8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

Form 8-K

CURRENT REPORT PURSUANT TO SECTION 13 OR 15 (D)

OF THE SECURITIES EXCHANGE ACT OF 1934

August 7, 2019

Date of Report (Date of earliest event reported)

SINCLAIR BROADCAST GROUP, INC.

(Exact name of registrant)

Maryland	000-26076	52-1494660
(State of organization)	(Commission File Number)	(I.R.S. Employer Identification Number)

10706 Beaver Dam Road

Hunt Valley, MD  21030

(Address of principal executive offices and zip code)

(410) 568-1500

(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2). Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Securities registered pursuant to Section 12(b) of the Act:

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

SINCLAIR BROADCAST GROUP, INC.

Item 2.02 Results of Operations and Financial Condition.

On August 7, 2019, Sinclair Broadcast Group, Inc. (the "Company") announced via press release the Company’s financial results for the second quarter ended June 30, 2019.  A copy of the Company’s press release is attached hereto as Exhibit 99.1.  The information contained herein and the attached exhibit are furnished under this Item 2.02 of Form 8-K and are furnished to, but for purposes of Section 18 of the Securities Exchange Act of 1934 shall not be deemed filed with, the Securities and Exchange Commission.  The information contained herein and in the accompanying exhibit shall not be incorporated by reference to any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing, unless expressly incorporated by specific reference to such filing.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

The following exhibit related to Item 2.02 shall be deemed to be furnished and not filed.

Exhibit 99.1 Sinclair Press Release (dated August 7, 2019).

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

SINCLAIR BROADCAST GROUP, INC.

By: /s/ David R. Bochenek

Name:    David R. Bochenek

Title:    Senior Vice President / Chief Accounting Officer / Corporate Controller

Dated: August 7, 2019

EX-99.1

News Release

SINCLAIR REPORTS SECOND QUARTER2019 FINANCIAL RESULTS

• INCREASES TOTAL REVENUE BY6%COMPARED TO PRIOR YEAR

• ANNOUNCES QUARTERLY DIVIDEND PER SHARE OF $0.20

BALTIMORE (August 7, 2019) - Sinclair Broadcast Group, Inc. (Nasdaq: SBGI), the "Company" or "Sinclair," today reported financial results for the three and six months ended June 30, 2019.

CEO Comment:

"We continue to make great strides in the transformation of Sinclair to a diversified media company," commented Chris Ripley, President and Chief Executive Officer.  "We have closed on the bond financing and successfully syndicated the bank financing to fund the acquisition of the FOX RSNs, which we anticipate, subject to regulatory approval, will close during the third quarter of 2019. On the broadcast side, we achieved, and in some cases exceeded, our second quarter guidance in all key financial metrics, and we renewed a multi-year carriage agreement with one of the country's largest multi-video program distributors. As a leading news organization, our stations have won 328 news awards so far this year."

Three Months Ended June 30, 2019 Financial Results:

• Total revenues increased5.6% to $771 million versus $730 million in the prior year period.

• Media expenses, defined as Media Production and Media Selling, General & Administration expenses, were $500 million versus $452 million in the prior year period.

• Operating income was $106 million, including $28 million of non-recurring costs for legal, regulatory, and transactions versus operating income of $132 million in the prior year period, which included $6 million of non-recurring costs for legal, regulatory and transactions.

• Net income attributable to the Company was $42 million versus net income of $28 million in the prior year period.

• Diluted earnings per common share was $0.45 as compared to $0.27 in the prior year period. The impact of non-recurring costs for legal, regulatory and transactions in 2019, on a per-share basis, was $(0.25) and the impact of non-recurring costs for legal, regulatory, transactions and financing ticking fees in 2018 was $(0.35).

Six Months Ended June 30, 2019 Financial Results:

• Total revenues increased7.0% to $1,493 million versus $1,395 million in the prior year period.

• Media expenses, defined as Media Production and Media Selling, General & Administration expenses, were $979 million versus $887 million in the prior year period.

