Sinclair broadcast group

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Retrieved September 11, 2014. Headquartered in , the company is the largest operator in the by number of stations, and largest by total coverage; owning or operating a total of 193 stations across the country 233 after all currently proposed sales are approved in over 100 markets covering 40% of American households , many of which are located in the and.

Retrieved July 14, 2009. Smith, executive chairman of Sinclair Broadcast Group, is unconventional. Retrieved June 17, 2017. Retrieved January 4, 2014. It was down high single digits. Chesapeake was founded in 2013, to acquire small-market stations purchased through Sinclair's run of acquisitions.

Sinclair also took over the operations of in Omaha and in Sioux City, which had been operated by TTBG through shared services agreements. There's been this persistent concern that this money would flow to the Internet and I think I just wanted you to comment on what you're seeing about Internet relative to spending on TV and how you're seeing that being balanced and whether TV is keeping its share in what seems to be a very competitive kind of cycle. But Sinclair had argued that the deal was critical to ensuring the future of free, over-the-air television and that it better positioned the company to compete with online giants such as Facebook and Google for advertising.

Welcome to SINCLAIR BROADCAST GROUP - As a result of the deal, Sinclair took over the operations of an additional former Newport Television station, in which Fisher, owner of in Eugene, had reached a deal to operate under a shared services agreement , and return to radio ownership for the first time since selling its previous radio group to and in 1999 and 2000. Accordingly, we have exercised our right to terminate the Merger Agreement, and, by way of our lawsuit, intend to hold Sinclair accountable.

Sinclair Broadcast Group, Inc. NASDAQ: Q2 2018 Earnings Call August 08, 2018 9:00 am ET Executives Lucy A. Rutishauser - Sinclair Broadcast Group, Inc. Unverified Participant Christopher S. Ripley - Sinclair Broadcast Group, Inc. Weisbord - Sinclair Broadcast Group, Inc. Analysts John Janedis - Jefferies LLC Barton Crockett - B. Ryvicker - Wells Fargo Securities LLC Dan L. Kurnos - The Benchmark Co. LLC Leo Kulp - RBC Capital Markets LLC Aaron L. Watts - Deutsche Bank Securities, Inc. James Davis Hebert - Wells Fargo Securities LLC Clay Griffin - Deutsche Bank Securities, Inc. Presentation Operator Greetings and welcome to the Sinclair Broadcast Group's Second Quarter 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Lucy Rutishauser, Senior Vice President and Chief Financial Officer. Rutishauser - Sinclair Broadcast Group, Inc. Participating on the call with me today are David Smith, Executive Chairman; Chris Ripley, President and CEO; David Amy, Vice Chairman; Rob Weisbord, Senior Vice President and Chief Revenue Officer; and Steve Pruett, Executive Vice President and Chief TV Development Officer. Steve Marks is unable to join us for the call today. Before we begin, Billie-Jo McIntire 00:56 will make our forward-looking statement disclaimer. Unverified Participant Certain matters discussed on this call may include forward-looking statements regarding, among other things, future operating results. Such statements are subject to a number of risks and uncertainties. Actual results in the future could differ from those described in the forward-looking statements as a result of various important factors. Such factors have been set forth in the company's most recent reports as filed with the SEC and included in our second quarter earnings release. The company undertakes no obligation to update these forward-looking statements. Unless otherwise indicated, pro forma results do not reflect the impact of the Tribune acquisition. The company uses its website as a key source of company information, which can be accessed at www. In accordance with Regulation FD, this call is being made available to the public. A webcast replay will be available on our website later today and will remain available until our next quarterly earnings release. Included on the call will be a discussion of non-GAAP financial measures, specifically television broadcast cash flow, EBITDA, free cash flow and leverage. These metrics are not meant to replace GAAP measurements, but are provided as supplemental detail to assist the public in their analysis and valuation of our company. A reconciliation of the non-GAAP financial measures to the GAAP measures in our financial statements is provided on our website under Investors, Non-GAAP Measures. Chris Ripley will now you through our operating highlights. Ripley - Sinclair Broadcast Group, Inc. We're looking forward to sharing our results with you from a strong quarter. On today's call, we'll be focusing on those results and our guidance. Because of the developing nature of matter surrounding the Tribune acquisition and any regulatory items, we will not be providing an update on the Tribune acquisition on this call, although we expect to be able to do so in the near future. We also expect — so, we also ask that your questions focus on our results and guidance as we will not be