Sinclair Reports $0.21 Diluted Earnings Per Share In First Quarter 2013;
Declares $0.15 Quarterly Dividend Per Share
BALTIMORE, April 29, 2013
BALTIMORE, April 29, 2013 /PRNewswire/ --Sinclair Broadcast Group, Inc.
(Nasdaq: SBGI), the "Company" or "Sinclair," today reported financial results
for the three months ended March 31, 2013.
(Logo: http://photos.prnewswire.com/prnh/20100119/PH39783LOGO )
"2013 is off to a solid start with $2.5 million of incremental Super Bowl
revenues in the first quarter, increased ad spending by our largest
advertising category of automotive, and a very good February ratings book that
highlighted the importance and popularity of local news," commented David
Smith, President and CEO of Sinclair. "The market for television stations
remains robust, and we are pleased that we have been able to obtain quality
assets at accretive prices. We are excited the Barrington Broadcasting,
Fisher Communications and certain of the COX Media Group stations will soon be
joining us. We intend to continue analyzing and evaluating opportunities to
acquire additional television station assets towards creating greater scale
for our operations and value for our shareholders."
Net broadcast revenues from continuing operations were $252.9 million for the
three months ended March 31, 2013, an increase of 32.5% versus the prior year
period result of $190.9 million. The Company had operating income of $63.7
million in the three-month period, as compared to operating income of $59.9
million in the prior year period. Net income attributable to the Company was
$17.0 million in the three-month period, versus net income of $29.4 million in
the prior year period.
The Company reported diluted earnings per common share of $0.21 for the
three-month period ended March 31, 2013 versus diluted earnings per common
share of $0.36 in the prior year period.
"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.
Operating Statistics and Income Statement Highlights:
oPolitical revenues were $0.9 million in the first quarter 2013 versus $3.6
million in first quarter 2012.
oLocal net broadcast revenues, which include local time sales,
retransmission revenues, and other broadcast revenues, were up 32.8% in
the first quarter 2013, while national net broadcast revenues, which
include national time sales and other national broadcast revenues, were up
31.5% versus the first quarter 2012. Excluding political revenues, local
net broadcast revenues were up 33.2% and national net broadcast revenues
were up 40.0% in the first quarter 2013 versus the first quarter of 2012.
On a same station basis, excluding political revenues, local net broadcast
revenues were up 7.1%, while national net broadcast revenues were down
1.4%, versus the first quarter of 2012.
oAdvertising categories, on a same station basis, that reported the largest
spending increases in the first quarter 2013, as compared to the same
period last year, were automotive, which was up 6.8%, telecommunications,
retail, and direct response. Categories that declined were services,
schools, medical, and restaurants.
oEffective January 1, 2013, the Company entered into a six-year affiliation
agreement with the CBS Network for our Portland, ME and Cedar Rapids, IA
affiliates, expiring December 31, 2018.
oIn February 2013, the Company entered into a multi-year retransmission
consent agreement with DirecTV.
oIn February 2013, the Company entered into an agreement to purchase
certain stock and/or broadcast assets of four television stations, located
in four markets, owned by COX Media Group ("COX") for $99.0 million less
$4.3 million of working capital and entered into an agreement to provide
sales services to one other station. The transaction is expected to close
in the second quarter of 2013 subject to the approval of the FCC.
oIn February 2013, the Company entered into an agreement to purchase the
broadcast assets of 18 television stations owned by Barrington
Broadcasting Group ("Barrington") for $370.0 million, less amounts to be
paid by third parties, and entered into agreements to operate or provide
sales services to another six stations. In addition, the Company entered
into an agreement to sell its station WSYT-TV (FOX) and assign its LMA
with WNYS-TV (MNT) in Syracuse, NY, and sell its station in Peoria IL,
WYZZ-TV (FOX). The transactions are expected to close late in the second
quarter /early in the third quarter of 2013 subject to the approval of the
FCC and customary antitrust clearance.
oIn February 2013, in connection with the announcement of the Cox and
Barrington acquisitions, the Company announced a small market television
acquisition strategy through a newly-formed operating unit, Chesapeake
Television, Inc. (''Chesapeake TV''). We also announced the hiring of
Steven Pruett as Chief Operating Officer of Chesapeake TV. Mr. Pruett,
who most recently served as Chief Executive Officer of Communications
Corporation of America's 25 television station group, will oversee the
growth and development of our small market strategy.
