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Sinclair Reports Second Quarter 2023 Financial Results

Sinclair, Inc. (Nasdaq: SBGI), the "Company" or "Sinclair," today reported financial results for the three and six months ended June 30, 2023.

Second Quarter Highlights:

  • Met or exceeded key financial metrics
  • Repurchased approximately $30 million of debt
  • Completed holding company reorganization

CEO Comment:

"Sinclair is continuing to see a solid start to 2023, meeting or beating guidance on all key financial metrics," said Chris Ripley, Sinclair's President & Chief Executive Officer. "As we continue our evolution from a traditional broadcast company to a diversified content and data distributor, we have finalized the process of reorganizing our company structure to increase transactional flexibility and transparency around the value of assets being held in each business unit, Sinclair Broadcast Group and its subsidiaries (`SBG') and Sinclair Ventures and its subsidiaries (`Ventures'). SBG holds the pure-play local media assets, while Ventures holds the company's non-local media assets. Our end goal is to create an even more effective company, designed to use the breadth of our assets to identify and accelerate growth."

Recent Company Developments:

  • In June, the Company completed the share exchange effectuating a reorganization in which Sinclair, Inc. became the publicly-traded parent of SBG.

Content and Distribution:

  • Year-to-date, Sinclair's newsrooms have won a total of 223 journalism awards, including 23 RTDNA Regional Edward R. Murrow awards, three National Headliner awards, and two Investigative Reporters and Editors (IRE) awards. Sinclair’s “Project Baltimore” also won the Society of Professional Journalists National Sigma Delta Chi Award for Investigative Reporting.
  • In July, the Company announced a distribution agreement with Hulu to add carriage of Tennis Channel, T2, Comet and CHARGE! to Hulu’s service offerings beginning January of 2024.
  • In June, the Company reached an agreement with Smith Entertainment Group (SEG), parent company of the Utah Jazz, to make KJZZ “The Home of the Utah Jazz,” enabling fans within the Jazz’s local broadcast market to watch all non-nationally televised exclusive Jazz games on the over-the-air, local TV station.
  • Tennis Channel, recorded a 20% year-over-year growth in total viewers in the second quarter of 2023, despite Wimbledon being pushed back a week this year into the third quarter. The growth rate outpaced all other English-language sports networks.

Community:

  • In July, the Company announced a partnership with the National Diaper Bank Network to launch Sinclair Cares: Summer Diaper Drive, a nationwide campaign to create awareness, provide assistance, and build a community to reduce diaper need in the US.
  • Also in July, the Company announced that it has awarded scholarships to 15 university students as a part of its annual Diversity Scholarship program. Having provided more than $315,000 in tuition assistance since 2013, the annual Sinclair Broadcast Group Diversity Scholarship aims to invest in the future of the local media industry and help students from diverse backgrounds, who reflect Sinclair’s audiences nationwide, complete their education and pursue careers in local media journalism, digital storytelling, and marketing.

Investment Portfolio:

  • As of June 30, 2023, the Company estimated the fair market value of Ventures' investment portfolio, which includes investments in real estate, private equity, and venture capital funds, as well as direct investments in companies, at approximately $1.2 billion, or approximately $20 per share.
  • During the second quarter, Ventures made investments of approximately $6 million in its portfolio of investments and received distributions, including exit payments, of approximately $5 million.

NextGen Broadcasting (ATSC 3.0):

  • As of the end of July, the Company launched NextGen Broadcast in 41 markets, including recent launches in South Bend, IN and Reno, NV. To date, NextGen Broadcast is available in 69% of the TV households in Sinclair's licensed footprint.

Financial Results:

The results below reflect the deconsolidation of the Local Sports segment comprised of the regional sports networks (RSNs), which are owned and operated by Diamond Sports Group ("DSG") and its direct and indirect subsidiaries, from the Company's financial statements and accounted for under equity method of accounting, effective March 1, 2022. As such, the quarter-to-date and year-to-date 2023 consolidated financial results do not include any results of operations of the Local Sports segment, while the consolidated financial results for the comparable year-to-date 2022 period include two months results of operations of the Local Sports segment.