• Operating income was $200 million, including $30 million of non-recurring costs for legal, regulatory, and transactions versus operating income of $239 million in the prior year period, which included $10 million of non-recurring costs for legal, regulatory and transactions.

• Net income attributable to the Company was $64 million versus net income of $71 million in the prior year period.

• Diluted earnings per common share was $0.69 as compared to $0.69 in the prior year period. The impact of non-recurring costs for legal, regulatory and transactions in 2019, on a per-share basis, was $(0.27) and the impact of non-recurring costs for legal, regulatory, transactions, financing ticking fees and net gains on asset dispositions in 2018 was $0.29.

Three Months Ended June 30, 2019 Operating Highlights:

• Media revenues increased3.6% to $721 million versus $696 million in the second quarter of 2018.

• Political revenues were $3 million in the second quarter versus $28 million in the second quarter of 2018, an election year.

• Distribution revenues were $367 million versus $319 million in the second quarter of 2018.

• Revenues from our digital businesses increased30%, as compared to the second quarter of 2018.

Recent Corporate Developments:

Transactions:

• On August 2, 2019, the Company announced that in connection with its $9.6 billion pending and previously announced acquisition of a regional sports networks business ("RSN") from The Walt Disney Company, its indirect wholly-owned subsidiaries, Diamond Sports Group, LLC ("Diamond") and Diamond Sports Finance Company, closed their previously announced private offering of $3.050 billion aggregate principal amount of Senior Secured Notes due 2026 bearing interest at a rate of 5.375% and $1.825 billion aggregate principal amount of Senior Notes due 2027 bearing interest at a rate of 6.625%. The proceeds have been deposited into escrow. The RSN acquisition is expected to close in the third quarter of 2019, subject to antitrust regulatory approval.

• Also, in connection with the RSN acquisition and subject to satisfaction of customary closing conditions, including the consummation of the RSN acquisition, Diamond raised $3.3 billion of seven-year term B loan commitments, priced at LIBOR plus 3.25% and a $650 million five-year revolving credit facility, priced at LIBOR plus 3.00%. In addition, subject to satisfaction of customary closing conditions, including the consummation of the RSN acquisition, the Company's wholly-owned subsidiary, Sinclair Television Group, Inc. ("STG"), raised $700 million of seven-year incremental term B loan commitments (the "STG Term Loans"), priced at LIBOR plus 2.50% and expects to amend and extend its revolving credit facility from $485 million to $650 million which will mature five years after the closing date and is priced at LIBOR plus 2.00%. STG's existing bank credit facility will also be amended to provide for additional operating flexibility. The net proceeds of the term loans will be used to fund a portion of the purchase price for the RSN acquisition.

Content and Distribution:

• In July 2019, the Company announced a multi-year agreement with Charter Communications, Inc. for the continued carriage of the Company's broadcast television stations and Tennis Channel, as well as carriage of Marquee Sports Network when it launches in the first quarter of 2020. The agreement also provides for a term extension for the carriage of currently carried RSNs that is effective upon the closing of the RSN acquisition.

• In July 2019, the Company released its Compulse360 offering, a new daily OTT reporting platform for CompulseOTT, providing advertisers near real-time campaign evaluation so they can optimize their advertising efforts in-flight.

• Year-to-date, Sinclair's newsrooms have won a total of 328 national and regional journalism awards, including four National RTDNA Edward R. Murrow awards and the prestigious Investigative Reporters and Editors award for "Best in Investigative Reporting" in the Broadcast/Video category for Division III, which spans television stations in market sizes 21-50.

Community:

• In June, the Company, in partnership with the Salvation Army, held a nationwide day of giving, with its stations participating in on-air, digital and social media efforts to encourage viewers to donate and help local communities recover from damage caused by tornadoes and floods in the Midwest. In total, the initiative raised $56,000, with Sinclair providing an additional donation of $25,000.

• In July, the Company awarded its Broadcast Diversity Scholarship to eight applicants, distributing $25,000 in aggregate tuition assistance to students demonstrating a promising future in the broadcast industry.