oIn April 2013, the Company entered into a definitive merger agreement to
acquire Fisher Communications, Inc. ("Fisher") for $373.3 million, less
$20.0 to $25.0 million of expected working capital at closing. Under the
terms of the merger agreement, Fisher shareholders will receive $41.00 in
cash for each share of Fisher common stock they own. Fisher owns 20
television stations in eight markets, reaching 3.9% of U.S. television
households, and four radio stations in the Seattle market. Additionally,
Fisher previously entered into an agreement to provide certain operating
services for three television stations, including two simulcasts, pending
regulatory approval. The transaction is expected to close in the third
quarter of 2013 subject to the approval of the FCC, antitrust clearance,
the affirmative vote of two-thirds of Fisher's outstanding shares and
customary closing conditions.
oEffective March 1, 2013, the Company closed on the sale of WLAJ-TV (ABC)
in Lansing, MI for $14.4 million.
oEffective April 1, 2013, the Company closed on the sale of WLWC-TV (CW) in
the Providence, RI/New Bedford, MA market for $13.75 million.
oIn April 2013, the Company paid the last installment payment to the FOX
Network pursuant to its affiliation agreement entered into in May 2012 in
the amount of $25.0 million.
Balance Sheet and Cash Flow Highlights:
oDebt on the balance sheet, net of $25.8 million in cash and cash
equivalents, was $2,245.0 million at March 31, 2013 versus net debt of
$2,250.5 million at December 31, 2012.
oOn April 2, 2013, we issued $600.0 million of 5.375% Senior Unsecured
Notes due 2021.
oOn April 9, 2013, we entered into an Amended and Restated Bank Credit
Agreement ("BCA") to increase the availability under our revolving line of
credit, replace our existing term loans and provide more flexibility under
certain restrictive covenants. The new BCA consists of a $100.0 million
revolving line of credit priced at LIBOR plus 2.25% and due April 2018;
$500.0 million in tranche A term loans priced at LIBOR plus 2.25% and due
April 2018, of which $445.0 million will be a delayed draw to fund
acquisitions and general corporate purposes; and $400.0 million of tranche
B term loans priced at LIBOR plus 2.25% with a 0.75% LIBOR floor and due
oAs of March 31, 2013, 52.9 million Class A common shares and 28.8 million
Class B common shares were outstanding, for a total of 81.7 million common
oOn March 15, 2013, the Company paid a $0.15 per share quarterly cash
dividend to its shareholders.
oCapital expenditures in the first quarter 2013 were $7.5 million.
oProgram contract payments for continuing operations were $22.1 million in
the first quarter 2013.
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.
The management fees associated with the Freedom Communications ("Freedom")
local marketing agreement, which was terminated April 1, 2012 upon
acquisition, are reflected in other net broadcast revenues.
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, but not limited to, our abilityto consummate the offering of the
Class A common stock, to obtain necessary approvals for announced
acquisitions, 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 or refinance our indebtedness as its comes due,
our ability to integrate acquired businesses and maximize operating synergies,
our ability to implement our new small market strategy, 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, 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
In accordance with Regulation FD, Sinclair is providing public dissemination
through this news release of its expectations for certain components of its
second quarter 2013 and full year 2013 financial performance. The Company
assumes no obligation to update its expectations. All matters discussed in
this "Outlook" section are forward-looking and, therefore, readers should not
place any undue reliance on this information and should refer to the
"Forward-Looking Statements" section above.
The term "Acquisition(s)" in this Outlook section refers to the inclusion of
the Freedom stations (acquired on April 1, 2012), the Newport stations and
KBTV station (acquired on December 1, 2012) the GoCom stations (acquired on
December 31, 2012), the COX stations (assuming they are acquired on May 1,
2013), and the Barrington stations (assuming they are acquired on July 1,
2013). The Fisher stations are not included in the Outlook section.
"The first quarter momentum is continuing into the second quarter, especially
in the automotive category, which we expect to be up by mid to high single
digit percents on a same station basis," commented David Amy, EVP and CFO.
