Sinclair Reports $0.40 Diluted Earnings Per Share in Fourth Quarter 2010; Reinstates Dividend Policy and Declares $0.12 Quarterly Dividend Per Share

Sinclair Reports $0.40 Diluted Earnings Per Share in Fourth Quarter 2010; Reinstates Dividend Policy and Declares $0.12 Quarterly Dividend Per Share

BALTIMORE, Feb. 9, 2011 /PRNewswire/ -- Sinclair Broadcast Group, Inc. (Nasdaq: SBGI), the "Company" or "Sinclair," today reported financial results for the three months and twelve months ended December 31, 2010.

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"2010 ended on an even stronger note than originally anticipated with record levels of political advertising helping to drive net broadcast revenues up 23.5% in the quarter," commented David Smith, President and CEO of Sinclair. "For the year, excluding political, revenues from our core television business finished up 12.0% led by the automotive recovery. We expect to see continued improvement in our core advertising, driving our top-line in 2011. Based on the strength of the business and the cash flow generated, we made a special $0.43 per share cash dividend distribution to our shareholders in the fourth quarter of 2010, and for 2011 are permitted under our Bank Credit Agreement to return up to $40 million in dividends and/or share repurchases to our shareholders. I am pleased to report that due to our optimistic 2011 outlook and confidence in the economy longer-term, our Board of Directors has reinstated our dividend policy and declared a regular quarterly dividend in the amount of $0.12 per share, beginning with the payment date of March 15, 2011."

Financial Results:

Net broadcast revenues from continuing operations were $189.9 million for the three months ended December 31, 2010, an increase of 23.5% versus the prior year period result of $153.9 million. The Company had operating income of $81.3 million in the three-month period, as compared to an operating loss of $66.1 million in the prior year period. Impairment charges related to goodwill and other intangible assets were $4.8 million in the three-month period, as compared to $119.5 million in the prior year period. The Company had net income attributable to Sinclair of $33.1 million in the three-month period versus a net loss of $67.8 million in the prior year period.

The Company reported diluted earnings per common share of $0.40 for the three-month period versus a diluted loss per common share of $0.85 in the prior year period.

Net broadcast revenues from continuing operations for the twelve months ended December 31, 2010 were $655.4 million, an increase of 18.2% versus the prior year period result of $554.6 million. The Company had operating income of $240.4 million in the twelve-month period versus the prior year period operating loss of $111.2 million. Impairment charges related to goodwill and other intangible assets were $4.8 million in the twelve-month period, as compared to $249.8 million in the prior year period. The Company had net income attributable to Sinclair of $76.1 million in the twelve-month period versus a net loss of $135.7 million in the prior year period.

The Company reported diluted earnings per common share of $0.94 in the twelve-month period versus a diluted loss per common share of $1.70 in the prior year period.

Operating Statistics and Income Statement Highlights:

-- Political revenues were $26.8 million in the fourth quarter 2010 versus
$4.1 million in fourth quarter 2009. For the 2010 year, political
revenues hit an all-time high of $41.9 million, which was a 34.9%
increase over 2006's and a 2.0% increase over 2008's political revenues.
-- Revenues related to the February 6, 2011 Super Bowl, which aired on our
20 FOX affiliates, were $6.2 million. This represents a 26.5% increase
over the $4.9 million we generated in 2008, the last time the FOX
Network aired the Super Bowl.
-- Local net broadcast revenues, which include local time sales,
retransmission revenues, and other broadcast revenues, were up 18.9% in
the fourth quarter 2010 while national net broadcast revenues, which
include national time sales and other national broadcast revenues, were
up 35.3% versus the fourth quarter 2009. Excluding political revenues,
local net broadcast revenues were up 12.1% and national net broadcast
revenues were up 0.2% in the fourth quarter. For the year, local
advertising revenues were up 15.5%, while national was up 26.0%.
Excluding political, local was up 13.0% for the year, while national was
up 9.0%.
-- Advertising categories that reported the largest spending increases in
the fourth quarter were automotive, services, telecommunications, media,
furniture, and schools, while religious, medical, home products,
pharmacy, and fast food ad spending reported the largest decreases.
Automotive, our largest category, was up 25.1%, while services, our
second largest category, was up 16.8% in the quarter. For the year,
automotive was up 36.9% and represented 17.9% of our time sales.
-- The Company extended its affiliation agreements with the FOX Network
until December 31, 2012 and entered into a programming licensing
agreement which allows us to enter into retransmission consent
agreements with cable, telecom and satellite video providers in exchange
for a license fee.
-- The Company extended its program services distribution agreement with
MyNetworkTV until Fall 2014, with early cancellation options beginning
in 2012.
-- The Company entered into multi-year retransmission consent agreements
with Mediacom Communications, Bright House Networks and Time Warner
Cable.
-- The Company entered into a news share agreement with Time Warner Cable
("TWC") in which TWC will provide a 6:30 a.m., 6:00 p.m. and 11:00 p.m.
news program Monday through Friday on WXLV, our ABC affiliate in
Greensboro/Winston-Salem, NC, beginning January 2012.
-- The Company's ABC affiliate in St. Louis, MO, KDNL-TV, entered into a
news sharing agreement with the local NBC affiliate, KSDK-TV, in which
KSDK-TV began producing an early evening and late evening newscast for
KDNL-TV.

