Announces Sale of WGGB-TV in Springfield/Holyoke, Massachusetts
BALTIMORE, August 1 /PRNewswire-FirstCall/ -- Sinclair Broadcast Group,
Inc. (Nasdaq: SBGI), the "Company" or "Sinclair," today reported financial
results for the three months and six months ended June 30, 2007.
Commenting on the quarter, David Smith, President and CEO of Sinclair,
stated, "We have now successfully closed on multi-year retransmission
consent agreements with all of the major multi-channel video programming
distributors in our markets, covering approximately 90% of the subscribers
in our markets. We now estimate that our 2007 revenues from our
retransmission consent agreements will be approximately $60.5 million, as
compared to $25.4 million last year, a 138% increase. For 2008, we expect
this number to grow to approximately $66.0 million based on what we have
under contract today. This estimate does not include the remaining 10% of
the subscribers in our markets for which we do not yet have longer-term
contracts in place and excludes revenues from our retransmission consent
agreements for WGGB-TV, the sale of which we expect to close in the fourth
quarter 2007."
Financial Results:
Net broadcast revenues from continuing operations were $161.4 million
for the three months ended June 30, 2007, a decrease of 1.4% versus the
prior year period result of $163.8 million. Operating income was $41.9
million in the three-month period as compared to $47.2 million in the prior
year period, a decrease of 11.3%. The Company had net income available to
common shareholders of $2.2 million in the three-month period, which
included a $15.0 million extinguishment of debt charge associated with the
partial call of the Company's 8% Notes, versus net income available to
common shareholders of $10.3 million in the prior year period. The Company
reported diluted earnings per common share of $0.03 for the three-month
period versus diluted earnings per common share of $0.12 in the prior year
period.
Net broadcast revenues from continuing operations were $311.6 million
for the six months ended June 30, 2007, flat versus the prior year period
result of $311.7 million. Operating income was $79.2 million in the
six-month period, a decrease of 4.1% versus the prior year period result of
$82.5 million. Net loss available to common shareholders was $0.2 million
in the six-month period, which included a $30.6 million extinguishment of
debt charge associated with the partial call of the Company's 8% Notes and
full redemption of the Company's 8.75% Notes. The Company had net income
available to common shareholders of $20.3 million in the six-month period
ended June 30, 2006. Diluted earnings per common share were $0.00 in the
six-month period versus diluted earnings per common share of $0.24 in the
prior year period.
Operating Statistics and Income Statement Highlights:
-- Political revenues were $1.1 million in the quarter versus $1.7 million
in the second quarter last year.
-- Local advertising revenues were down 0.8% in the quarter versus the
second quarter 2006, while national advertising revenues decreased
9.2%, primarily due to weakness on the MyNetworkTV stations.
Advertising spending by the automotive, services, retail and fast food
categories were down while medical and telecommunications advertising
spending was up. Local revenues, excluding political revenues,
represented 66.5% of advertising revenues.
-- Time sales on our FOX stations were up 2.9% in the quarter, while
stations affiliated with ABC, CW and MyNetworkTV were down 0.4%, 3.4%
and 21.2%, respectively. Time sales on our CBS stations were up 3.2%
and our NBC station was down 10.2%.
-- With all but six markets reported, market share survey results reflect
that our stations' share of the television advertising market in the
second quarter of 2007 declined slightly from 18.2% to 18.1%, versus
the same period last year.
-- In June 2007, the Company entered into a retransmission consent
agreement with COX Communications, Inc. for the carriage of the analog
and digital signals of 9 stations in 6 markets, representing 1.3
million subscribers.
-- In May 2007, the Company acquired Triangle Sign & Service, a Baltimore-
based company whose primary business is to design and fabricate
commercial signs for retailers, sports complexes, and other commercial
businesses, for $16.0 million.
-- In July 2007, the Company entered into an agreement to sell the assets
of WGGB-TV, our ABC affiliate in Springfield, Massachusetts, to
Gormally Broadcasting LLC for $21.2 million in cash. The sale is
expected to close in the fourth quarter of 2007.
Balance Sheet and Cash Flow Highlights:
-- Debt on the balance sheet, net of $9.2 million in cash, was $1,348.8
million at June 30, 2007 versus net debt of $1,331.8 million at March
31, 2007.
-- As of June 30, 2007, 51.6 million Class A common shares and 35.7
million Class B common shares were outstanding, for a total of 87.3
million common shares outstanding.
-- Capital expenditures in the quarter were $3.4 million.
-- Common stock dividends paid in cash in the quarter were $12.9 million.
-- Program contract payments for continuing operations were $20.3 million
in the quarter.
Forward-Looking Statements:
The matters discussed in this press release, particularly those in the
section labeled "Outlook," include forward-looking statements regarding,
among other things, future operating results. When used in this press
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 and in
addition to the assumptions identified in this release, the impact of
changes in national and regional economies, 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 Network and MyNetworkTV
programming, our news share strategy, our local sales initiatives, the
execution of retransmission consent agreements and the other risk factors
set forth in the Company's most recent reports on Form 10-Q and 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.