ATSC 3.0:

• In July 2019, the Company's ONE Media 3.0 subsidiary announced an agreement with Saankhya Labs to accelerate the development of a 5G Next Generation Broadcast Offload Platform.

Balance Sheet and Cash Flow Highlights:

• Debt on the balance sheet, net of $929 million in cash, cash equivalents and restricted cash, was $2.859 billion as of June 30, 2019 versus net debt of $2.908 billion as of March 31, 2019.

• The Company announced that STG intends to redeem, in full, $600.0 million of 5.375% Senior Unsecured Notes due 2021 (the "2021 Notes") on August 13, 2019. The Notes were called at 100.0% of their par value. The redemption is contingent on STG's closing of $600 million of incremental term B loans (the "STG Incremental Term Loans"). The STG Incremental Term Loans will have the same pricing terms as the STG Term Loans and will become effective upon satisfaction of customary closing conditions including the concurrent redemption of the 2021 Notes.

• As of June 30, 2019, 67.0 million Class A common shares and 25.0 million Class B common shares were outstanding, for a total of 92.1 million common shares outstanding. During the three months ended June 30, 2019, the Company repurchased 0.5 million shares for $20 million. $743 million share repurchase capacity remains outstanding.

• In June2019, the Company paid a $0.20 per share quarterly cash dividend to its shareholders.

• Routine capital expenditures in the second quarter of 2019 were $21 million with another $12 million related to the spectrum repack.

• Program contract payments were $24 million in the second quarter of 2019.

Notes:

Certain reclassifications have been made to prior years' financial information to conform to the presentation in the current year.

Outlook:

The Company currently expects to achieve the following results for the three months ending September 30, 2019 and twelve months ending December 31, 2019. The outlook does not include the pending RSN acquisition.

2019 Outlook ($ in millions)	Third Quarter	Full Year
Media Revenues	$695 to $703	No estimate provided
Political Revenues Included in Media Revenues	$3 to $4
Distribution Revenues Included in Media Revenues	$363 to $366
Media Revenue Related to Revenue-generating Initiatives	$19
Media Production Expenses and Media Selling, General and Administrative Expenses (together, "Media Expenses")	$500 to $502	$1,979 to $1,981
Media Expenses Related to Revenue-generating Initiatives	$29	$111
Stock-based Compensation Expense	$4	$18
Non-media Revenues	$49	$197
Program Contract Payments	$23	$94
Corporate Overhead	$56	$163
Stock-based Compensation Expense	$3	$19
Non-recurring costs for legal, regulatory and transactions	$34	$71
Non-media Expenses, Including ONE Media and Research and Development Costs	$47	$172
Program Contract Amortization	$22	$91
Depreciation on Property and Equipment	$23	$93
Amortization of Acquired Intangibles	$44	$174
Net Gains on Asset Dispositions	$24	$63
Net Interest Expense	$50	$194
Net Interest Expense - Cash Basis	$46	$185
Equity Method Investments Loss	$12	$49
Effective Tax Rate Provision (Benefit)	(50)%	(2)%
Net Cash Taxes Paid	Less than $1	$31
Total Capital Expenditures, Including Repack	$52	$192 to $202
Repack Capital Expenditures	$22	$82

Sinclair Conference Call:

The senior management of Sinclair will hold a conference call to discuss its second quarter 2019 results on Wednesday, August 7, 2019, at 9:00 a.m. ET. The call will be webcast live and can be accessed at www.sbgi.net under "Investors/ Webcasts." After the call, an audio replay will remain available at www.sbgi.net. The press and the public will be welcome on the call in a listen-only mode. The dial-in number is (888) 428-7458.

