Date of Report (Date of earliest event reported) |
(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 | ||
Exhibit No. | Description | |
99.1 | ||
104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
• | Consolidated total revenue increased 66% to $1,283 million as compared to the second quarter of 2019, with gains driven in large part by the Company's acquisition of 21 Regional Sports Networks (RSNs) and Fox College Sports in August 2019. Included in the quarter is a $124 million for accrued rebates to distributors based on minimum game guarantees. |
• | Consolidated operating income increased 364% to $492 million. |
• | Consolidated Adjusted EBITDA of $254 million increased 31% versus the second quarter of 2019. |
• | Five million shares of common stock representing 6% of the Company's outstanding shares as of March 31, 2020, were repurchased during the second quarter. Year-to-date, through August 4, 2020, the Company has repurchased 19 million of its outstanding shares. |
• | In July, the Company entered into multi-year content carriage agreements with Comcast for all Sinclair television stations and regional sports networks in Comcast’s cable television footprint, including the Marquee Sports Network and YES Network, as well as continued distribution of Tennis Channel. |
• | In June, the Company announced that it will be launching a headline news service scheduled to premiere in early 2021 on the Company's CW and MYTV network affiliates, as well as on STIRR, Sinclair’s free ad-supported over-the-top streaming platform. |
• | In June, the Company signed a multi-year agreement with ViacomCBS to renew eight CBS network affiliations for Sinclair stations. ViacomCBS also reached agreements to renew the affiliations of two stations to which Sinclair provides services, WTVH in Syracuse, NY and WGFL in Gainesville, FL. |
• | Year-to-date, Sinclair's newsrooms have won a total of 233 journalism awards, including 28 Regional RTDNA Edward R. Murrow awards and 23 regional Emmy awards. |
• | Since March, the Company partnered with the Salvation Army on the “Sinclair Cares: Your Neighbor Needs You” initiative which has raised almost $1 million for those financially impacted by COVID-19. |
• | In June, the Company selected ten winning applicants for its Broadcast Diversity Scholarship, awarding tuition assistance to students demonstrating a promising future in the broadcast industry. |
• | The Company, in coordination with other broadcasters, has recently deployed NEXTGEN TV, powered by ATSC 3.0, in five of its markets: Las Vegas, NV; Pittsburgh, PA, Nashville, TN; Salt Lake City, UT; and Portland, OR. Based on the same fundamental technology as the Internet, digital apps, and other web services, NEXTGEN TV can support a wide range of features currently in development, such as immersive audio and video (up to 4K), broadcasting to mobile devices, personalized viewing tools, and advanced emergency alerts that provide rich media rather than simple text messages. NEXTGEN TV also allows full integration with 5G and other broadband-delivered Internet content. BitPath, the broadcast data network operated by Spectrum Co, LLC, led the planning and coordination efforts across the participating stations in each market. |
• | In June, Jeff Krolik, President, Regional Sports Networks, announced his retirement effective August 30, 2020. The Company announced in July that Steve Rosenberg, a broadcasting industry executive with over 30 years of experience, joined the Company and will be taking on the role of President of Local Sports, effective September 1, 2020. |
• | Total revenues increased 66% to $1,283 million versus $771 million in the prior year period. Media revenues increased 75% to $1,260 million versus $721 million in the second quarter of 2019. The increase was driven in large part by the Company's acquisition of 21 Regional Sports Networks and Fox College Sports in August 2019. Consolidated revenue was less than the Company's quarterly guidance, due to $124 million of accrued rebates to distributors tied to minimum game guarantees, which are expected to be paid in cash after the 2020 calendar year. |
• | Political revenues were $19 million in the second quarter versus $3 million in the second quarter of 2019 due to the upcoming 2020 elections. Distribution revenues were $1,010 million versus $367 million in the second quarter of 2019 driven by the acquisition of the RSNs. |
