
2009.
-- The Company expects barter revenue to be approximately $16.9 million in
the fourth quarter.
-- The Company expects barter expense to be approximately $16.9 million in
the fourth quarter.
-- The Company expects continuing operations station production expenses
and station selling, general and administrative expenses (together,
"television expenses"), before barter expense, in the fourth quarter to
be approximately $73.3 million, an 8.3% increase from fourth quarter
2009 television expenses of $67.7 million. On a full year basis,
television expenses are expected to be approximately $280.0 million, up
5.6% as compared to 2009 television expenses of $265.2 million. The
2010 expense forecast includes $1.7 million of stock-based compensation
expense for the year.
-- The Company expects program contract amortization expense to be
approximately $15.3 million in the fourth quarter and $62.4 million for
2010, as compared to the 2009 actuals of $15.4 million and $73.1 million
for the quarter and year, respectively.
-- The Company expects program contract payments to be approximately $19.9
million in the fourth quarter and $89.0 million for 2010, as compared to
the 2009 actuals of $21.4 million and $82.2 million for the quarter and
year, respectively.
-- The Company expects corporate overhead to be approximately $6.9 million
in the fourth quarter and $27.0 million for 2010, as compared to the
2009 actuals of $7.1 million and $25.6 million for the quarter and year,
respectively. The 2010 corporate expense forecast includes $0.3 million
of stock-based compensation expense for the quarter and $2.6 million for
the year, as compared to the 2009 actuals of $0.1 million and $0.7
million for the quarter and year, respectively.
-- The Company expects other operating division revenues less other
operating division expenses to be $2.6 million of income in the fourth
quarter and $5.9 million of income for 2010, assuming current equity
interests, and as compared to the 2009 actuals of a $1.0 million loss in
the quarter and a $1.8 million loss for the year, respectively, relating
to the shut down and sale of two operating units.
-- The Company expects depreciation on property and equipment to be
approximately $8.8 million in the fourth quarter and $36.5 million for
2010, assuming the capital expenditure assumptions below, and as
compared to the 2009 actuals of $10.4 million and $42.9 million for the
quarter and year, respectively.
-- The Company expects amortization of acquired intangibles to be
approximately $4.7 million in the fourth quarter and $18.8 million for
2010, as compared to the 2009 actuals of $4.7 million and $22.4 million
for the quarter and year, respectively.
-- The Company expects net interest expense to be approximately $27.4
million in the fourth quarter and $116.0 million for 2010 (approximately
$104.9 million on a cash basis), assuming no changes in the current
interest rate yield curve, changes resulting from the refinancing of the
Bank Credit Agreement, bond issuance, tender offers, and outstanding
call redemption, as well as changes in debt levels based on the
assumptions discussed in this "Outlook" section. This compares to the
2009 actuals of $26.5 million and $80.0 million ($64.9 million on a cash
basis) for the quarter and year, respectively.
-- The Company expects a current tax provision from continuing operations
of approximately $0.5 million and $1.7 million in the fourth quarter and
for the full year 2010, respectively, based on the assumptions discussed
in this "Outlook" section. The Company expects the effective tax rate
to be approximately 37.3% and 35.8% for the fourth quarter and full
year, respectively. In October, the Company received approximately $8.4
million in tax refunds.
-- The Company expects to spend approximately $7.1 million in capital
expenditures in the fourth quarter and approximately $16.9 million for
the year.

Sinclair Conference Call:

The senior management of Sinclair will hold a conference call to discuss its third quarter 2010 results on Wednesday, November 3, 2010, at 8:30 a.m. ET. After the call, an audio replay will be available at www.sbgi.net under "Investor Information/Earnings Webcast." The press and the public will be welcome on the call in a listen-only mode. The dial-in number is (877) 407-9205.

About Sinclair:

Sinclair Broadcast Group, Inc., one of the largest and most diversified television broadcasting companies, owns and operates, programs or provides sales services to 58 television stations in 35 markets. Sinclair's television group reaches approximately 22% of U.S. television households and is affiliated with all major networks. Sinclair owns equity interests in various non-broadcast related companies.

The Company regularly uses its website as a key source of Company information and can be accessed at www.sbgi.net.

Sinclair Broadcast Group, Inc. and Subsidiaries
Preliminary Unaudited Consolidated Statements of Operations
(in thousands, except per share data)

Three Months Ended
------------------
September 30,
-------------
2010 2009
---- ----
REVENUES:
Station broadcast revenues,
net of agency commissions $158,809 $136,427
Revenues realized from
station barter
arrangements 17,812 13,010
Other operating divisions
revenues 9,831 10,690
----- ------
Total revenues 186,452 160,127
OPERATING EXPENSES:
Station production expenses 38,619 34,368
Station selling, general
and administrative
expenses 32,230 28,484
Expenses recognized from
station barter
arrangements 15,716 11,164
Amortization of program
contract costs and net
realizable value
adjustments 15,945 17,021
Other operating divisions
expenses 7,902 11,280
Depreciation of property
and equipment 9,022 9,995
Corporate general and
administrative expenses 6,236 6,109
Amortization of definite-
lived intangible assets
and other assets 4,687 6,230
Gain on asset exchange - (500)
Impairment of goodwill,
intangible and other
assets - 243
--- ---
Total operating expenses 130,357 124,394
------- -------
Operating income (loss) 56,095 35,733
OTHER INCOME (EXPENSE):
Interest expense and
amortization of debt
discount and deferred
financing costs (31,349) (17,466)
(Loss) gain from
extinguishment of debt (3,939) -
(Loss) income from equity
and cost method
investments (1,997) 453
Other income, net 557 448
--- ---
Total other expense (36,728) (16,565)
------- -------
Income (loss) from
continuing operations
before income taxes 19,367 19,168
INCOME TAX (PROVISION)
BENEFIT (5,154) (3,313)
------ ------
Income (loss) from
continuing operations 14,213 15,855
DISCONTINUED OPERATIONS:
(Loss) income from
discontinued operations,
includes income tax
provision of $68, $24,
$202 and $241,
respectively (68) 245
--- ---
NET INCOME (LOSS) 14,145 16,100
Net loss (income)
attributable to the
noncontrolling interests 131 (1,162)
--- ------
NET INCOME (LOSS)
ATTRIBUTABLE TO SINCLAIR
BROADCAST GROUP $14,276 $14,938
======= =======
BASIC AND DILUTED EARNINGS
(LOSS) PER COMMON SHARE
ATTRIBUTABLE TO SINCLAIR
BROADCAST GROUP:
Earnings (loss) per share
from continuing operations $0.18 $0.18
===== =====
Earnings (loss) per share $0.18 $0.19
===== =====
Weighted average common
shares outstanding 80,344 79,739
====== ======
Weighted average common and
common equivalent shares
outstanding 80,627 86,155
====== ======