commenting on any Tribune-related questions. Before we go through the results, let me review some highlights. We couldn't be prouder of the achievements of our dedicated news professionals who bring their communities impactful journalism with a local focus. All-in, our stations and digital national news platform, Circa, have won 258 awards and counting in 2018. That includes 45 Regional Edward R. Murrow Awards at 21 newsrooms and 50 Emmy's at 11 stations. I'm happy to now include Circa among our group of award-winning news operations this year, winning the very prestigious national Edward R. Murrow Award this past June alongside our station in Seattle, KOMO. We also wrapped up six National Press Photographers Association awards for photojournalism, including the Medium Market Station of the Year award for WLOS in Asheville. Congratulations to all of our winners this year. Our stations do more than just report the news. We're partners with the local communities and play a vital role in serving our viewers. In July, Sinclair's Las Vegas stations, KSNV and KVCW, were recognized for this part of their missions when St. Jude named them collectively the 2018 St. Jude Children's Research Hospital and the giveaway of a home. Our stations are helping their communities in times of crisis such as in Redding, California and the CARR wildfires. One of our stations, KRCR in Redding, is at the center of the fire, playing a critically needed role to disseminate emergency alerting and lifesaving information. With the support of neighboring Sinclair stations, KRCR has been able to offer over 110 hours of around-the-clock continuous coverage of the fast-moving wildfires. The funds raised will be used by the Salvation Army locally for short and long-term relief efforts. This is a fundamental part of our company's mission over the years, newsrooms with deep local roots that can leverage our financial, technical and operating resources across the company for the betterment of the local community. Now, Lucy will take you through the second quarter results. Rutishauser - Sinclair Broadcast Group, Inc. I am pleased to report we exceeded our second quarter guidance in all key financial metrics. On a pro forma basis, second quarter 2018 media revenues were 6% higher than pro forma second quarter 2017 on higher distribution, political and digital revenue, offset in part by lower core advertising as a result of a decrease in certain categories. We're still on track for pro forma net retrans to grow by low single-digit percents this year. Corporate overhead was above our prior guidance due to higher group insurance claims and the higher onetime transaction cost. That's on the revenue beat, lower media expenses and the timing of the ONE Media expenses. Turning to the balance sheet and cash flow highlights, as a reminder, the announced station divestitures related to the Tribune acquisition were, as of June 30, accounted for as assets held for sale for balance sheet purposes and were included in our statement of operations. The effective tax rate in 2018 is expected to be a benefit of low-single-digit percent rate. And this reflects the lower statutory federal income tax rate as well as tax credits related to sustainability initiatives and the tax-free gain on the Milwaukee spectrum sale in the first quarter. Total net leverage through the holding company at quarter-end was 3. This is our strongest balance sheet in company history and based on our guidance, we expect it to improve to an historically low 3. The first lien indebtedness ratio on a trailing eight quarters was 1. And if the Tribune acquisition closes after divestures, we would expect the pro forma combined company total net leverage to be approximately 4. Now, Rob Weisbord will take you through our operating performance. Weisbord - Sinclair Broadcast Group, Inc. We had a much better second quarter than anticipated, driven by strong political spending. In addition to the higher fundraising and ad spending, we have more ballot issues in our markets versus 2014. Our digital business continues to perform very well with pro forma revenues growing 27% in the second quarter as compared to the same period last year. Turning to our outlook, which does not include Tribune. On a pro forma basis, third quarter media revenues are expected to be approximately 10% higher than third quarter of 2017 and higher distribution in political revenues. Pro forma core advertising revenues in the third quarter, excluding political, are expected to be down low to mid-single digits versus the same period last year. This is to be expected as we head into the height of political season with heavy political demand crowding out normal advertisers. Distribution revenue, net of reverse retrans fees for the year, is still expected to grow by low single-digit percents. The year-over-year increase is due primarily to higher reverse retrans on the large number of network agreements that renewed at the beginning of this year, annual compensation increases, growth initiatives and sales commissions on the added political revenues. The increase is driven by net retrans and political revenue, partially offset by timing of ONE Media expenses. Their full year guidance remains unchanged. With that, I