Three Months Ended June 30, 2023 Consolidated Financial Results:

  • Total revenues decreased 8% to $768 million versus $837 million in the prior year period. Media revenues also decreased 8% to $761 million versus $831 million in the prior year period.
  • Total advertising revenues of $309 million decreased 16% versus $366 million in the prior year period. Core advertising revenues, which exclude political revenues, were down 3% in the second quarter to $303 million versus $312 million in the prior year period.
  • Distribution revenues of $418 million decreased versus $430 million in the prior year period.
  • Operating loss of $3 million, including non-recurring transaction and transition services, implementation, COVID, legal, and regulatory costs ("Adjustments") of $24 million, declined versus an operating income of $107 million in the prior year period, which included Adjustments of $13 million. Operating income, when excluding the Adjustments, was $21 million compared to an operating income, excluding the Adjustments, of $120 million in the prior year period.
  • Net loss attributable to the Company was $89 million versus net loss of $11 million in the prior year period. Excluding Adjustments, the Company had net loss of $70 million.
  • Adjusted EBITDA decreased 42% to $107 million from $183 million in the prior year period.
  • Diluted loss per common share was $1.38 as compared to diluted loss per common share of $0.17 in the prior year period. On a diluted share basis, the impact of Adjustments was $(0.29), and the impact of Adjustments in the prior year period was $(0.14).

Six Months Ended June 30, 2023 Consolidated Financial Results:

  • Total revenues decreased 27% to $1,541 million versus $2,125 million in the prior year period. Media revenues decreased 27% to $1,527 million versus $2,106 million in the prior year period. Excluding DSG, total revenues decreased 8% from $1,669 million in the prior year period and media revenues decreased 7% from $1,650 million in the prior year period.
  • Total advertising revenues of $618 million decreased 16% versus $737 million in the prior year period. Excluding DSG, total advertising revenues decreased 11% from $693 million in the prior year period. Core advertising revenues, which excludes political revenues, of $609 million were down 9% versus $666 million in the prior year period. Excluding DSG, core advertising revenues decreased 2% from $622 million in the prior year period.
  • Distribution revenues of $844 million decreased versus $1,303 million in the prior year period. Excluding DSG, distribution revenues decreased 3% from $870 million in the prior year period.
  • Operating income of $18 million, including $30 million of Adjustments, declined versus operating income of $3,573 million in the prior year period, which included Adjustments of $19 million and a $3,357 million gain on asset dispositions relating to deconsolidating DSG's net liability ("Gain on Deconsolidation"). Operating income, when excluding the Adjustments and Gain on Deconsolidation, was $48 million compared to operating income of $235 million in the prior year period. Excluding DSG, operating income excluding the Adjustments and Gain on Deconsolidation decreased 81% from $237 million in the prior year period.
  • Net income attributable to the Company was $96 million versus net income of $2,576 million in the prior year period. Excluding Adjustments, the Company had net income of $120 million. Net loss from DSG in the prior year period was $94 million.
  • Adjusted EBITDA decreased 48% to $227 million from $437 million in the prior year period. Adjusted EBITDA from DSG in the first two months of 2022 was $54 million.
  • Diluted earnings per common share was $1.43 as compared to diluted earnings per common share of $36.00 in the prior year period. On a diluted-per-share basis, the impact of Adjustments was $(0.36) and the impact of Adjustments and the Gain on Deconsolidation in the prior year period was $35.68.

Segment financial information is included in the following tables for the periods presented. The Local Media segment consists primarily of broadcast television stations, which the Company owns, operates or to which the Company provides services, and includes multicast networks and original content. The Local Media segment assets are owned and operated by SBG. The Tennis segment consists primarily of Tennis Channel, a cable network which includes coverage of many of tennis' top tournaments and original professional sport and tennis lifestyle shows; the Tennis Channel International streaming service; Tennis Channel Plus streaming service; T2 FAST, a 24-hours a day free ad-supported streaming television channel; and Tennis.com. Other includes non-broadcast digital and internet solutions, technical services, and other non-media investments. The assets of the Tennis segment and Other are owned and operated by Ventures. The highlights below include the divestiture of Ring of Honor (May 3, 2022) and Stadium (May 2, 2023).