Nine Months Ended
-----------------
September 30,
-------------
2010 2009
---- ----
REVENUES:
Station broadcast revenues,
net of agency commissions $465,440 $400,740
Revenues realized from
station barter
arrangements 50,573 38,827
Other operating divisions
revenues 25,618 33,570
------ ------
Total revenues 541,631 473,137
OPERATING EXPENSES:
Station production expenses 113,182 106,200
Station selling, general
and administrative
expenses 93,426 91,387
Expenses recognized from
station barter
arrangements 44,695 32,685
Amortization of program
contract costs and net
realizable value
adjustments 47,162 57,644
Other operating divisions
expenses 22,259 34,422
Depreciation of property
and equipment 27,744 32,456
Corporate general and
administrative expenses 20,063 18,485
Amortization of definite-
lived intangible assets
and other assets 14,087 17,683
Gain on asset exchange - (3,016)
Impairment of goodwill,
intangible and other
assets - 130,341
--- -------
Total operating expenses 382,618 518,287
------- -------
Operating income (loss) 159,013 (45,150)
OTHER INCOME (EXPENSE):
Interest expense and
amortization of debt
discount and deferred
financing costs (88,700) (53,486)
(Loss) gain from
extinguishment of debt (4,377) 18,986
(Loss) income from equity
and cost method
investments (2,478) 471
Other income, net 1,767 1,561
----- -----
Total other expense (93,788) (32,468)
------- -------
Income (loss) from
continuing operations
before income taxes 65,225 (77,618)
INCOME TAX (PROVISION)
BENEFIT (22,932) 9,129
------- -----
Income (loss) from
continuing operations 42,293 (68,489)
DISCONTINUED OPERATIONS:
(Loss) income from
discontinued operations,
includes income tax
provision of $68, $24,
$202 and $241,
respectively (202) 28
---- ---
NET INCOME (LOSS) 42,091 (68,461)
Net loss (income)
attributable to the
noncontrolling interests 978 527
--- ---
NET INCOME (LOSS)
ATTRIBUTABLE TO SINCLAIR
BROADCAST GROUP $43,069 $(67,934)
======= ========
BASIC AND DILUTED EARNINGS
(LOSS) PER COMMON SHARE
ATTRIBUTABLE TO SINCLAIR
BROADCAST GROUP:
Earnings (loss) per share
from continuing operations $0.54 $(0.85)
===== ======
Earnings (loss) per share $0.54 $(0.85)
===== ======
Weighted average common
shares outstanding 80,204 80,036
====== ======
Weighted average common and
common equivalent shares
outstanding 80,480 80,036
====== ======

Preliminary Unaudited Consolidated Historical Selected Balance Sheet
Data:
(In thousands)

September 30, June 30,
2010 2010
---- ----
Cash & cash equivalents (1) $46,618 $65,266
Total current assets 227,331 228,359
Total long term assets 1,308,833 1,311,486
Total assets 1,536,164 1,539,845

Current portion of debt 24,237 40,737
Total current liabilities 189,555 176,214
Long term portion of debt 1,222,140 1,256,585
Total long term liabilities 1,502,582 1,533,999
Total liabilities 1,692,137 1,710,213

Total stockholders' deficit (155,973) (170,368)
Total liabilities & stockholders'
deficit $1,536,164 $1,539,845

1. September 30, 2010 includes $5.1 million of restricted cash held
in escrow for the redemption of the 4.875% Senior Convertible Notes
that will be released in January 2011.

Unaudited Consolidated Historical Selected Statement of Cash Flows
Data:
(In thousands)

Three Months Nine Months
Ended Ended
September September
30, 30,
2010 2010
---- ----

Net cash flow from operating
activities $46,770 $106,935
Net cash flow from investing
activities 4,702 32,483
Net cash flow used in financing
activities (52,795) (121,145)
------- --------

Net increase (decrease) in cash &
cash equivalents (1,323) 18,273
Cash & cash equivalents, beginning
of period 42,820 23,224
------ ------
Cash & cash equivalents, end of
period $41,497 $41,497

SOURCE Sinclair Broadcast Group, Inc.

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Sinclair Broadcast Group, Inc.

CONTACT: David Amy, EVP & Chief Financial Officer, or Lucy Rutishauser, VP-Corporate Finance & Treasurer, both of Sinclair Broadcast Group, Inc., +1-410-568-1500

Web Site: http://www.sbgi.net

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