Balance Sheet and Cash Flow Highlights:

-- Debt on the balance sheet, net of $27.0 million in cash and restricted
cash, was $1,185.0 million at December 31, 2010 versus net debt of
$1,199.8 million at September 30, 2010 and net debt of $1,278.2 million
at December 31, 2009. Included in the December 31, 2010 cash balance
was approximately $5.1 million held in an escrow account to redeem the
remainder of the 4.875% senior convertible notes which holders had the
right to put to the Company in January 2011.
-- On December 15, 2010, the Company paid a special $0.43 per share cash
dividend to its shareholders.
-- On January 18, 2011, holders of the remaining $5.7 million of
outstanding 4.875% convertible debentures due 2018 had the right to put
the bonds to the Company at par value. None of the remaining bonds were
put. As a result, the remaining $5.1 million of cash held in an escrow
account was released to the Company.
-- As of December 31, 2010, 50.3 million Class A common shares and 30.1
million Class B common shares were outstanding, for a total of 80.4
million common shares outstanding.
-- Capital expenditures in the fourth quarter were $1.9 million.
-- Program contract payments for continuing operations were $19.9 million
in the fourth quarter.
-- In October 2010, the Company received approximately $8.4 million in
federal tax refunds.

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 first quarter 2011 and full year 2011 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.

"2011 is off to a good start with the core business expected to grow and after realizing $6.2 million in revenues from the Super Bowl which aired on our 20 FOX affiliates," commented David Amy, EVP and CFO. "We continue to see growth in the automotive category in the first quarter, which is expected to increase 18%. On the expense side, our programming payments are expected to decline by almost $21 million for the year. Due to our expectation to generate significant cash flow, we will be reinvesting some of our cash flows into the television operations in order to drive our competitive positions, upgrade our infrastructure, and enhance our technical efficiencies. We will also be distributing a portion of the cash flow to our shareholders in the form of a quarterly dividend."

