May 8, 2019 |
Date of Report (Date of earliest event reported) |
Maryland | 000-26076 | 52-1494660 | ||
(State of organization) | (Commission File Number) | (I.R.S. Employer Identification Number) |
Title of each class | Trading Symbol | Name of each exchange on which registered | ||
Class A Common Stock, par value $ 0.01 per share | SBGI | The NASDAQ Stock Market LLC |
• | INCREASES TOTAL REVENUE BY 9% COMPARED TO PRIOR YEAR |
• | ANNOUNCES QUARTERLY DIVIDEND PER SHARE OF $0.20 |
• | Total revenues increased 8.5% to $722.1 million versus $665.4 million in the prior year period. |
• | Media expenses, defined as Media Production and Media Selling, General & Administration expenses, were $479.0 million versus $435.4 million in the prior year period. |
• | Operating income was $93.6 million, including $2 million of legal, regulatory and non-recurring costs, versus operating income of $107.3 million in the prior year period, which included $5 million of legal, regulatory and non-recurring costs and $21 million of gains on asset dispositions that included an $83 million cash gain relating to the sale of spectrum in Milwaukee in the Incentive Auction, partially offset by a non-cash impairment charge of a non-media related real estate investment. |
• | Net income attributable to the Company was $21.7 million versus net income of $43.1 million in the prior year period. |
• | Diluted earnings per common share was $0.23 as compared to $0.42 in the prior year period. The impact of legal, regulatory and non-recurring costs in 2019, on a per-share basis, was $(0.02) and the impact of legal, regulatory and non-recurring costs and net gains on asset dispositions in 2018 was $0.65. |
• | Media revenues increased 4.6% to $673.4 million versus $643.7 million in the first quarter of 2018. |
• | Political revenues were $2 million in the first quarter versus $7 million in the first quarter of 2018, an election year. |
• | 2019 Super Bowl revenues were $5 million versus $7 million in Super Bowl and Olympic revenues in the first quarter of 2018. |
• | Distribution revenues were $352 million versus $314 million in the first quarter of 2018. |
• | Revenues from our digital businesses increased 10%, as compared to the first quarter of 2018. |
• | On May 3, 2019, the Company announced that it entered into a definitive agreement with the Walt Disney Company to acquire 21 RSNs for $9.6 billion, representing a $10.6 billion enterprise value. This is the largest collection of regional sports networks in the United States and expands the Company's focus on local sports and news. The transaction is expected to close in the third quarter of 2019, subject to antitrust regulatory approval. |
• | In March, the Federal Communications Commission administrative law judge dismissed with prejudice the July 2018 hearing designation order related to the Company’s terminated Tribune Acquisition. |
• | Year-to-date, Sinclair’s newsrooms have won a total of 192 national and regional journalism awards, including ACLU of Nevada’s 2019 Freedom of the Press Award, 7 Headliner Awards, and 30 Regional RTDNA Edward R. Murrow Awards by 18 newsrooms. |
• | In April, Tennis Channel’s first full-length feature film, Strokes of Genius, was nominated for two Sports Emmy Awards by the National Academy of Television Arts & Sciences. The program is a finalist for the Outstanding Long Sports Documentary and Outstanding Musical Direction awards, which will be announced at the 40th Annual Sports Emmy Awards ceremony in New York City May 20, 2019. |
• | In March, the Company, in partnership with the Salvation Army, held a day of giving to aid ongoing relief efforts for the survivors of the severe Midwest weather that brought historic flooding to significant parts of Nebraska and Iowa. |
• | In April, a broad contingent of broadcasters announced the deployment of ATSC 3.0 to approximately 60 U.S. markets by the end of 2020. This includes 27 markets in which Sinclair stations will be participating in the deployment. |
• | Debt on the balance sheet, net of $975 million in cash, cash equivalents and restricted cash, was $2.908 billion as of March 31, 2019 versus net debt of $2.832 billion as of December 31, 2018. |