Three months ended June 30, 2023

Local

Media

 

Tennis

 

Other

 

Corporate

and

Eliminations

 

Consolidated

($ in millions)

 

 

 

 

Distribution revenue

$

372

 

$

46

 

$

 

 

$

 

 

$

418

Advertising revenue

 

293

(a)

 

14

 

 

6

 

 

 

(4

)

 

 

309

Other media revenue

 

34

(b)

 

 

 

 

 

 

 

 

 

34

Media revenues

$

699

 

$

60

 

$

6

 

 

$

(4

)

 

$

761

Non-media revenue

 

 

 

 

 

8

 

 

 

(1

)

 

 

7

Total revenues

$

699

 

$

60

 

$

14

 

 

$

(5

)

 

$

768

 

 

 

 

 

 

 

 

 

 

Media programming and production expenses

$

369

 

$

40

 

$

5

 

 

$

(1

)

 

$

413

Media selling, general and administrative expenses

 

175

 

 

12

 

 

6

 

 

 

(3

)

 

 

190

Non-media expenses

 

3

 

 

 

 

7

 

 

 

(1

)

 

 

9

Program contract payments

 

23

 

 

 

 

 

 

 

 

 

 

23

Corporate general and administrative expenses

 

46

 

 

 

 

 

 

 

16

 

 

 

62

Stock-based compensation

 

10

 

 

 

 

 

 

 

2

 

 

 

12

Non-recurring transaction and transition services, implementation, COVID, legal, and regulatory costs.

 

18

 

 

 

 

4

 

 

 

2

 

 

 

24

Adjusted EBITDA(c)

$

111

 

$

8

 

$

 

 

$

(12

)

 

$

107

 

 

 

 

 

 

 

 

 

 

Interest expense (net) (d)

$

66

 

$

 

$

(5

)

 

$

 

 

$

61

Capital expenditures

 

19

 

 

 

 

1

 

 

 

 

 

 

20

Distributions to the noncontrolling interests

 

4

 

 

 

 

 

 

 

 

 

 

4

Cash distributions from equity investments

 

 

 

 

 

5

 

 

 

 

 

 

5

Cash taxes paid

 

 

 

 

 

 

 

 

 

2

Adjusted Free Cash Flow (e)

 

 

 

 

 

 

 

 

$

25

(a)

Includes political advertising revenue of $6 million.

(b)

Local Media segment other media revenue includes $14 million of management and incentive fees for services provided by the Local Media segment to DSG and Marquee under management services agreements which are not eliminated due to the deconsolidation of the Local Sports segment as of March 1, 2022.

(c)

Adjusted EBITDA is defined as earnings before interest, tax, depreciation and amortization, and non-recurring transaction and transition services, implementation, COVID, legal, and regulatory costs, as well as certain non-cash items such as stock-based compensation expense; less program contract payments. Refer to the reconciliation on the last page of this press release and the Company's website. In the above table, Adjusted EBITDA equals total revenues minus media programming and production expenses, media selling, general and administrative expenses, non-media expenses, program contract payments, and corporate general and administrative expenses; plus stock-based compensation and non-recurring transaction and transition services, implementation, COVID, legal, and regulatory costs.

(d)

Interest expense (net) excludes deferred financing costs, original issue discount amortization, and other non-cash interest expense, and is net of interest income.

(e)

Adjusted Free Cash Flow is defined as Adjusted EBITDA less interest expense (net), distributions to non-controlling interest holders, cash taxes paid, and capital expenditures; plus cash distributions received from equity investments. Refer to the reconciliation on the last page of this press release and the Company's website.

Three months ended June 30, 2022

Local

Media

 

Tennis

 

Other

 

Corporate

and

Eliminations

 

Consolidated

($ in millions)

 

 

 

 

Distribution revenue

$

385

 

$

45

 

$

 

 

$

 

 

$

430

Advertising revenue

 

343

(a)

 

11

 

 

13

 

 

 

(1

)

 

 

366

Other media revenue

 

32

(b)

 

2

 

 

2

 

 

 

(1

)

 

 

35

Media revenues

$

760

 

$

58

 

$

15

 

 

$

(2

)

 

$

831

Non-media revenue

 

 

 

 

 

12

 

 

 

(6

)

 

 

6

Total revenues

$

760

 

$

58

 

$

27

 

 

$

(8

)

 

$

837

 

 

 

 

 

 

 

 

 

 

Media programming and production expenses

$

360

 

$

39

 

$

7

 

 

 

(3

)

 

$

403

Media selling, general and administrative expenses

 

169

 

 

14

 

 

14

 

 

 

(2

)

 

 

195

Non-media expenses

 

3

 

 

 

 

9

 

 

 

(2

)

 

 

10

Program contract payments

 

26

 

 

 

 

 

 

 

 

 

 

26

Corporate general and administrative expenses

 

34

 

 

 

 

 

 

 

4

 

 

 

38

Stock-based compensation

 

