Sinclair Reports Third Quarter 2013 Financial Results

Sinclair Reports Third Quarter 2013 Financial Results

- EARNS $0.36 DILUTED EARNINGS PER SHARE

- DECLARES $0.15 QUARTERLY DIVIDEND PER SHARE

BALTIMORE, Nov. 6, 2013 /PRNewswire/ -- Sinclair Broadcast Group, Inc. (Nasdaq: SBGI), the "Company" or "Sinclair," today reported financial results for the three months and nine months ended September 30, 2013.

(Logo: http://photos.prnewswire.com/prnh/20100119/PH39783LOGO )

"Our third quarter 2013 results showed an increase of 11.0% in net broadcast revenues on a same station basis, excluding political revenues, which was driven by growth in our retransmission revenues and core business," commented David Smith, President and CEO of Sinclair. "We are pleased with our solid third quarter results and expect to continue to grow our revenue share and provide additional value to our shareholders through our station acquisitions and the synergies and efficiencies of scale that we are creating as we continue to consolidate. Including all pending station acquisitions, we are the largest and one of the most diversified TV broadcasters in the country and have been the most active TV broadcasting consolidator with over $3.0 billion in assets purchased and announced. Television continues to be the preferred medium for advertisers and consumers top choice for news and entertainment. As we look ahead, we are beginning to assess other possible avenues for growth after the industry consolidates, including enhancing our original content offerings and distribution, the pursuit of strategic partnerships and monetizing spectrum holdings, all with the intent of creating additional value for our shareholders."

Three Months Ended September 30, 2013 Financial Results:


-- Net broadcast revenues from continuing operations increased 34.7% to
$303.0 million, versus $225.0 million in the prior year period.
-- Operating income decreased 7.1% to $72.8 million, due to non-cash
depreciation and amortization as a result of acquisitions and a one-time
cash charge of $4.3 million of severance costs related to the Fisher
acquisition, compared to operating income of $78.4 million in the prior
year period.
-- Net income attributable to the Company was $36.3 million compared to net
income of $26.2 million in the prior year period.
-- Diluted earnings per common share were $0.36 compared to $0.32 in the
prior year period.
Nine-Months Ended September 30, 2013 Financial Results:


-- Net broadcast revenues from continuing operations increased 31.8% to
$835.2 million, versus $633.5 million in the prior year period.
-- Operating income increased 5.0% to $220.8 million, versus $210.2 million
in the prior year period.
-- Net income attributable to the Company was $71.2 million, which includes
$16.3 million of loss on the extinguishment of debt, versus net income
of $85.7 million in the prior year period.
-- Diluted earnings per common share were $0.78 compared to $1.05 in the
prior year period.
Three Months Ended September 30, 2013 Operating Highlights:


-- Political revenues were $2.7 million versus $27.8 million in the third
quarter of 2012.
-- Local net broadcast revenues, which include local time sales,
retransmission revenues, and other broadcast revenues, were up 53.3%,
while national net broadcast revenues, which include national time sales
and other national broadcast revenues, were down 7.0% versus the third
quarter of 2012.
-- Excluding political revenues, local net broadcast revenues increased
55.8% and national net broadcast revenues increased 40.0% versus the
third quarter of 2012.
-- On a same station basis, excluding political revenues, local net
broadcast revenues were up 14.0%, while national net broadcast
revenues were up 0.7%, versus the third quarter of 2012.
-- Fastest growing advertising categories, on a same station basis,
included automotive, which was up 9.3%, services, grocery, media,
furniture, and home products. Categories that declined were
telecommunications and paid programming.
Recent Corporate Developments