Outlook:
In accordance with Regulation FD, Sinclair is providing public
dissemination through this press release of its expectations for certain of
its third quarter 2007 and full year 2007 financial performance. The
Company assumes no obligation to update its expectations. All matters
discussed in the "Outlook" section are forward-looking and, as such,
persons relying on this information should refer to the "Forward-Looking
Statements" section above.
All assumptions and historical periods have been adjusted to exclude
WGGB- TV, which will be accounted for under discontinued operations
accounting commencing in the third quarter of 2007.
"We are currently forecasting our third quarter broadcast revenues to
decline by $2.9 million to $4.7 million primarily due to tougher prime-time
comps faced by the stations affiliated with MyNetworkTV, a continued soft
Columbus, Ohio market, which is our largest market, and almost $2.0 million
less in network compensation," commented David Amy, EVP and CFO. "While
most broadcasters will be faced with having to replace last year's
incremental political revenues, our ability to secure retransmission
consent fee revenues is expected to more than offset the absence of
political dollars in the third quarter."
-- The Company expects third quarter 2007 station net broadcast revenues
from continuing operations, before barter, to be down approximately
$2.9 million to $4.7 million, or down 1.9% to 3.1% from third quarter
2006 station net broadcast revenues, before barter, of $150.3 million.
This assumes $6.7 million less in political revenues and $1.9 million
less in network compensation, offset by higher retransmission consent
fee revenues versus third quarter 2006.
-- The Company expects barter revenue and barter expense each to be
approximately $14.0 million in the third quarter.
-- The Company expects continuing operations station production expenses
and station selling, general and administrative expenses (together,
"television expenses"), before barter expense, but including stock-
based compensation expense, in the quarter to be approximately $69.0
million, a 0.5% decrease from third quarter 2006 television expenses of
$69.4 million. On a full year basis, television expenses are expected
to be approximately $284.3 million, or up a nominal 0.7%, as compared
to 2006 television expenses of $282.2 million. The 2007 television
expense forecast includes $0.4 million of stock-based compensation
expense for the quarter and $1.5 million for the year, as compared to
the 2006 actuals of $0.4 and $1.4 million for the quarter and year,
respectively.
-- The Company expects program contract amortization expense to be
approximately $22.8 million in the quarter and $90.8 million for the
year, as compared to the 2006 actuals of $24.1 million and $90.6
million for the quarter and year, respectively.
-- The Company expects program contract payments to be approximately $18.4
million in the quarter and $78.9 million for the year, as compared to
the 2006 actuals of $19.1 million and $87.8 million for the quarter and
year, respectively.
-- The Company expects corporate overhead, including stock-based
compensation expense, to be approximately $6.4 million in the quarter
and $25.9 million for the year. The 2007 corporate overhead forecast
includes $0.1 million of stock-based compensation expense for the
quarter and $2.1 million for the year.
-- The Company expects depreciation on property and equipment to be
approximately $10.8 million in the quarter and $43.6 million for the
year, assuming the capital expenditure assumptions below, and as
compared to the 2006 actuals of $10.7 million and $45.3 million for the
quarter and year, respectively.
-- The Company expects amortization of acquired intangibles to be
approximately $4.2 million in the quarter and $16.9 million for the
year, as compared to the 2006 actuals of $4.3 million and $33.1 million
for the quarter and year, respectively.
-- The Company expects net interest expense to be approximately $21.9
million in the quarter and $93.7 million for the year, 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 expects the third quarter effective tax rate for continuing
operations to be approximately 44%, including a current tax benefit
from continuing operations of approximately $4.3 million in the quarter
based on the assumptions discussed in this "Outlook" section. For the
year, the effective tax rate on continuing operations is expected to be
approximately 40%, including a current tax benefit of $13.5 million.
-- The Company expects dividends paid on the Class A and Class B common
shares to be approximately $13.1 million in the third quarter and $49.7
million for the year, assuming current shares outstanding and a $0.60
per share annual dividend rate.
-- The Company expects to spend approximately $9.0 million in capital
expenditures in the quarter and approximately $25.0 to $30.0 million
for the year.
Sinclair Conference Call:
The senior management of Sinclair will hold a conference call to
discuss its second quarter results on Wednesday, August 1, 2007, at 8:30
a.m. ET. After the call, an audio replay will be available at
http://www.sbgi.net under "Investor Information/Conference Call." The press
and the public will be welcome on the call in a listen-only mode. The
dial-in number is (877) 407-9205.
About Sinclair:
Sinclair Broadcast Group, Inc., one of the largest and most diversified
television broadcasting companies, will own and operate, program or provide
sales services to 57 television stations in 35 markets after the sale of
WGGB- TV. Sinclair's television group reaches approximately 22% of U.S.
television households and is affiliated with all major networks. Sinclair
owns a majority equity interest in G1440 Holdings, Inc., an Internet
consulting and development company, and Acrodyne Communications, Inc., a
manufacturer of transmitters and other television broadcast equipment.