About Sinclair:

Sinclair is one of the largest and most diversified television broadcasting companies in the country. The Company owns, operates and/or provides services to 191 television stations in 89 markets. Sinclair is a leading local news provider in the country and is dedicated to impactful journalism with a local focus. The Company has multiple national networks, live local sports production, as well as stations affiliated with all the major networks. Sinclair's 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 and in addition to the assumptions set forth therein, but not limited to, risks associated with the ability to consummate the pending RSN acquisition and the timing of the closing thereof; the risk that a regulatory approval that may be required for the pending RSN acquisition is delayed; the impact of changes in national and regional economies, the completion of the FCC spectrum repack, the volatility in the U.S. and global economies and financial credit markets which impact our ability to forecast or refinance our indebtedness as it comes due, 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 and MyNetworkTV programming, our news share strategy, our 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, the impact of pending and future litigation claims against the Company, uncertainties associated with potential changes in the regulatory environment affecting our business and growth strategy, and any risk factors set forth in the Company's recent reports on Form 10-Q and/or Form 10-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   June 30,						Six Months Ended   June 30,
	2019			2018			2019			2018
REVENUES:
Media revenues	$	720,898		$	695,862		$	1,394,262		$	1,339,513
Non-media revenues	49,821			34,281			98,560			55,983
Total revenues	770,719			730,143			1,492,822			1,395,496
OPERATING EXPENSES:
Media production expenses	335,162			300,858			654,206			589,407
Media selling, general and administrative expenses	164,755			150,794			324,678			297,693
Amortization of program contract costs and net realizable value adjustments	22,084			24,710			46,021			51,660
Non-media expenses	39,210			31,021			78,510			52,244
Depreciation of property and equipment	22,305			23,117			45,325			50,442
Corporate general and administrative expenses	51,655			29,685			79,381			54,281
Amortization of definite-lived intangible and other assets	43,537			43,117			87,001			86,722
Gain on asset dispositions and other, net of impairment	(13,988		)	(4,741		)	(21,897		)	(25,850		)
Total operating expenses	664,720			598,561			1,293,225			1,156,599
Operating income	105,999			131,582			199,597			238,897
OTHER INCOME (EXPENSE):
Interest expense and amortization of debt discount and deferred financing costs	(53,678		)	(92,271		)	(108,304		)	(162,013		)
Loss from equity method investments	(11,844		)	(17,690		)	(25,481		)	(30,277		)
Other income, net	5,533			4,391			7,728			7,772
Total other expense, net	(59,989		)	(105,570		)	(126,057		)	(184,518		)
Income before income taxes	46,010			26,012			73,540			54,379
INCOME TAX (PROVISION) BENEFIT	(2,627		)	3,297			(7,386		)	18,925
NET INCOME	43,383			29,309			66,154			73,304
Net income attributable to the noncontrolling interests	(1,086		)	(1,268		)	(2,185		)	(2,139		)
NET INCOME ATTRIBUTABLE TO SINCLAIR BROADCAST GROUP	$	42,297		$	28,041		$	63,969		$	71,165
EARNINGS PER COMMON SHARE ATTRIBUTABLE TO SINCLAIR BROADCAST GROUP:
Basic earnings per share	$	0.46		$	0.27		$	0.70		$	0.70
Diluted earnings per share	$	0.45		$	0.27		$	0.69		$	0.69
Weighted average common shares outstanding	91,764			102,224			92,032			102,062
Weighted average common and common equivalent shares outstanding	93,163			102,986			93,189			102,952

###

Investor Contact: Lucy Rutishauser, SVP Chief Financial Officer, (410) 568-1500

Media Contact: Michael Padavano, 5W, mpadovano@5wpr.com

XML

Cover Page Cover Page	Aug. 07, 2019
Cover page.
Document Type	8-K
Document Period End Date	Aug. 07, 2019
Entity Registrant Name	SINCLAIR BROADCAST GROUP, INC.
Entity Incorporation, State or Country Code	MD
Entity File Number	000-26076
Entity Tax Identification Number	52-1494660
Entity Address, Address Line One	10706 Beaver Dam Road
Entity Address, City or Town	Hunt Valley
Entity Address, State or Province	MD
Entity Address, Postal Zip Code	21030
City Area Code	410
Local Phone Number	568-1500
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Entity Emerging Growth Company	false
Title of 12(b) Security	Class A Common Stock, par value $ 0.01 per share
Trading Symbol	SBGI
Security Exchange Name	NASDAQ
Amendment Flag	false
Entity Central Index Key	0000912752