"The acquisitions which closed at the end of 2012 have transitioned smoothly
into the organization and our culture, and we are on track with the launching
of our small market television operation."
oThe Company expects second quarter 2013 station net broadcast revenues
from continuing operations, before barter, to be approximately $277.0
million to $279.3 million, up 27.3% to 28.4% as compared to second quarter
2012 results of $217.6 million. This assumes approximately $1.4 million
in political revenues in the second quarter 2013, as compared to $11.4
million in the second quarter 2012. The 2013 second quarter net broadcast
revenue estimates assume $48.8 million related to the Acquisitions.
Excluding the Acquisitions, same station net broadcast revenues in the
second quarter 2013 are estimated to be up 4.9% to 6.0% versus the second
quarter 2012, and up 10.1% to 11.2% excluding political.
oThe Company expects barter revenue to be approximately $21.5 million in
the second quarter 2013.
oThe Company expects barter expense to be approximately $21.5 million in
the second quarter 2013.
oThe Company expects continuing operations station production expenses and
station selling, general and administrative expenses (together,
"television expenses"), before barter expense, to be approximately $141.0
million in the second quarter and $607.1 million for 2013, as compared to
the 2012 actuals of $104.2 million and $426.8 million for the second
quarter and year, respectively. The 2013 estimates assume $24.0 million
and $148.6 million related to the Acquisitions for the quarter and year,
respectively. The 2013 expense forecast includes $2.0 million of
stock-based compensation expense for the year, as compared to $1.6 million
for 2012. Excluding the Acquisitions, same station television expenses
are expected to be up approximately 12.4% and 11.1% in the second quarter
and full year 2013, respectively. This assumes the stations are at full
staffing levels and maximum bonus potential, as well as higher reverse
retransmission fees on the retransmission renewals and the addition of the
oThe Company expects program contract amortization expense to be
approximately $19.0 million in the second quarter and $82.0 million for
2013, as compared to the 2012 actuals of $15.2 million and $61.0 million
for the quarter and year, respectively. The 2013 estimates assume $2.2
million and $11.6 million for the quarter and year respectively, related
to the Acquisitions.
oThe Company expects program contract payments to be approximately $22.7
million in the second quarter and $88.9 million for 2013, as compared to
the 2012 actuals of $18.2 million and $69.0 million for the quarter and
year, respectively. The 2013 estimates assume $3.3 million and $13.2
million for the quarter and year respectively, related to the
oThe Company expects corporate overhead to be approximately $11.0 million
in the second quarter 2013, which includes $1.4 million of stock-based
compensation, and $43.0 million for the full year, as compared to the 2012
actuals of $7.5 million and $33.4 million for the quarter and year,
respectively. The increase includes expenses related to the Chesapeake TV
small market operating group and costs associated with the Acquisitions.
Stock-based compensation expense for 2013 is expected to be approximately
$6.8 million as compared to $4.2 million for 2012.
oThe Company expects other operating division revenues less other operating
division expenses to be $2.2 million of income in the second quarter and
$10.8 million of income for 2013 (assuming current equity interests), as
compared to the 2012 actuals of $1.6 million of income in the quarter and
$8.0 million of income for the year.
oThe Company expects depreciation on property and equipment to be
approximately $15.0 million in the second quarter and $66.8 million for
2013 (assuming the capital expenditure assumptions below), as compared to
the 2012 actuals of $12.1 million and $47.1 million for the quarter and
oThe Company expects amortization of acquired intangibles to be
approximately $14.7 million in the second quarter and $63.2 million for
2013, as compared to the 2012 actuals of $10.0 million and $38.1 million
for the quarter and year, respectively.
oThe Company expects net interest expense to be approximately $48.6 million
in the second quarter and $177.6 million (approximately $167.2 million on
a cash basis) for 2013, assuming no changes in the current interest rate
yield curve, the 5.375% Notes issued in April 2013, the refinancing of the
BCA in April 2013, and changes in debt levels based on the assumptions
discussed in this "Outlook" section. The second quarter 2013 expectation
includes $4.8 million of one-time interest expense associated with the
refinancing fees for the BCA. The interest expense expectation compares
to the 2012 actuals of $29.3 million and $128.4 million ($117.5 million on
a cash basis) for the second quarter and year, respectively.
oThe Company expects to record in the second quarter a non-cash loss from
extinguishment of debt in the amount of approximately $16.3 million
associated with the write-down of deferred financing fees and original
issue discount associated with the prior bank agreement.
oThe Company expects a current tax provision from continuing operations of
approximately $2.2 million and $26.4 million in the second quarter and for
the full year 2013, respectively, based on the assumptions discussed in
this "Outlook" section. The Company expects the effective tax rate to be
approximately 38.3% and 36.5% for the second quarter and 2013,
respectively. The Company expects to pay cash taxes of $27.2 million for
oThe Company expects to spend approximately $13.2 million in capital
expenditures in the second quarter and approximately $48.0 million for
2013. The 2013 estimate assumes $12.8 million related to the
Sinclair Conference Call:
The senior management of Sinclair will hold a conference call to discuss its
first quarter 2013 results on Monday, April 29, 2013, 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) 407-8033.