-- The Company expects first quarter 2011 station net broadcast revenues
from continuing operations, before barter, to be approximately $155.7
million to $156.5 million, an increase of 5.3% to 5.8% as compared to
first quarter 2010 station net broadcast revenues of $147.9 million.
This assumes approximately $0.4 million in political revenues in the
first quarter as compared to $1.5 million in first quarter 2010. The
first quarter 2011 also includes $6.2 million of revenues generated from
the Super Bowl.
-- The Company expects barter revenue to be approximately $16.3 million in
the first quarter.
-- The Company expects barter expense to be approximately $16.3 million in
the first quarter.
-- The Company expects continuing operations station production expenses
and station selling, general and administrative expenses (together,
"television expenses"), before barter expense, in the first quarter to
be approximately $73.6 million, a 10.6% increase from first quarter 2010
television expenses of $66.6 million due to promoting the February
sweeps, annual salary increases, higher sales commissions on the higher
revenues, and higher network programming licensing fees. On a full year
basis, television expenses are expected to be approximately $298.1
million, up 5.9% as compared to 2010 television expenses of $281.3
million. The 2011 expense forecast includes $1.7 million of stock-based
compensation expense for the year as compared to $1.7 million for 2010.
-- The Company expects program contract amortization expense to be
approximately $13.1 million in the first quarter and $55.3 million for
2011, as compared to the 2010 actuals of $15.9 million and $60.9 million
for the quarter and year, respectively.
-- The Company expects program contract payments to be approximately $18.8
million in the first quarter and $68.2 million for 2011, as compared to
the 2010 actuals of $27.4 million and $89.0 million for the quarter and
year, respectively.
-- The Company expects corporate overhead to be approximately $7.2 million
in the first quarter and $30.9 million for 2011, as compared to the 2010
actuals of $6.6 million and $26.8 million for the quarter and year,
respectively. The 2011 corporate expense forecast includes $0.3 million
of stock-based compensation expense for the quarter and $3.4 million for
the year, as compared to the 2010 actuals of $1.6 million and $2.5
million for the quarter and year, respectively.
-- The Company expects other operating division revenues less other
operating division expenses to be $1.7 million of income in the first
quarter and $11.2 million of income for 2011, assuming current equity
interests, and as compared to the 2010 actuals of $0.2 million of income
in the quarter and $5.7 million of income for the year.
-- The Company expects depreciation on property and equipment to be
approximately $8.8 million in the first quarter and $34.9 million for
2011, assuming the capital expenditure assumptions below, and as
compared to the 2010 actuals of $9.6 million and $36.3 million for the
quarter and year, respectively.
-- The Company expects amortization of acquired intangibles to be
approximately $4.7 million in the first quarter and $17.9 million for
2011, as compared to the 2010 actuals of $4.7 million and $18.8 million
for the quarter and year, respectively.
-- The Company expects net interest expense to be approximately $26.6
million in the first quarter and $105.8 million for 2011 (approximately
$95.4 million on a cash basis), assuming no changes in the current
interest rate yield curve, and changes in debt levels based on the
assumptions discussed in this "Outlook" section. This compares to the
2010 actuals of $28.9 million and $115.9 million ($104.8 million on a
cash basis) for the first quarter and year, respectively.
-- The Company expects a current tax provision from continuing operations
of approximately $2.9 million and $12.9 million in the first quarter and
for the full year 2011, respectively, based on the assumptions discussed
in this "Outlook" section. The Company expects the effective tax rate
to be approximately 38.5% and 38.8% for the first quarter and full year,
respectively.
-- The Company expects to spend approximately $12.2 million in capital
expenditures in the first quarter and approximately $36.5 million for
the year in order to take advantage of the bonus depreciation tax
deduction rules. Of this amount, approximately $5.2 million relates to
2010 projects that have carried over into 2011, $13.0 million is for
high-definition news projects and news equipment upgrades, and $9.5
million for master control upgrades.

Sinclair Conference Call:

The senior management of Sinclair will hold a conference call to discuss its fourth quarter 2010 results on Wednesday, February 9, 2011, 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)

For the three
months ended For the twelve months
December 31, ended December 31,
2010 2009 2010 2009
---- ---- ---- ----
REVENUES:
Station broadcast
revenues, net of
agency commissions $189,938 $153,857 $655,378 $554,597
Revenues realized from
station barter
arrangements 24,637 19,355 75,210 58,182
Other operating
divisions revenues 10,980 10,128 36,598 43,698
------ ------ ------ ------
Total revenues 225,555 183,340 767,186 656,477

OPERATING EXPENSES:
Station production
expenses 40,951 36,215 154,133 142,415
Station selling,
general and
administrative
expenses 33,665 31,446 127,091 122,833
Expenses recognized
from station barter
arrangements 22,388 15,434 67,083 48,119
Amortization of program
contract costs and net
realizable value
adjustments 13,700 15,443 60,862 73,087
Other operating
divisions expenses 8,657 11,098 30,916 45,520
Depreciation of
property and equipment 8,563 10,436 36,307 42,892
Corporate general and
administrative
expenses 6,737 7,147 26,800 25,632
Amortization of
definite-lived
intangible assets and
other assets 4,747 4,672 18,834 22,355
Gain on asset exchange - (1,929) - (4,945)
Impairment of goodwill,
intangible and other
assets 4,803 119,458 4,803 249,799
----- ------- ----- -------
Total operating
expenses 144,211 249,420 526,829 767,707
------- ------- ------- -------
Operating income (loss) 81,344 (66,080) 240,357 (111,230)