• | Operating income was $492 million, including $9 million of non-recurring costs for transaction, COVID, legal, litigation, and regulatory costs ("Adjustments"), versus operating income of $106 million in the prior year period, which included $28 million of Adjustments. Operating income when excluding the Adjustments, increased to $501 million from $134 million for the same prior-year period. |
• | Adjusted EBITDA, which excludes Adjustments, increased 31% to $254 million from $194 million in the second quarter of 2019, but was $43 million lower than the low end of Company guidance, due to the |
• | Diluted earnings per common share was $3.12 as compared to $0.45 in the prior year period. The impact of Adjustments in the second quarter of 2020, on a diluted per-share basis, was $(0.09) and the impact of Adjustments in the second quarter of 2019 was $(0.25). |
• | For purposes of fiscal year 2020 results, the impact of the accrued rebates to the distributors, tied to minimum game guarantees, is expected to be $124 million in each of the second through fourth quarters of 2020. These rebates are expected to be more than offset by lower sports rights payments, and rebates from the teams, which are also tied to minimum game guarantees, and which are expected to benefit Adjusted EBITDA in the third and fourth quarters of 2020. The lower sports rights payments for the year are also reflected in lower sports rights amortization expense for the year, with the majority of the favorable net income impact having been realized in the second quarter, when sports rights payments were still being made but no games were played, resulting in no sports rights amortization. |
• | Total revenues increased 94% to $2,892 million versus $1,493 million in the prior year period. Media revenues increased 103% to $2,834 million versus $1,394 million in the same period a year ago. Revenues benefited from the inclusion of the local sports businesses, which were not in the prior year results. Distribution revenues were $2,165 million versus $719 million in the same period a year ago. |
• | Operating income was $819 million, including $29 million of Adjustments, versus operating income of $200 million in the prior year period, which included $30 million of Adjustments. Operating income when excluding the Adjustments increased to $848 million from $230 million for the same prior-year period. |
• | Adjusted EBITDA, which excludes Adjustments, increased 49% to $535 million from $360 million for the six-month period ending June 30, 2020. |
• | Diluted earnings per common share was $4.36 as compared to $0.69 in the prior year period. The impact of Adjustments in the six months ending June 30, 2020, on a diluted per-share basis, was ($0.28) and the impact of Adjustments in the six months ending June 30, 2019 was ($0.27). |
For the three months ended June 30, 2020 | Broadcast | Local Sports | Corporate, Other & Elimination | Consolidated | |||||||||||
($ in millions) | |||||||||||||||
Revenue Highlights: | |||||||||||||||
Distribution revenue | $ | 349 | $ | 610 | $ | 51 | $ | 1,010 | |||||||
Advertising revenue | 208 | 3 | 24 | 235 | |||||||||||
Other media revenue | 35 | (a) | 3 | (23 | ) | (a) | 15 | ||||||||
Media revenues | $ | 592 | $ | 616 | $ | 52 | $ | 1,260 | |||||||
Non-media revenue | — | — | 23 | 23 | |||||||||||
Total revenues | $ | 592 | $ | 616 | $ | 75 | $ | 1,283 | |||||||
Expense Highlights: | |||||||||||||||
Media programming & production expenses and media selling, general and administrative expenses | 430 | 106 | (a) | 33 | (a) | 569 | |||||||||
Sports rights amortization included in media production expenses | — | 5 | — | 5 | |||||||||||
Non-media expenses | — | — | 21 | 21 | |||||||||||
Corporate general and administrative expenses | 27 | 2 | 3 | 32 | |||||||||||
Other Highlights: | |||||||||||||||
Sports rights payments | — | 413 | — | 413 | |||||||||||
Program contract payments | 24 | — | — | 24 | |||||||||||
Capital expenditures(b) | 9 | 8 | 15 | 32 | |||||||||||
Interest expense (net) (c) | 1 | 105 | 46 | 152 | |||||||||||
Adjusted EBITDA(d) | 254 |