-- On August 8, 2013, the Company closed on its previously announced
purchase of Fisher Communications, Inc. for $373.2 million, less
approximately $25.0 million of working capital.
-- In September, the Company entered into a definitive merger agreement to
acquire the assets of eight television stations owned by New Age Media
for $90.0 million. The transaction is expected to close during the
first quarter of 2014, subject to the approval of the FCC and customary
closing conditions.
-- On September 30, 2013, the Company closed on its previously announced
purchase of certain stock and assets of the Sioux City, IA television
stations owned by TTBG, LLC and closed on the Fresno/Visalia, CA and
Omaha, NE stations on October 1, 2013 for a total purchase price of
$115.35 million. The Company will provide sales and other services to
two stations.
-- On October 1, 2013, the Company closed on the purchase of KDBC (FOX) in
El Paso, Texas for $21.0 million.
-- On October 31, 2013, the Company closed on the purchase of the
non-license assets of WPFO (FOX) in Portland, Maine for $13.6 million
and will provide sales and other services to the station.
-- On September 27, 2013, the Company announced the passing of its
long-time Board Member, the Honorable Judge Basil A. Thomas.
Balance Sheet and Cash Flow Highlights:


-- Debt on the balance sheet, net of $229.0 million in cash and cash
equivalents, was $2,245.9 million at September 30, 2013 versus net debt
of $1,898.4 million at June 30, 2013.
-- On October 11, 2013, the Company's wholly-owned subsidiary, Sinclair
Television Group ("STG"), closed on a $350.0 million, 6.375% Senior
Unsecured Note due 2021.
-- On October 23, 2013, the Company's wholly-owned subsidiary, STG, amended
and upsized its Bank Credit Facility with an additional $57.5 million in
revolving line of credit capacity, a $250 million incremental term loan
B, and an incremental $200 million delayed draw term loan A.
-- On October 12, 2013, the Company's wholly-owned subsidiary, STG,
redeemed its $500 million, 9.25% Second Lien Notes due 2017 from the
proceeds of the 6.375% Note and incremental bank credit facilities.
-- On September 25, 2013, holders of $5.7 million original principal value
of the Company's 4.875% Convertible Notes converted their Notes into
approximately 338.6 thousand common shares pursuant to the indenture
governing those notes.
-- On October 24, 2013, holders of $5.4 million original principal value of
the Company's 3.0% Convertible Notes converted their Notes, and the
conversion was settled in $10.5 million cash pursuant to the indenture
governing those Notes.
-- As of September 30, 2013, 73.9 million Class A common shares and 26.3
million Class B common shares were outstanding, for a total of 100.2
million common shares outstanding.
-- In September 2013, the Company paid a $0.15 per share quarterly cash
dividend to its shareholders.
-- Capital expenditures in the third quarter 2013 were $11.6 million.
-- Program contract payments for continuing operations were $21.7 million
in the third quarter 2013.
Notes:

Presentation of financial information for the prior year has been reclassified to conform with the presentation of generally accepted accounting principles for the current year.

Outlook:

The term "Acquisition(s)" in this Outlook section refers to the inclusion of the GoCom stations for the full year 2013; the COX stations beginning May 1, 2013; WUTB beginning June 1, 2013; the Fisher stations beginning August 8, 2013, the TTBG and El Paso stations beginning October 1, 2013, the Barrington stations beginning December 1, 2013, the Portland ME station beginning November 1, 2013. The Allbritton, New Age, and Peak Media stations are not included in the Outlook section as they are not expected to close in 2013. The term "same station basis" excludes the Acquisitions defined above for the periods noted as well as the results of the Newport stations and KBTV for the first 11 months of 2013.

"For the fourth quarter of 2013, we expect to see continued growth in core local and national advertising," commented David Amy, Executive Vice President and Chief Financial Officer. "While we expect our political revenues to benefit from the implementation of the Affordable Care Act, the uncertainty surrounding the government's computer enrollment issues has resulted in slower than expected state spending on related advertising. Advertising in the automotive sector, however, continues to be robust, growing 9.3% in the third quarter over the same period last year, as sales of new cars hit their highest levels since 2007. That momentum is carrying through to the fourth quarter with auto advertising, on a same station basis, expected to grow by high single digits over the fourth quarter last year."