Notes:
"Discontinued Operations" accounting has been adopted in the financial
statements for all periods presented in this press release. As such, the
results from operations, net of related income taxes, have been
reclassified from income from operations and reflected as net income from
discontinued operations. WGGB-TV will be accounted for under discontinued
operations accounting commencing with the third quarter of 2007.
Prior year amounts have been reclassified to conform to current year
GAAP presentation.
Sinclair Broadcast Group, Inc. and Subsidiaries
Unaudited Consolidated Statements of Operations
(in thousands, except per share data)
Three Months Ended Six Months Ended
June 30, June 30,
2007 2006 2007 2006
REVENUES:
Station broadcast revenues,
net of agency commissions $161,427 $163,771 $311,596 $311,696
Revenues realized from station
barter arrangements 15,772 13,629 29,571 25,434
Other operating divisions'
revenues 3,466 7,692 6,353 11,429
Total revenues 180,665 185,092 347,520 348,559
OPERATING EXPENSES:
Station production expenses 39,279 37,085 75,905 75,194
Station selling, general and
administrative expenses 34,637 34,633 68,915 68,780
Expenses recognized from
station barter arrangements 14,279 12,503 26,744 23,328
Amortization of program
contract costs and net
realizable value adjustments 23,108 22,683 44,492 41,306
Other operating divisions'
expenses 4,079 7,773 7,625 11,762
Depreciation of property and
equipment 11,632 12,686 22,529 24,973
Corporate general and
administrative expenses 7,427 6,113 13,391 11,919
Amortization of definite-lived
intangible assets and other
assets 4,365 4,435 8,732 8,760
Total operating expenses 138,806 137,911 268,333 266,022
Operating income 41,859 47,181 79,187 82,537
OTHER INCOME (EXPENSE):
Interest expense and
amortization of debt discount
and deferred financing costs (25,887) (28,625) (52,269) (58,335)
Interest income 1,701 304 2,089 350
Gain (loss) from sale of assets 4 18 (8) (269)
Loss from extinguishment of
debt (14,967) (256) (30,648) (879)
(Loss) gain from derivative
instruments (1,654) 26 (597) 2,907
(Loss) income from equity and
cost investees (880) 36 (892) 6,135
Other income, net 455 607 676 482
Total other expense (41,228) (27,890) (81,649) (49,609)
Income (loss) from
continuing operations
before income taxes 631 19,291 (2,462) 32,928
INCOME TAX BENEFIT (PROVISION ) 1,195 (8,498) 2,038 (15,059)
Income (loss) from continuing
operations 1,826 10,793 (424) 17,869
DISCONTINUED OPERATIONS:
Income (loss) from discontinued
operations, net of related
income tax benefit (provision)
of $371, ($510), $232
and $604 respectively 371 (510) 232 658
Gain from discontinued
operations, net of related
income tax provision of
$0, $0, $0 and
$885 respectively - - - 1,774
NET INCOME (LOSS) AVAILABLE TO
COMMON SHAREHOLDERS $2,197 $10,283 $(192) $20,301
BASIC AND DILUTED EARNINGS
(LOSS) PER COMMON SHARE:
Earnings per common share from
continuing operations $0.02 $0.13 $- $0.21
(Loss) earnings per common
share from discontinued
operations $- $(0.01) $- $0.03
Earnings per common share $0.03 $0.12 $- $0.24
Weighted average common shares
outstanding 87,122 85,692 86,634 85,593
Weighted average common and
common equivalent shares
outstanding 87,282 85,734 86,634 85,634
Dividends declared per common
share $0.15 $0.10 $0.30 $0.20
Unaudited Consolidated Historical Selected Balance Sheet Data:
(In thousands)
June 30, March 31,
2007 2007
Cash & cash equivalents $9,181 $15,450
Total current assets 221,467 216,121
Total long term assets 1,961,315 1,970,685
Total assets 2,182,782 2,186,806
Current portion of debt 47,245 42,608
Total current liabilities 197,384 191,174
Long term portion of debt 1,310,734 1,304,663
Total long term liabilities 1,727,697 1,730,342
Total liabilities 1,925,081 1,921,516
Minority interest in consolidated
subsidiaries 705 724
Total stockholders' equity 256,996 264,566
Total liabilities & stockholders' equity $2,182,782 $2,186,806
Unaudited Consolidated Historical Selected Statement of Cash Flows Data:
(In thousands)
Three Months Six Months
Ended Ended
June 30, June 30,
2007 2007
Net cash flow from operating activities $17,010 $40,252
Net cash flow used in investing activities (19,136) (25,227)
Net cash flow used in financing activities (4,143) (73,252)
Net decrease in cash & cash equivalents (6,269) (58,227)
Cash & cash equivalents, beginning of period 15,450 67,408
Cash & cash equivalents, end of period $9,181 $9,181
SOURCE Sinclair Broadcast Group, Inc.
 back to top
Related links:
http://www.sbgi.net/
http://www.prnewswire.com/comp/110203.html/
CONTACT:
David Amy, EVP & Chief Financial Officer, or
Lucy Rutishauser, VP-Corporate Finance & Treasurer, of Sinclair
Broadcast Group, Inc., +1-410-568-1500
|
