Sinclair Reports Second Quarter 2015 Financial Results

Sinclair Reports Second Quarter 2015 Financial Results

- REPORTS $0.48 DILUTED EARNINGS PER SHARE

- DECLARES $0.165 QUARTERLY DIVIDEND PER SHARE

BALTIMORE, Aug. 5, 2015 /PRNewswire/ -- Sinclair Broadcast Group, Inc. (Nasdaq: SBGI), the "Company" or "Sinclair," today reported financial results for the three and six months ended June 30, 2015.

"For second quarter, we exceeded our guidance in all key financial metrics, due in part to higher retransmission consent fees and favorable cost outlays," commented David Smith, President and CEO of Sinclair. "We continue to make significant progress with regard to content initiatives and distribution rights, particularly in the areas of sports and first-run programming. We completed our renewals with the CBS and CW networks, securing five-year agreements that represent fair value to us both. Lastly and with another month remaining in the regional Emmy and Associated Press awards season, we are proud to announce that our television station news organizations have received more than 200 awards, a reflection of our commitment to and outstanding reporting we are doing as the largest producer of local news in the country."

Three Months Ended June 30, 2015 Financial Results:


-- Total revenues increased 21.8% to $554.2 million, versus $455.1 million
in the prior year period.
-- Operating income was $114.3 million, an increase of 11.0%, versus
operating income of $103.0 million in the prior year period.
-- Net income attributable to the Company was $45.8 million, versus net
income of $41.3 million in the prior year period.
-- Diluted earnings per common share were $0.48 as compared to $0.42 in the
prior year period.
Six Months Ended June 30, 2015 Financial Results:


-- Total revenues increased 22.0% to $1,058.9 million, versus $867.8
million in the prior year period.
-- Operating income was $198.9 million, an increase of 8.1%, versus
operating income of $184.0 million in the prior year period.
-- Net income attributable to the Company was $70.1 million, versus net
income of $68.5 million in the prior year period.
-- Diluted earnings per common share were $0.73 as compared to $0.69 in the
prior year period.
Three Months Ended June 30, 2015 Operating Highlights:


-- Net broadcast revenues, before barter, increased 24.3% to $502.3 million
versus $404.2 million in the second quarter of 2014.
-- Political revenues were $4.0 million versus $11.6 million in the
second quarter of 2014.
-- Revenues from our digital offerings increased 32.0% in the second
quarter. Our web and mobile platforms had over 44 million unique
visitors and over eight million social media fans and followers, on
average, during the second quarter.
Recent Corporate Developments:

Content and Distribution Opportunities:


-- During the second quarter, the Company renewed multi-year retransmission
consent agreements with COX Communications and Suddenlink covering over
4.1 million subscribers.
-- In May, the Company signed a 26-week national broadcast deal with
Destination America, part of Discovery Communications, to air Ring of
Honor programming, the Company's professional wrestling promotion.
-- In May, the Company's American Sports Network ("ASN") entered into an
agreement with Minor League Baseball to televise weekly games pursuant
to a new series, "Minor League Baseball Sunday Showcase," and to
televise two All-Star games.
-- In June, ASN announced an agreement with AMA Pro Racing to offer
syndicated network television coverage in select markets for eight AMA
Pro Flat Track events during the summer of 2015.
-- In July, ASN announced an agreement with Millennium Dancesport
Championships to televise "The Dancesport League on ASN."
-- In June, the Company formed a joint venture with Michael Eisner's
Tornante Company, Tornante-Sinclair LLC, to create, develop, produce and
distribute first-run syndicated talk, game, court and comedy shows.
-- In June, the Company and Metro-Goldwyn-Mayer ("MGM") partnered on the
first-ever science fiction multi-channel network, "Comet TV."
-- In July, the Company renewed affiliation agreements with the CBS Network
covering 16 markets. The new agreements are for five years, beginning in
2015 and 2016 when the current affiliation agreements expire.
-- In July, the Company renewed affiliation agreements with the CW Network
for 23 owned and/or operated markets. At the same time, the CW renewed
affiliation agreements with another nine markets for which Sinclair
provides sales and other services. The new agreements are for five
years, beginning August 2016 when the current affiliation agreements
expire.
News Expansions:


-- In July, the Company announced the October 4, 2015 launch of "Full
Measure with Sharyl Attkisson," a Sunday morning national news program
that will air on Sinclair's affiliates nationwide and be available for
streaming on their websites. The 30-minute program, based in Washington,
D.C., will focus on investigative journalism and target accountability
in the public and private sectors.
Digital Investments:


-- In May, the Company partnered with Chideo, a charity network, to connect
Sinclair's broadcast and digital audiences with Chideo's inspirational
and entertainment content to benefit leading charities through
much-needed public awareness.
-- In June, the Company invested in ExtendTV (rebranded as Zypmedia), the
leading local digital program and repurposing media-buying platform.
Spectrum Opportunities:


-- In May, the Company's subsidiary, ONE Media, along with Samsung, had its
"System Discovery and Signaling" technology (bootstrap) approved for
Candidate Standard (A/321 Part 1). The technical specification is
critical to a robust Next Generation Broadcast Platform that provides
for mobility of the broadcast signal.
-- In June, the Company announced a Memorandum of Understanding with
Samsung Electronics America, Inc. ("Samsung") and Pearl TV, a
partnership of nine major TV broadcast companies, to work
collaboratively to support the development and implementation of the new
Advanced Television Systems Committee ("ATSC") 3.0 standard,
representing a significant step forward to speed the implementation of
4K Ultra High Definition TV and mobility. The agreement brings together
the world's leader in home entertainment (Samsung) alongside major
American broadcasters that together reach tens of millions of Americans.
Balance Sheet and Cash Flow Highlights:


-- Debt on the balance sheet, net of $64.6 million in cash and cash
equivalents, was $3,825.1 million at June 30, 2015 versus net debt of
$3,812.9 million at March 31, 2015. Pursuant to a change in Generally
Accepted Accounting Principles, $42.4 million and $40.3 million of debt
issuance costs were reclassified from other assets to a deduction in the
carrying amount of the related debt liability, at June 30, 2015 and
March 31, 2015, respectively.
-- As of June 30, 2015, 69.6 million class A common shares and 25.9 million
class B common shares were outstanding, for a total of 95.5 million
common shares outstanding.
-- In June 2015, the Company paid a $0.165 per share quarterly cash
dividend to its shareholders.
-- Capital expenditures in the second quarter of 2015 were $23.4 million.
-- Program contract payments were $28.1 million in the second quarter of
2015.
Notes:

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

Outlook:

The following acquisitions closed during 2014 and, therefore, the results of these acquired stations were not included in the corresponding 2014 periods, pre-acquisition: the Allbritton stations (August 1, 2014), the Macon station (September 1, 2014), the New Age stations (November 1, 2014), KSNV in Las Vegas (November 1, 2014), and the Media General station swaps (December 19, 2014). The results of the divested stations associated with these acquisitions are not included in the corresponding 2015 periods.

"On a political advertising excluded basis, we believe our third quarter core advertising revenues will finish slightly better than our second quarter results," commented David Amy, Executive Vice President and Chief Operating Officer. "For the fourth quarter, we expect to benefit from additional retransmission consent agreement renewals, increased digital advertising revenues from the staged launch of our content management system, and an improvement in FOX prime-time programming."

The Company currently expects to achieve the following results for the three months ending September 30, 2015 and year ending December 31, 2015:

Third Quarter 2015


-- Net broadcast revenues, before barter, are expected to be approximately
$483.3 million to $486.5 million, up 7.9% to 8.6% year-over-year.
Embedded in these anticipated results are:
-- $7.2 million in political revenues as compared to $33.8 million in
the third quarter of 2014.
-- Barter and trade revenue are expected to be approximately $28.0 million
in third quarter 2015.
-- Barter expense is expected to be approximately $24.0 million. $4.0
million of 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 but including trade expense, are expected to be
approximately $293.8 million, including $1.7 million in stock-based
compensation expense.
-- Program contract amortization expenses are expected to be approximately
$32.2 million.
-- Program contract payments are expected to be approximately $26.9
million.
-- Corporate overhead is expected to be approximately $13.5 million,
including $1.1 million of stock-based compensation expense.
-- Research and development costs related to ONE Media (previously reported
in corporate overhead) are expected to be $5.9 million.
-- Other operating division revenues less other operating division expenses
are expected to generate $4.4 million of operating cash flow, assuming
current equity interests.
-- Depreciation on property and equipment is expected to be approximately
$25.2 million, assuming the capital expenditure assumption below.
-- Amortization of acquired intangibles is expected to be approximately
$39.9 million.
-- Net interest expense is expected to be approximately $48.4 million
($46.0 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.
-- Cash taxes paid are expected to be approximately $35.6 million, based on
the assumptions discussed in this "Outlook" section. The Company's
effective tax rate is expected to be approximately 35.2%.
-- Capital expenditures are expected to be approximately $22.8 million.
Full Year 2015


-- Barter and trade revenue is expected to be approximately $114.6 million.
-- Barter expense is expected to be approximately $99.1 million. $15.5
million of trade expense is included in television expenses.
-- 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 $1,153.4 million, including $6.7 million of stock-based
compensation expense. Included in this amount are approximately $23.0
million of costs related to future return-generating initiatives
consisting of ASN, the digital content management system and news
expansions.
-- Program contract amortization expense is expected to be approximately
$124.6 million.
-- Program contract payments are expected to be approximately $108.8
million.
-- Corporate overhead is expected to be approximately $57.0 million,
including $10.4 million of stock-based compensation expense.
-- Research and development costs related to ONE Media are expected to be
$15.3 million.
-- Other operating division revenues less other operating division expenses
are expected to generate $20.0 million of operating cash flow, assuming
current equity interests.
-- Depreciation on property and equipment is expected to be approximately
$99.9 million, assuming the capital expenditure assumption below.
-- Amortization of acquired intangibles is expected to be approximately
$159.2 million.
-- Net interest expense is expected to be approximately $191.2 million
(approximately $181.8 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 Company's effective tax rate is expected to be approximately 35.5%.
-- Capital expenditures are expected to be $90.0 million, which assumes
investments in HD news, building consolidation projects, and ASN capital
requirements.
Sinclair Conference Call:

The senior management of Sinclair will hold a conference call to discuss its second quarter 2015 results on Wednesday, August 5, 2015, at 9:30 a.m. ET. After the call, an audio replay will be available at www.sbgi.net under "Investors/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.

About Sinclair:

Sinclair is the largest and one of the most diversified television broadcasting companies in the country with 163 television stations it owns, operates and/or provides services to in 79 markets broadcasting 379 channels and affiliations with all the major networks. Sinclair is the leading local news provider in the country, as well as a producer of sports content. Sinclair's broadcast content is delivered via multiple-platforms, including over-the-air, multi-channel video program distributors, and digital platforms. The Company regularly uses its website as a key source of Company information which can be accessed at www.sbgi.net.

Forward-Looking Statements:

The matters discussed in this news release, particularly those in the section labeled "Outlook," include forward-looking statements regarding, among other things, future operating results. When used in this news release, the words "outlook," "intends to," "believes," "anticipates," "expects," "achieves," "estimates," and similar expressions are intended to identify forward-looking statements. Such statements are subject to a number of risks and uncertainties. Actual results in the future could differ materially and adversely from those described in the forward-looking statements as a result of various important factors, including, 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, 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 Six Months Ended
June 30, June 30,

2015 2014 2015 2014
---- ---- ---- ----

REVENUES:

Station broadcast
revenues, net of
agency commissions $502,338 $404,151 $966,501 $778,032

Revenues realized from
station barter
arrangements 30,373 33,336 51,332 57,361

Other operating
divisions revenues 21,456 17,649 41,109 32,391
------ ------ ------ ------

Total revenues 554,167 455,136 1,058,942 867,784

OPERATING EXPENSES:

Station production
expenses 181,088 134,303 352,103 261,342

Station selling,
general and
administrative
expenses 102,801 82,595 204,688 164,520

Expenses recognized
from station barter
arrangements 26,381 29,528 43,793 51,005

Amortization of program
contract costs and net
realizable value
adjustments 29,782 23,574 60,173 47,515

Other operating
divisions expenses 16,666 14,453 32,489 26,778

Depreciation of
property and equipment 25,273 25,252 50,462 49,630

Corporate general and
administrative
expenses 14,154 15,820 30,170 31,655

Amortization of
definite-lived
intangible assets 39,445 24,989 79,425 49,717

Research and
development expenses 4,237 1,583 6,752 1,583
----- ----- -----

Total operating
expenses 439,827 352,097 860,055 683,745
------- ------- ------- -------

Operating income 114,340 103,039 198,887 184,039

OTHER INCOME (EXPENSE):

Interest expense and
amortization of debt
discount and deferred
financing costs (47,664) (40,121) (94,312) (79,659)

Income from equity and
cost method
investments 2,007 742 5,153 840

Other income, net 1,050 1,015 1,268 1,932
----- ----- -----

Total other expense,
net (44,607) (38,364) (87,891) (76,887)
------- ------- ------- -------

Income before income
taxes 69,733 64,675 110,996 107,152

INCOME TAX PROVISION (23,334) (23,074) (39,761) (37,894)
------- ------- ------- -------

NET INCOME 46,399 41,601 71,235 69,258

Net income attributable
to the noncontrolling
interests (612) (266) (1,166) (765)
==== ==== ====

NET INCOME ATTRIBUTABLE
TO SINCLAIR BROADCAST
GROUP $45,787 $41,335 $70,069 $68,493
======= ======= ======= =======

Dividends declared per
share $0.165 $0.15 $0.330 $0.30
====== ===== ====== =====

BASIC AND DILUTED EARNINGS PER COMMON
SHARE ATTRIBUTABLE TO SINCLAIR BROADCAST
GROUP:

Basic earnings per
share $0.48 $0.43 $0.74 $0.70
===== ===== ===== =====

Diluted earnings per
share $0.48 $0.42 $0.73 $0.69
===== ===== ===== =====

Weighted average common
shares outstanding 95,307 97,174 95,219 97,994
====== ====== ====== ======

Weighted average common
and common equivalent
shares outstanding 96,050 97,864 95,911 98,678
====== ====== ====== ======


SOURCE Sinclair Broadcast Group, Inc.

Sinclair Broadcast Group, Inc.

CONTACT: Chris Ripley, Chief Financial Officer, Lucy Rutishauser, SVP-Corporate Finance & Treasurer, (410) 568-1500

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


-------
Profile: intent