OTHER INCOME (EXPENSE):
Interest expense and
amortization of debt
discount and deferred
financing costs (27,346) (26,535) (116,046) (80,021)
(Loss) gain from
extinguishment of debt (1,889) (521) (6,266) 18,465
(Loss) income from
equity and cost method
investments (2,383) (117) (4,861) 354
Other income, net 900 411 2,667 1,972
--- --- ----- -----
Total other expense (30,718) (26,762) (124,506) (59,230)
------- ------- -------- -------
Income (loss) from
continuing operations
before income taxes 50,626 (92,842) 115,851 (170,460)
INCOME TAX (PROVISION)
BENEFIT (17,294) 23,383 (40,226) 32,512
------- ------ ------- ------
Income (loss) from
continuing operations 33,332 (69,459) 75,625 (137,948)
DISCONTINUED
OPERATIONS:
Loss from discontinued
operations, net of
related income tax
benefit (provision) of
$125, ($109), ($77)
and ($350),
respectively (375) (109) (577) (81)
---- ---- ---- ---
NET INCOME (LOSS) 32,957 (69,568) 75,048 (138,029)
Net loss attributable
to the noncontrolling
interest 122 1,808 1,100 2,335
--- ----- ----- -----
NET INCOME (LOSS)
ATTRIBUTABLE TO
SINCLAIR BROADCAST
GROUP $33,079 $(67,760) $76,148 $(135,694)
Dividends declared per
share $0.43 $- $0.43 $-
===== === ===== ===
EARNINGS (LOSS) PER
COMMON SHARE
ATTRIBUTABLE TO
SINCLAIR BROADCAST
GROUP:
Basic earnings (loss)
per share from
continuing operations $0.42 $(0.85) $0.96 $(1.70)
===== ====== ===== ======
Basic loss per share
from discontinued
operations $- $- $(0.01) $-
=== === ====== ===
Basic earnings (loss)
per share $0.41 $(0.85) $0.95 $(1.70)
===== ====== ===== ======
Diluted earnings (loss)
per share from
continuing operations $0.41 $(0.85) $0.95 $(1.70)
===== ====== ===== ======
Diluted loss per share
from discontinued
operations $- $- $(0.01) $-
=== === ====== ===
Diluted earnings (loss)
per share $0.40 $(0.85) $0.94 $(1.70)
===== ====== ===== ======
Weighted average common
shares outstanding 80,365 79,819 80,245 79,981
====== ====== ====== ======
Weighted average common
and common equivalent
shares outstanding 83,775 79,819 83,606 79,981
====== ====== ====== ======

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

December 31, September 30,
2010 2010
---- ----
Cash & cash equivalents (1) $27,032 $46,618
Total current assets 204,281 227,331
Total long term assets 1,281,643 1,308,833
Total assets 1,485,924 1,536,164

Current portion of debt 22,752 24,237
Total current liabilities 167,896 189,555
Long term portion of debt 1,189,313 1,222,140
Total long term liabilities 1,475,110 1,502,582
Total liabilities 1,643,006 1,692,137

Total stockholders' deficit (157,082) (155,973)
Total liabilities & stockholders'
deficit $1,485,924 $1,536,164

(1) December 31, 2010 includes $5.1 million of restricted cash held
in escrow for the redemption of
the 4.875% Senior Convertible Notes that was released in January
2011.

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

Twelve
Three Months Months
Ended Ended
December
December 31, 31,
2010 2010
---- ----
Net cash flow from operating
activities $48,026 $154,961
Net cash flow (used in) from
investing activities (548) 31,935
Net cash flow used in financing
activities (67,001) (188,146)
------- --------

Net decrease in cash & cash
equivalents (19,523) (1,250)
Cash & cash equivalents, beginning
of period 41,497 23,224
------ ------
Cash & cash equivalents, end of
period $21,974 $21,974

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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