would like to open it up for questions. Question-and-Answer Session Operator Thank you. We will now be conducting a question-and-answer session. Our first question comes from John Janedis with Jefferies. John Janedis - Jefferies LLC Oh, hi. Two quick ones from me. One, given the release last night on the OTT platform, I was hoping for a little more color. How large do you view the addressable market today and how quickly do you see the adoption scaling and I guess what kind of margin do you expect to see from that business? And then, separately, with the Disney or Fox RSN sales, would you have an interest in expanding your portfolio? Ripley - Sinclair Broadcast Group, Inc. So, on CompulseOTT, we're very excited about that new product. It really fills a niche within both the local marketplace and the national marketplace for greater targeted advertising. So, we've already soft launched it and ran over 5,000 campaigns with 2,000 unique advertisers. We think that marketplace is already a multibillion dollar marketplace, but it's underserved. So, there's more demand than there is supply and we expect it will grow double digits for the foreseeable future. So, we put together a really top-notch product with multiple premium inventory suppliers mixed in with our own inventory and with the great data and analytics and daily dashboards for advertisers. So, we think that's going to be a nice growth opportunity for us moving forward. What was the — can you restate your question on the RSNs? John Janedis - Jefferies LLC Maybe one more on that, Chris, is just would that be margin dilutive in terms of that business versus the broadcast portfolio? Was it similar in terms of, say, a spot ad sale and then separately on the RSN, just with, I guess, Disney selling the Fox RSNs, any interest and maybe particular markets, if you will, to expand your RSN portfolio? Ripley - Sinclair Broadcast Group, Inc. So, look, on a variable contribution basis, the margins will be less than just a pure spot. But on a fully loaded basis, because stations have extensive news operations and other costs, it is not margin-dilutive. And in terms of the RSNs, look, we're always active. We continue to seek scale within the broadcast industry. There's a lot of deals coming on the marketplace as I'm sure you've all heard, adjacencies, they continue to be an interest to us including cable, content, digital media and I would put RSN squarely in that adjacency bucket. I think they are fairly interesting. They are a good fit with the broadcast footprint and operations. Of course, it all has to be for the right value and the right deal. John Janedis - Jefferies LLC Thanks a lot, Chris. Ripley - Sinclair Broadcast Group, Inc. Operator Our next question comes from Barton Crockett with B. Barton Crockett - B. I was wondering how you think about your capacity to do deals, given the Tribune acquisition, which is still on the table. How does that affect kind of your appetite to do deals? And then, secondarily, is there some advantages maybe to looking at deals that are maybe less regulated? RSNs would not be regulated the same way that TV stations have been. In this environment, is there some advantage to looking outside of your typical breadbox at this point? Ripley - Sinclair Broadcast Group, Inc. So, our appetite to do further transactions has not changed based on the current status of the Tribune transaction. So, there really is no change there. As I said, we will continue to seek scale within broadcast and in adjacencies. Look, if a less regulated opportunity, like an RSN, makes sense from a business and a value perspective, that obviously is a benefit. I think that'd benefit for anyone. The less regulated industries are generally easier to operate in. I think that's a statement any management team would make. Barton Crockett - B. And then, secondarily, I just wanted to probe a little bit on the political, which seems to be strong for many, including you guys. There's been this persistent concern that this money would flow to the Internet and I think I just wanted you to comment on what you're seeing about Internet relative to spending on TV and how you're seeing that being balanced and whether TV is keeping its share in what seems to be a very competitive kind of cycle. Ripley - Sinclair Broadcast Group, Inc. So, I'll let maybe Rob comment on Internet-related political spending, but what we're seeing so far is very encouraging on the political front. As you all know in 2016, there was a hiccup in the political cycle with the entry of Trump and the lack of fundraising that was done and the lack of fundraising led to a lack of spending. And what we're seeing in this cycle is exactly what the standard pattern is. There's going to be record amount of spending this year on the political campaigns. And it looks like we're headed for another record year of TV spot political spending. They're also spending on the Internet and I don't know, Rob, if you have further color on that. But that spending is — it is going on, but it's smaller dollars and the spot TV market is maintaining its historical share. Weisbord - Sinclair Broadcast Group, Inc. So, we haven't seen really any impact on the broadcast side. There is some spending on the