(a) | For the quarter ended June 30, 2020 Broadcast includes $25 million of revenue and the Local Sports segment includes $25 million of selling, general, and administrative expenses for services provided by the Broadcast segment to the Local Sports and Other segments. Such amounts are eliminated in consolidation. |
(b) | Capital expenditures exclude $19 million of repack capital expenditures expected to be reimbursed in the future from the TV Broadcaster Relocation Fund administered by the FCC. |
(c) | Interest expense excludes deferred financing costs, original issue discount amortization, and other non-cash interest expense, and is net of interest income. |
(d) | “Adjusted EBITDA” is defined as earnings before interest, tax, depreciation and amortization, plus non-recurring transaction, COVID, legal, litigation and regulatory costs, as well as certain non-cash items such as stock-based compensation expense and sports rights amortization; less sports rights payments and program contract payments. Refer to the reconciliation on the last page of this press release and the Company's website. |
For the three months ended June 30, 2019 | Broadcast | Local Sports | Corporate & Other | Consolidated | |||||||||||
($ in millions) | |||||||||||||||
Revenue Highlights: | |||||||||||||||
Distribution revenue | $ | 335 | $ | — | $ | 32 | $ | 367 | |||||||
Advertising revenue | 315 | — | 24 | 339 | |||||||||||
Other media revenue | 10 | — | 5 | 15 | |||||||||||
Media revenues | $ | 660 | $ | — | $ | 61 | $ | 721 | |||||||
Non-media revenue | — | — | 50 | 50 | |||||||||||
Total revenues | $ | 660 | $ | — | $ | 111 | $ | 771 | |||||||
Expense Highlights: | |||||||||||||||
Media programming & production expenses and media selling, general and administrative expenses | 424 | — | 76 | 500 | |||||||||||
Non-media expenses | — | — | 39 | 39 | |||||||||||
Corporate general and administrative expenses | 33 | — | 19 | 52 | |||||||||||
Other Highlights: | |||||||||||||||
Program contract payments | 24 | — | — | 24 | |||||||||||
Capital expenditures(a) | 19 | — | 2 | 21 | |||||||||||
Interest expense (net)(b) | 1 | — | 46 | 47 | |||||||||||
Adjusted EBITDA(c) | 194 |
(a) | Capital expenditures exclude $12 million of repack capital expenditures expected to be reimbursed in the future from the TV Broadcaster Relocation Fund administered by the FCC. |
(b) | Interest expense excludes deferred financing costs, original issue discount amortization, and other non-cash interest expense, and is net of interest income. |
(c) | “Adjusted EBITDA” is defined as earnings before interest, tax, depreciation and amortization, plus non-recurring transaction, legal, litigation and regulatory costs, as well as certain non-cash items such as stock-based compensation expense and sports rights amortization; less sports rights payments and programming payments. Refer to the reconciliation on the last page of this press release and the Company's website. |
• | Total Company debt as of June 30, 2020, was $12,399 million, which includes Diamond Sports Group (DSG) debt of $7,959 million. |
• | Cash and cash equivalents for the consolidated total Company as of June 30, 2020 was $622 million, which includes $436 million held at DSG. |
• | During the quarter, Sinclair Television Group (STG) repaid the full $648 million drawn amount under its revolving credit facility and DSG repaid the full $225 million drawn amount under its revolving credit facility. Currently, the STG and DSG revolvers are not drawn. |
• | In May, the Company's indirect subsidiaries, Diamond Sports Group, LLC and Diamond Sports Finance Company (together, the “Issuers”) commenced a private exchange offer (the “Exchange Offer”) for any and all of the Issuers’ outstanding 6.625% Senior Notes due 2027 (the “Senior Notes”) for newly issued 12.750% Senior Secured Notes due 2026 (the “New Secured Notes”) and a cash payment. On June 10th, the Issuers completed the Exchange Offer, in which the Company accepted for exchange all of the approximately $66 million aggregate principal amount of the Senior Notes (or approximately 3.6%) that were validly tendered in the Exchange Offer. The Company (i) issued approximately $31 million aggregate principal amount of New Secured Notes and (ii) made cash payments totaling approximately $10 million (including accrued but unpaid interest) in exchange for the validly tendered and not properly withdrawn Senior Notes. |