The Company currently expects to achieve the following results for the fourth quarter and year ending December 31, 2013, as follows:

Fourth Quarter 2013


-- Net broadcast revenues from continuing operations, before barter, are
expected to be approximately $368.1 million to $372.1 million, up 28.2%
to 29.6% year-over-year. Embedded in these anticipated results are:
-- Net revenues of $116.7 million related to the Acquisitions.
-- Approximately $5.9 million in political revenues as compared to
$54.1 million in the fourth quarter 2012.
-- Total same station net broadcast revenues are estimated to be down
11.0% to 12.4% versus the same period in 2012 reflecting the absence
of political as 2013 is a non-election year.
-- Excluding the Acquisitions and excluding political revenues, same
station net broadcast revenues are estimated to be up 6.7% to 8.4%
versus the fourth quarter of 2012.
-- Barter and trade revenue are expected to be approximately $22.5 million.
-- Barter expense is expected to be approximately $20.0 million. Trade
expense is included in television expenses (defined below).
-- Station production expenses and station selling, general and
administrative expenses (together, "television expenses"), excluding
barter expense of $20.0 million but including trade expense of $2.5
million, are expected to be approximately $192.3 million, which assumes
$66.3 million related to the acquisitions for the quarter. Trade
expense has historically been forecasted with barter expense but is
currently forecasted in television expenses.
-- Excluding the Acquisitions, same station television expenses are
expected to be up approximately 2.8%.
-- Program contract amortization expenses are expected to be approximately
$23.6 million, which assumes $4.8 million related to the Acquisitions.
-- Program contract payments are expected to be approximately $22.1
million, which assumes $2.9 million related to the Acquisitions.
-- Corporate overhead is expected to be approximately $11.5 million, which
includes $0.8 million of stock-based compensation.
-- Other operating division revenues less other operating division expenses
are expected to be $3.1 million of income, assuming current equity
interests.
-- Depreciation on property and equipment is expected to be approximately
$22.2 million, assuming the capital expenditure assumption below.
-- Amortization of acquired intangibles is expected to be approximately
$20.8 million.
-- Net interest expense is expected to be approximately $40.9 million,
assuming no changes in the current interest rate yield curve and changes
in debt levels based on the assumptions discussed in this "Outlook"
section and the recent redemptions and financings.
-- A current tax benefit from continuing operations is expected to be
approximately $4.5 million, based on the assumptions discussed in this
"Outlook" section, and an effective tax rate of approximately 45.3%.
-- Capital expenditures are expected to be approximately $17.2 million.
Full Year 2013


-- Net broadcast revenues from continuing operations, before barter, are
expected to be approximately $1.203 billion to $1.207 billion, up 30.7%
to 31.1% year-over-year. Embedded in these anticipated results are:
-- Net revenues of $313.2 million related to the Acquisitions.
-- Approximately $11.0 million in political revenues as compared to
$96.9 million in 2012.
-- Total same station net broadcast revenues are estimated to be down
2.1% to 2.5% versus the same period in 2012 reflecting the absence
of political as 2013 is a non-election year.
-- Excluding the Acquisitions and political revenues, same station net
broadcast revenues are estimated to be up 8.3% to 8.8% versus 2012.
-- Barter and trade revenue is expected to be approximately $83.4 million
-- Barter expense is expected to be approximately $73.5 million.
-- Station production expenses and station selling, general and
administrative expenses (together, "television expenses"), excluding
barter expense but including trade expense, are expected to be
approximately $628.7 million, which assumes $174.3 million related to
the acquisitions for the year.
-- Stock based compensation expense is expected to be $2.9 million.
-- Excluding the acquisitions, same station television expenses are
expected to be up approximately 8.2%.
-- Program contract amortization expense is expected to be approximately
$80.4 million, which assumes $14.1 million related to the Acquisitions.
-- Program contract payments are expected to be approximately $88.7
million, which assumes $9.7 million related to the Acquisitions.
-- Corporate overhead is expected to be approximately $50.3 million, which
includes certain one-time costs associated with the acquisitions;
additions to certain corporate functions as a result of the acquisition
growth; and corporate overhead acquired in the fourth quarter of 2013,
the synergies of which are not expected to be realized until early 2014.
-- Stock-based compensation expense is expected to be approximately
$7.0 million.
-- Other operating division revenues less other operating division expenses
are expected to be $9.0 million of income, assuming current equity
interests.
-- Depreciation on property and equipment is expected to be approximately
$69.3 million, assuming the capital expenditure assumption below.
-- Amortization of acquired intangibles is expected to be approximately
$69.5 million.
-- Net interest expense is expected to be approximately $163.8 million
(approximately $154.1 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.
-- The current tax provision from continuing operations is expected to be
approximately $12.8 million based on the assumptions discussed in this
"Outlook" section, and an effective tax rate of approximately 31.3%.
The Company expects to pay cash taxes of $20.0 million for the year.
-- Capital expenditures are expected to be $45.9 million, which assumes
$12.3 million related to the Acquisitions.
Sinclair Conference Call:

The senior management of Sinclair will hold a conference call to discuss its third quarter 2013 results on Wednesday, November 6, 2013, at 9:30 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) 407-8033.

"Discontinued Operations" accounting has been adopted in the financial statements for all periods presented in this press release for the sale of WLAJ-TV, our ABC affiliate in Lansing, Michigan which closed in March 2013, and for the sale of WLWC-TV, our CW affiliate in the Providence, RI/New Bedford, MA market which closed in April 2013. Therefore, the related results from operations, net of related income taxes, have been reclassified from income from continuing operations and reflected as net income from discontinued operations. Prior current year amounts have been reclassified to conform to current year GAAP presentation.

About Sinclair:

On a pro forma basis assuming consummation of all announced transactions, Sinclair Broadcast Group, Inc., the largest and one of the most diversified television broadcasting companies, will own and operate, program or provide sales services to 163 television stations in 77 markets. Sinclair's television group will reach approximately 38.7% of U.S. television households (24.3% based on the FCC's calculation with the UHF discount) and will be affiliated with all major networks. Sinclair's television portfolio will include 39 FOX, 29 ABC, 26 CBS, 25 CW, 22 MNT, 15 NBC, 5 Univision, one Azteca and one independent station. Sinclair owns equity interests in broadcast transmission-related companies and various non-broadcast related companies. 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, 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, our ability to integrate acquired businesses and maximize operating synergies, our ability to obtain necessary governmental approvals and financing for announced acquisitions, successful execution of outsourcing agreements, pricing and demand fluctuations in local and national advertising, volatility in programming costs, the market's acceptance of new programming and performance of, 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 any 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.









Sinclair Broadcast Group, Inc. and Subsidiaries

Preliminary Unaudited Consolidated Statements of Operations

(in thousands, except per share data)




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

2013 2012 2013 2012
---- ---- ---- ----

REVENUES:

Station broadcast revenues, net of agency commissions $303,028 $225,023 $835,223 $633,493

Revenues realized from station barter arrangements 20,653 21,179 60,930 60,060

Other operating divisions revenues 14,963 12,512 39,263 38,609
------ ------ ------ ------

Total revenues 338,644 258,714 935,416 732,162

OPERATING EXPENSES:

Station production expenses 98,939 61,705 265,066 184,098

Station selling, general and administrative expenses 66,115 43,169 171,350 120,462

Expenses recognized from station barter arrangements 18,082 19,300 53,478 55,119

Amortization of program contract costs and net realizable 19,229 14,296 56,746 43,565
value adjustments

Other operating divisions expenses 12,746 10,372 33,351 33,165

Depreciation of property and equipment 17,408 12,626 47,108 34,031

Corporate general and administrative expenses 16,109 8,286 38,806 25,166

Amortization of definite-lived intangible and other assets 17,168 10,562 48,727 26,375

Total operating expenses 265,796 180,316 714,632 521,981
------- ------- ------- -------

Operating income 72,848 78,398 220,784 210,181

OTHER INCOME (EXPENSE):

Interest expense and amortization of debt discount and (39,867) (35,294) (123,029) (92,001)
deferred financing costs

Loss from extinguishment of debt - - (16,283) (335)

Income from equity and cost method investments 1,571 1,919 115 8,343

Other income, net 488 547 1,427 1,733
--- --- ----- -----

Total other expense (37,808) (32,828) (137,770) (82,260)
------- ------- -------- -------