digital side, but in many races it's really — has been previously bought programmatically and with the issues of the bot traffic, it has curtailed some of that spending. And I think we're reaping the benefit of it as being a regulated and sourced media that the spending as the proof of how it's coming in through our second and third quarter is that we're not really impacted by any of the digital spend. Barton Crockett - B. Operator Our next question comes from Marci Ryvicker with Wells Fargo. Ryvicker - Wells Fargo Securities LLC Thanks. A couple questions, first, can you talk about your use of cash options if there is no Tribune deal? And then, is the Fox renewal, I assume that, that was separate from any of the station sales, so that those economics are in place? And then, related just to the total fundamentals, can you talk about auto in the third quarter and maybe what you might be seeing for the fourth quarter? Ripley - Sinclair Broadcast Group, Inc. So, in terms of how we think about spending money, it really again doesn't change our priorities and our view of the world. It doesn't change in terms of what ultimately happens with Tribune. And so, when clarity comes on the outcome for Tribune, then that evaluation will be made and it will also be weighed against other opportunities, of which there are quite a few, right now, coming on to the marketplace. So, we'll look to balance that equation, like we always do. And whether Tribune happens or not doesn't really play into a change into our philosophy there. What was the next question you had? Weisbord - Sinclair Broadcast Group, Inc. Ripley - Sinclair Broadcast Group, Inc. Ryvicker - Wells Fargo Securities LLC Fox renewals. Ripley - Sinclair Broadcast Group, Inc. So, the Fox renewals, they are in place to the extent that the Tribune acquisition does not happen, Fox does have the right to cancel those. And if that were to happen, then it would be like just any other renewal negotiation. Weisbord - Sinclair Broadcast Group, Inc. Ryvicker - Wells Fargo Securities LLC Okay. And then, on auto, any color on your auto category? Weisbord - Sinclair Broadcast Group, Inc. We we're seeing in third quarter auto rebounding. We expect it to be down low single digits due to a political crowd out. However, on the domestic side from both the dealer group and factory led by Ford and Chevy, we've seen a big turnaround in their investments into broadcast television. Ryvicker - Wells Fargo Securities LLC This may be a silly question, but do you know why, because no one seems to know why auto is rebounding. Weisbord - Sinclair Broadcast Group, Inc. I think that, typically, what we've seen, especially on a dealer group, that they were, again, dabbling on the digital side with co-op money and it takes away from the long tail of the brand and when you are in the marketplace to actually purchase the funnel. And we've seen this typically in the local market places that sales won't drop off for a short period of time and then they dramatically drop off and they come back to the broadcast. Ryvicker - Wells Fargo Securities LLC Great. Rutishauser - Sinclair Broadcast Group, Inc. Marci, if I can just add also, we shouldn't overlook just the strength in the economy right now as well. We have GDP, which is up over 4%, whether or not some of the strength in auto is also coming from our tax reform implications, but I don't want you to overlook the fact that the economy has also been improving as the year goes on. Ryvicker - Wells Fargo Securities LLC Okay. Operator Our next question comes from Dan Kurnos with The Benchmark Company. Kurnos - The Benchmark Co. And, look, so, if Tribune, for example, doesn't happen, there are a lot of opportunities out there. Ripley - Sinclair Broadcast Group, Inc. Look, I think the regulatory environment is very favorable in terms of the rules that are currently on the book. The UHF discount is in place and that was a bit of an uncertainty for what ultimately happens with the national cap is an unknown. We really have no insight into what the FCC will do there. They did open an NPRM on the national cap. However, now that the UHF discount is not going away, they may not touch it. They may, they may not. So, only time will tell. And in terms of other opportunities, I think there's several other station groups that have decided that it's time to hit the market and they're already essentially committed to go. And the industrial logic for the industry for us and anyone else is still very much there. Kurnos - The Benchmark Co. LLC And then, I apologize if I missed this earlier, but on 3. Ripley - Sinclair Broadcast Group, Inc. Phoenix is up and running. It has a signal for a 3. Dallas, in about 60 days should launch a 3. So, that will be a first of that sort of deployment. And there is a lot of work going on in the background right now amongst all the various broadcast groups in agreeing on a deployment plan for the rest of the country and how channels will be shared. That's probably the most complicated part of the organization is getting everyone to agree to that, but we're making good headway there. And so, things are moving along and we still expect deployments to happen as the repack rolls through the industry. Kurnos - The Benchmark