Sinclair Broadcast Group, Inc. is the largest and one of the most diversified
television broadcasting companies. Including pending acquisitions, the
Company will own and operate, program or provide sales services to 134
television stations in 69 markets. Sinclair's television portfolio will
consist of 29 FOX, 24 CBS, 21 CW, 20 MNT, 19 ABC, 14 NBC, 5 Univision, 1
Independent, and 1 Azteca station. Sinclair's television group will reach
approximately 34% 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 March 31,
Station broadcast revenues, net of $ 252,925 $ 190,888
Revenues realized from station barter 18,230 17,538
Other operating divisions revenues 11,463 13,948
Total revenues 282,618 222,374
Station production expenses 80,433 59,797
Station selling, general and 51,938 35,712
Expenses recognized from station 16,014 16,124
Amortization of program contract costs 18,861 14,100
and net realizable value adjustments
Other operating divisions expenses 9,869 12,290
Depreciation of property and equipment 14,595 9,271
Corporate general and administrative 11,250 9,367
Amortization of definite-lived 16,002 5,819
Total operating expenses 218,962 162,480
Operating income 63,656 59,894
OTHER INCOME (EXPENSE):
Interest expense and amortization of
debt discount and deferred financing (37,697) (27,387)
Loss from extinguishment of debt — (335)
Income (loss) from equity and cost (1,052) 1,276
Other income, net 457 471
Total other expense (38,292) (25,975)
Income from continuing operations 25,364 33,919
before income taxes
INCOME TAX PROVISION (8,849) (4,794)
Income from continuing operations 16,515 29,125
Income (loss) from discontinued
operations, includes income tax 355 (51)
provision of $292 and $67,
NET INCOME 16,870 29,074
Net loss attributable to the 127 285
NET INCOME ATTRIBUTABLE TO SINCLAIR $ 16,997 $
BROADCAST GROUP 29,359
Dividends declared per share $ $
BASIC AND DILUTED EARNINGS PER COMMON
SHARE ATTRIBUTABLE TO SINCLAIR
Earnings per share from continuing $ $
operations 0.20 0.36
Earnings per share $ $
Weighted average common shares 81,191 80,852
Weighted average common and common 82,064 81,127
equivalent shares outstanding
AMOUNTS ATTRIBUTABLE TO SINCLAIR
BROADCAST GROUP COMMON SHAREHOLDERS:
Income from continuing operations, net $ 16,642 $
of tax 29,410
Income (loss) from discontinued 355 (51)
operations, net of tax
Net income $ 16,997 $
Preliminary Unaudited Consolidated Historical Selected Balance Sheet Data:
March 31, December 31,
Cash & cash equivalents $ 25,825 $ 22,865
Total current assets 292,932 304,448
Total long term assets ^ 2,441,596 2,425,249
Total assets $ 2,734,528 $ 2,729,697
Current portion of debt 48,456 49,326
Total current liabilities 311,164 307,600
Long term portion of debt 2,222,406 2,224,053
Total long term liabilities 2,520,651 2,522,150
Total liabilities 2,831,815 2,829,750
Total stockholders' deficit (97,287) (100,053)
Total liabilities & stockholders' deficit $ 2,734,528 $ 2,729,697
Unaudited Consolidated Historical Selected Statement of Cash Flows Data:
Three Months Ended
Net cash flow from operating activities $ 49,702
Net cash flow used in investing activities (14,942)
Net cash flow used in financing activities (31,800)
Net increase in cash & cash equivalents 2,960
Cash & cash equivalents, beginning of period 22,865
Cash & cash equivalents, end of period $ 25,825
SOURCE Sinclair Broadcast Group, Inc.
Contact: David Amy, EVP & Chief Financial Officer, Lucy Rutishauser,
VP-Corporate Finance & Treasurer, (410) 568-1500
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