• | As of March 31, 2019, 66.2 million Class A common shares and 25.5 million Class B common shares were outstanding, for a total of 91.8 million common shares outstanding. During the three months ended March 31, 2019, the Company repurchased 3.5 million shares for $105 million In April 2019, the Company repurchased an additional 0.5 million shares for $20 million. $743 million share repurchase capacity remains outstanding. |
• | In March 2019, the Company paid a $0.20 per share quarterly cash dividend to its shareholders. |
• | Routine capital expenditures in the first quarter of 2019 were $16 million with another $13 million related to the spectrum repack. |
• | Program contract payments were $24 million in the first quarter of 2019. |
2019 Outlook ($ in millions) | Second Quarter | Full Year |
Media Revenues | $716 million to $725 million | No estimate provided |
Political Revenues Included in Media Revenues | $4 million to $5 million | |
Distribution Revenues Included in Media Revenues | $365 million to $368 million | |
Media Revenue Related to Revenue-generating Initiatives | $16 million | |
Media Production Expenses and Media Selling, General and Administrative Expenses (together, “Media Expenses”) | $506 million to $508 million | $1,987 million to $1,990 million |
Media Expenses Related to Revenue-generating Initiatives | $25 million | $113 million |
Stock-based Compensation Expense | $5 million | $19 million |
Non-media Revenues | $50 million | $180 million |
Program Contract Payments | $24 million | $95 million |
Corporate Overhead | $25 million | $100 million |
Stock-based Compensation Expense | $4 million | $17 million |
One-time Transaction Costs | $3 million | $11 million |
Non-media Expenses, Including ONE Media and Research and Development Costs | $46 million | $164 million |
Program Contract Amortization | $22 million | $92 million |
Depreciation on Property and Equipment | $24 million | $97 million |
Amortization of Acquired Intangibles | $44 million | $174 million |
Net Gains on Asset Dispositions | $14 million | $92 million |
Net Interest Expense | $49 million | $196 million |
Net Interest Expense - Cash Basis | $47 million | $188 million |
Equity Method Investments Loss | $12 million | $49 million |
Effective Tax Rate | 9% | 10% |
Net Cash Taxes Paid | $31 million | $34 million |
Total Capital Expenditures, Including Repack | $77 million | $246 million to $256 million |
Repack Capital Expenditures | $37 million | $136 million |
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
REVENUES: | |||||||
Media revenues | $ | 673,364 | $ | 643,651 | |||
Non-media revenues | 48,739 | 21,701 | |||||
Total revenues | 722,103 | 665,352 | |||||
OPERATING EXPENSES: | |||||||
Media production expenses | 319,044 | 288,549 | |||||
Media selling, general and administrative expenses | 159,923 | 146,899 | |||||
Amortization of program contract costs and net realizable value adjustments | 23,937 | 26,950 | |||||
Non-media expenses | 39,300 | 21,223 | |||||
Depreciation of property and equipment | 23,020 | 27,325 | |||||
Corporate general and administrative expenses | 27,726 | 24,596 | |||||
Amortization of definite-lived intangible and other assets | 43,464 | 43,605 | |||||
Gain on asset dispositions and other, net of impairment | (7,909 | ) | (21,109 | ) | |||
Total operating expenses | 628,505 | 558,038 | |||||
Operating income | 93,598 | 107,314 | |||||
OTHER INCOME (EXPENSE): | |||||||
Interest expense and amortization of debt discount and deferred financing costs | (54,626 | ) | (69,742 | ) | |||
Loss from equity method investments | (13,637 | ) | (12,587 | ) | |||
Other income, net | 2,195 | 3,381 | |||||
Total other expense, net | (66,068 | ) | (78,948 | ) | |||
Income before income taxes | 27,530 | 28,366 | |||||
INCOME TAX (PROVISION) BENEFIT | (4,759 | ) | 15,628 | ||||
NET INCOME | 22,771 | 43,994 | |||||
Net income attributable to the noncontrolling interests | (1,099 | ) | (871 | ) | |||
NET INCOME ATTRIBUTABLE TO SINCLAIR BROADCAST GROUP | $ | 21,672 | $ | 43,123 | |||
EARNINGS PER COMMON SHARE ATTRIBUTABLE TO SINCLAIR BROADCAST GROUP: | |||||||
Basic earnings per share | $ | 0.23 | $ | 0.42 | |||
Diluted earnings per share | $ | 0.23 | $ | 0.42 | |||
Weighted average common shares outstanding | 92,302 | 101,899 | |||||
Weighted average common and common equivalent shares outstanding | 93,218 | 102,917 |