• | As of June 30, 2020, 53.3 million Class A common shares and 24.7 million Class B common shares were outstanding, for a total of 78.1 million common shares, reflecting five million shares that were repurchased in the second quarter. Third quarter-to-date, another approximate four million shares have been repurchased. Since December 31, 2019, the Company has repurchased approximately 29% of its Class A common shares outstanding at that time and 21% of the total shares outstanding. |
• | In August, the Board of Directors approved an additional $500 million of share repurchase authorization to its existing approximately $380 million authorization remaining. |
• | In June, the Company paid a $0.20 per share quarterly cash dividend to its shareholders. |
• | Routine capital expenditures in the second quarter of 2020 were $32 million with another $19 million related to the spectrum repack. |
• | The Local Sports segment's media production expense included $5 million of sports rights amortization, while sports rights payments in the quarter were $413 million. |
For the three months ending September 30, 2020 ($ in millions) | Broadcast | Local Sports | Corporate and Other and Elimination | Consolidated | ||||||
Revenue Highlights: | ||||||||||
Core advertising revenue | $363 to 388 | |||||||||
Political revenue | 77 to 83 | |||||||||
Advertising revenue | $298 to 324 | $111 to 116 | $31 | $440 to 471 | ||||||
Distribution revenue | 349 to 351 | 602 to 606 | (a) | 50 | 1,001 to 1,007 | |||||
Other media revenue | 48 | (b) | 5 | (34) | (b) | 19 | ||||
Media revenues | 695 to 723 | 718 to 727 | 47 | 1,460 to 1,497 | ||||||
Non-media revenue | — | — | 17 | 17 | ||||||
Total revenues | $695 to 723 | $718 to 727 | $64 | $1,477 to 1,514 | ||||||
Expense Highlights: | — | |||||||||
Media programming & production expenses and media selling, general and administrative expenses | $471 to 476 | $810 to 811 | (b) (c) | $39 | (b) | $1,320 to 1,326 | ||||
Sports rights amortization included in media production expenses | — | 630 | (c) | — | 630 | |||||
Non-media expenses | — | — | 23 | 23 | ||||||
Corporate overhead | 33 | |||||||||
Stock-based compensation and non-recurring costs for transaction, legal, litigation and regulatory fees included in corporate and media expenses above | 22 | |||||||||
Depreciation, intangible & programming amortization | 202 | |||||||||
Other Highlights: | ||||||||||
Sports rights payments | — | $138 | — | $138 | ||||||
Program contract payments | 26 | — | — | 26 | ||||||
Interest expense (net)(d) | 144 | |||||||||
Income tax benefit | Approximately 12% effective tax rate | |||||||||
Net cash tax payments | Approximately $4 million | |||||||||
Payments to noncontrolling interest holders, including preferred dividend (e) | 29 | |||||||||
Total capital expenditures, including repack | 55 to 60 | |||||||||
Repack capital expenditures | 20 | |||||||||
Adjusted EBITDA(f) | $402 to 410 | $589 to 621 |
(a) | Reflects $124 million of accrued rebates to distributors tied to minimum game guarantees. |
(b) | The Broadcast segment includes $36 million of revenue and the Local Sports segment includes $35 million of selling, general, and administrative expenses for services provided by the Broadcast segment to the Local Sports and Other segments. Such amounts are eliminated in the Consolidated column. |
(c) | Reflects lower payments to teams of sports rights payments tied to minimum game guarantees. |
(d) | Interest expense excludes deferred financing costs, original issue discount amortization, and other non-cash interest expense, and is net of interest income. |
(e) | Preferred dividend was paid in cash in the quarter ending June 30, 2020 and is expected to be paid in cash in the quarter ending September 30, 2020. |
(f) | “Adjusted EBITDA” is defined as earnings before interest, tax, depreciation and amortization, plus non-recurring transaction, COVID, legal, litigation and regulatory costs, as well as certain non-cash items such as stock-based compensation expense and sports rights amortization; less sports rights payments and programming payments. Refer to the reconciliation on the last page of this release and the Company's website. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