Co. Operator Our next question comes from Leo Kulp with RBC Capital Markets. Leo Kulp - RBC Capital Markets LLC Good morning. Thanks for taking the question. I just had two. First, can you remind us what your long-term leverage target is? And then, second, on the core ad front, Charter saw 3% non-political ad growth and they say it's some of their targeting capabilities. Are you seeing any evidence that local cables share gains are accelerating and that's weighing on broadcast spot? Rutishauser - Sinclair Broadcast Group, Inc. So, I'll do the target leverage first. So, we're still at our high 3 times, low 4 times in a normalized environment. Weisbord - Sinclair Broadcast Group, Inc. And as far as the targeting in cable, they obviously over the last 20 years have seen growth and — taken away from when there was a broadcast exclusive business. However, I don't see any enhanced targeting capabilities that haven't been around for the last couple of years. So, they might be having some cess on the GO 32:42 , but there aren't really significant premium ad rates right now in the marketplace that that we've seen for addressable. Ripley - Sinclair Broadcast Group, Inc. I think that the punch line there is that cable for decades now has been a strong competitor within the local ad marketplace and we don't see any sort of acceleration in terms of that trend. Leo Kulp - RBC Capital Markets LLC Got it. Thanks for the color. Operator Our next question comes from Aaron Watts with Deutsche Bank. Watts - Deutsche Bank Securities, Inc. I had a couple questions. First one, more of a clarifier. I heard your comments around what auto is going to look like in the third quarter. Did you say what auto did in the second quarter? Weisbord - Sinclair Broadcast Group, Inc. It was down high single digits. Watts - Deutsche Bank Securities, Inc. And then, just more broadly, I think same theme, with pro forma core in 3Q, I think you said looking down low to mid-single digits, what's the comparable kind of metric for what that did in the second quarter, kind of pro forma core? Rutishauser - Sinclair Broadcast Group, Inc. We would have been down about 5% in second quarter. Watts - Deutsche Bank Securities, Inc. Weisbord - Sinclair Broadcast Group, Inc. Look, I think as we said, we're not going to comment on Tribune-related questions and that clearly falls into that bucket. Watts - Deutsche Bank Securities, Inc. Thank you for the time. Weisbord - Sinclair Broadcast Group, Inc. Operator Our next question comes from Davis Hebert with Wells Fargo Securities. James Davis Hebert - Wells Fargo Securities LLC Hi. I realize you probably can't answer a lot on the Tribune deal, but I do want to ask about the ticking fees ending on August 8. What happens with the term loan commitments, if you could just walk us through the mechanics of that, please? Rutishauser - Sinclair Broadcast Group, Inc. So, same thing there, Davis, that as we stated at the beginning of the call, we're not going to be commenting on anything Tribune related and the ticking fees and commitments would fall there. James Davis Hebert - Wells Fargo Securities LLC Okay. Operator Our next question comes from Clay Griffin with Deutsche Bank. Clay Griffin - Deutsche Bank Securities, Inc. Chris, I think on the last call, you mentioned the company was starting to get opportunities to implement targeted advertising through virtual MVPDs. And just curious how that opportunity is progressing and I guess, from a couple of fronts, what that platform growth with the virtual MVPDs, how that's affecting your sub base? And two, is there any change in the way those platforms engage with networks as it relates to targeted advertising? Ripley - Sinclair Broadcast Group, Inc. So, yeah, we're getting several different sources of targeted advertising inventory at this point. It's coming through the virtual MVPDs both on our channels. And as you saw with the CompulseOTT announcement, we're also selling other channels' inventories through on virtual MVPDs on a targeted basis. And, of course, our websites, our OTT apps like NewsON for instance and the upcoming launch of our direct-to-consumer platform. So, the amount of inventory that's becoming available to us through all these different sources, and I forgot to mention Sorenson as well, is growing and that is why we launched our sales initiative around CompulseOTT to really focus on that. And as I said, it's already soft launched and it's been a big success so far and we think it's going to be a big growth driver for us. And it's a very underserved marketplace, especially in the local marketplace, which really hasn't had access to this. In terms of subscribers, the virtual MVPDs have really started to contribute this year. We're seeing those numbers grow quite significantly and they've really helped our overall subscriber base. Clay Griffin - Deutsche Bank Securities, Inc. Operator I would like to turn the call over to Lucy for closing comments. Rutishauser - Sinclair Broadcast Group, Inc. Thank you, operator, and thank you for participating on our earnings call this morning. And if anyone has additional questions, please feel free to contact us. Operator This concludes today's teleconference. Thank you for your participation.