Income from continuing operations before income taxes 35,040 45,570 83,014 127,921

INCOME TAX PROVISION (4,489) (19,093) (22,992) (42,185)
------ ------- ------- -------

Income from continuing operations 30,551 26,477 60,022 85,736

DISCONTINUED OPERATIONS:

Income (loss) from discontinued operations, includes income 6,100 (125) 11,558 (178)
tax benefit (provision) of $6,107, $(36), $10,806 and $(220),
respectively
---

NET INCOME 36,651 26,352 71,580 85,558

Net (income) loss attributable to the noncontrolling interests (309) (107) (415) 106
---- ---- ---- ---

NET INCOME ATTRIBUTABLE TO SINCLAIR $36,342 $26,245 $71,165 $85,664
BROADCAST GROUP


Dividends declared per share $0.15 $0.15 $0.45 $0.39
===== ===== ===== =====


EARNINGS PER COMMON SHARE ATTRIBUTABLE TO
SINCLAIR BROADCAST GROUP:

Basic earnings per share from continuing operations $0.30 $0.33 $0.66 $1.06
===== ===== ===== =====

Basic earnings per share from discontinued operations $0.06 $(0.00) $0.13 $(0.00)
===== ====== ===== ======

Basic earnings per share $0.37 $0.32 $0.78 $1.05
===== ===== ===== =====

Diluted earnings per share from continuing operations $0.30 $0.32 $0.65 $1.06
===== ===== ===== =====

Diluted earnings per share from discontinued operations $0.06 $(0.00) $0.13 $(0.00)
===== ====== ===== ======

Diluted earnings per share $0.36 $0.32 $0.78 $1.05
===== ===== ===== =====

Weighted average common shares outstanding 99,473 81,081 99,982 80,990
====== ====== ====== ======

Weighted average common and common equivalent shares outstanding 100,239 81,379 91,549 81,267
======= ====== ====== ======


AMOUNTS ATTRIBUTABLE TO SINCLAIR BROADCAST
GROUP COMMON SHAREHOLDERS:

Income from continuing operations, net of tax $30,242 $26,370 $59,607 $85,842

Loss from discontinued operations, net of tax 6,100 (125) 11,558 (178)
----- ---- ------ ----

Net income $36,342 $26,245 $71,165 $85,664
======= ======= ======= =======










Preliminary Unaudited Consolidated Historical Selected Balance Sheet Data:

(In thousands)




September 30, December 31,

2013 2012
---- ----

Cash & cash equivalents $228,994 $22,865

Total current assets 587,582 304,448

Total long term assets 3,030,091 2,425,249

Total assets $3,617,673 $2,729,697


Current portion of debt 18,893 49,326

Total current liabilities 340,711 307,600

Long term portion of debt 2,456,005 2,224,053

Total long term liabilities 2,860,724 2,522,150

Total liabilities 3,201,435 2,829,750


Total stockholders' deficit 416,238 (100,053)

Total liabilities & stockholders' deficit $3,617,673 $2,729,697










Unaudited Consolidated Historical Selected Statement of Cash Flows Data:

(In thousands)




Three Months Ended Nine Months Ended

September 30, September 30,

2013 2013
---- ----

Net cash flow from operating activities $97,269 $150,639

Net cash flow used in investing activities (430,106) (556,742)

Net cash flow from financing activities 11,019 612,232
------ -------


Net increase (decrease) in cash & cash equivalents (321,818) 206,129

Cash & cash equivalents, beginning of period 550,812 22,865
------- ------

Cash & cash equivalents, end of period $228,994 $228,994


SOURCE Sinclair Broadcast Group, Inc.

Photo:http://photos.prnewswire.com/prnh/20100119/PH39783LOGO
http://photoarchive.ap.org/
Sinclair Broadcast Group, Inc.

CONTACT: David Amy, EVP & Chief Financial Officer, or Lucy Rutishauser, VP-Corporate Finance & Treasurer, (410) 568-1500

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


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