REVENUES: | |||||||||||||||
Media revenues | $ | 1,260 | $ | 721 | $ | 2,834 | $ | 1,394 | |||||||
Non-media revenues | 23 | 50 | 58 | 99 | |||||||||||
Total revenues | 1,283 | 771 | 2,892 | 1,493 | |||||||||||
OPERATING EXPENSES: | |||||||||||||||
Media programming and production expenses | 383 | 335 | 1,211 | 654 | |||||||||||
Media selling, general and administrative expenses | 186 | 165 | 396 | 325 | |||||||||||
Amortization of program contract costs | 21 | 22 | 44 | 46 | |||||||||||
Non-media expenses | 21 | 39 | 51 | 78 | |||||||||||
Depreciation of property and equipment | 26 | 22 | 50 | 45 | |||||||||||
Corporate general and administrative expenses | 32 | 52 | 81 | 80 | |||||||||||
Amortization of definite-lived intangible and other assets | 150 | 44 | 300 | 87 | |||||||||||
Gain on asset dispositions and other, net of impairment | (28 | ) | (14 | ) | (60 | ) | (22 | ) | |||||||
Total operating expenses | 791 | 665 | 2,073 | 1,293 | |||||||||||
Operating income | 492 | 106 | 819 | 200 | |||||||||||
OTHER INCOME (EXPENSE): | |||||||||||||||
Interest expense including amortization of debt discount and deferred financing costs | (165 | ) | (54 | ) | (345 | ) | (108 | ) | |||||||
Gain on extinguishment of debt | 3 | — | 5 | — | |||||||||||
Loss from equity method investments | (7 | ) | (12 | ) | (13 | ) | (26 | ) | |||||||
Other income, net | 4 | 6 | — | 8 | |||||||||||
Total other expense, net | (165 | ) | (60 | ) | (353 | ) | (126 | ) | |||||||
Income before income tax | 327 | 46 | 466 | 74 | |||||||||||
INCOME TAX PROVISION | (54 | ) | (3 | ) | (42 | ) | (8 | ) | |||||||
NET INCOME | 273 | 43 | 424 | 66 | |||||||||||
Net income attributable to the redeemable noncontrolling interests | (12 | ) | — | (32 | ) | — | |||||||||
Net income attributable to the noncontrolling interests | (9 | ) | (1 | ) | (17 | ) | (2 | ) | |||||||
NET INCOME ATTRIBUTABLE TO SINCLAIR BROADCAST GROUP | $ | 252 | $ | 42 | $ | 375 | $ | 64 | |||||||
EARNINGS PER COMMON SHARE ATTRIBUTABLE TO SINCLAIR BROADCAST GROUP: | |||||||||||||||
Basic earnings per share | $ | 3.13 | $ | 0.46 | $ | 4.39 | $ | 0.70 | |||||||
Diluted earnings per share | $ | 3.12 | $ | 0.45 | $ | 4.36 | $ | 0.69 | |||||||
Weighted average common shares outstanding (in thousands) | 80,425 | 91,764 | 85,517 | 92,032 | |||||||||||
Weighted average common and common equivalent shares outstanding (in thousands) | 80,737 | 93,163 | 85,981 | 93,189 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Adjusted EBITDA | |||||||||||||||
Net income attributable to Sinclair Broadcast Group | $ | 252 | $ | 42 | $ | 375 | $ | 64 | |||||||
Add: Income from redeemable noncontrolling interests | 12 | — | 32 | — | |||||||||||
Add: Income from noncontrolling interests | 9 | 1 | 17 | 2 | |||||||||||
Add: Provision for income taxes | 54 | 3 | 42 | 8 | |||||||||||
Add: Other (income) expense | (4 | ) | — | 1 | 2 | ||||||||||
Add: Loss from equity method investments | 7 | 12 | 13 | 26 | |||||||||||
Add: Loss from other investments and impairments | 1 | — | 3 | 1 | |||||||||||
Add: Gain on extinguishment of debt/insurance proceeds | (3 | ) | — | (6 | ) | — | |||||||||
Add: Interest expense | 165 | 54 | 345 | 108 | |||||||||||
Less: Interest income | — | (5 | ) | (2 | ) | (11 | ) | ||||||||
Less: Gain on asset dispositions and other, net of impairment | (28 | ) | (14 | ) | (60 | ) | (22 | ) | |||||||
Add: Amortization of intangible assets & other assets | 150 | 44 | 300 | 87 | |||||||||||
Add: Depreciation of property & equipment | 26 | 22 | 50 | 45 | |||||||||||
Add: Stock-based compensation | 15 | 9 | 28 | 22 | |||||||||||
Add: Amortization of program contract costs | 21 | 22 | 44 | 46 | |||||||||||
Less: Cash film payments | (24 | ) | (24 | ) | (47 | ) | (48 | ) | |||||||
Add: Amortization of sports programming rights | 5 | — | 396 | — | |||||||||||
Less: Cash sports programming rights payments | (413 | ) | — | (1,025 | ) | — | |||||||||
Add: Transaction, COVID, legal and other one-time expense | 9 | 28 | 29 | 30 | |||||||||||
Adjusted EBITDA | $ | 254 | $ | 194 | $ | 535 | $ | 360 |
Cover Page Cover Page |
Aug. 05, 2020 |
---|---|
Cover page. | |
Document Type | 8-K |
Document Period End Date | Aug. 05, 2020 |
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 |
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