4

 

 

 

 

 

 

 

1

 

 

 

5

Non-recurring transaction and transition services, implementation, COVID, legal, and regulatory costs

 

12

 

 

 

 

 

 

 

1

 

 

 

13

Adjusted EBITDA(c)

 

184

 

 

5

 

 

(3

)

 

 

(3

)

 

 

183

 

 

 

 

 

 

 

 

 

 

Interest expense (net) (d)

$

51

 

$

 

$

(3

)

 

$

 

 

$

48

Capital expenditures

 

22

 

 

1

 

 

 

 

 

1

 

 

 

24

Distributions to the noncontrolling interests

 

2

 

 

 

 

 

 

 

 

 

 

2

Cash distributions from equity investments

 

 

 

 

 

6

 

 

 

 

 

 

6

Cash taxes paid

 

 

 

 

 

 

 

 

 

15

Adjusted Free Cash Flow (e)

 

 

 

 

 

 

 

 

$

100

(a)

Includes political advertising revenue of $54 million.

(b)

Local Media segment other media revenue includes $10 million of management and incentive fees for services provided by the Local Media segment to DSG and Marquee under management services agreements which are not eliminated due to the deconsolidation of the Local Sports segment as of March 1, 2022.

(c)

Adjusted EBITDA is defined as earnings before interest, tax, depreciation and amortization, and non-recurring transaction and transition services, implementation, COVID, legal, and regulatory costs, as well as certain non-cash items such as stock-based compensation expense; less program contract payments. Refer to the reconciliation on the last page of this press release and the Company's website. In the above table, Adjusted EBITDA equals total revenues minus media programming and production expenses, media selling, general and administrative expenses, non-media expenses, program contract payments, and corporate general and administrative expenses; plus stock-based compensation and non-recurring transaction and transition services, implementation, COVID, legal, and regulatory costs.

(d)

Interest expense (net) excludes deferred financing costs, original issue discount amortization, and other non-cash interest expense, and is net of interest income.

(e)

Adjusted Free Cash Flow is defined as Adjusted EBITDA less interest expense (net), distributions to non-controlling interest holders, cash taxes paid, and capital expenditures; plus cash distributions received from equity investments. Refer to the reconciliation on the last page of this press release and the Company's website.

Consolidated Balance Sheet and Cash Flow Highlights of the Company:

  • Total Company debt as of June 30, 2023 was $4,222 million, of which $4,206 million is SBG debt and $16 million is Ventures debt.
  • The Company purchased approximately $32 million of principal across multiple tranches of debt, $30 million in June and $2 million in July, in the open market for $21 million, representing a weighted average discount of 35% to par and a weighted average yield to maturity of 13%.
  • Cash and cash equivalents for the Company as of June 30, 2023 was $728 million, of which $368 million is SBG cash and $360 million is Ventures cash.
  • As of June 30, 2023, 39.3 million Class A common shares and 23.8 million Class B common shares were outstanding, for a total of 63.0 million common shares. As previously reported, the Company repurchased approximately 8.8 million shares through May 1, 2023.
  • In June, the Company paid a quarterly cash dividend of $0.25 per share.
  • Capital expenditures for the second quarter of 2023 were $20 million.

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, 2023 and the twelve months ending December 31, 2023. The expected results for both the three months ending September 30, 2023 and the twelve months ending December 31, 2023 do not include the Company's former Local Sports segment, which was deconsolidated as of March 1, 2022.

For the three months ending September 30, 2023 ($ in millions)

Local Media

 

Tennis

 

Other

 

Corporate

and

Elimination

 

Consolidated

Advertising revenue

$281 to $295

 

$9

 

$6

 

$(4)

 

$291 to $307

Distribution revenue

362 to 365

 

46 to 47

 

 

 

408 to 412

Other media revenue

34

 

1

 

 

(1)

 

34

Media revenues

$677 to $694

 

$56 to $58

 

$6

 

$(5) to $(6)

 

$733 to $752

Non-media revenue

 

 

10 to 11

 

(1)

 

10 to 11

Total revenues

$677 to $694

 

$56 to $58

 

$16 to $18

 

$(6)

 

$742 to $763

 

 

 

 

 

 

 

 

 

 

Media programming & production expenses and media selling, general and administrative expenses

$549 to $551

 

$44

 

$5

 

$(5)

 

$593 to $595

Non-media expenses

4

 

 

13 to 14

 

 

17 to 18

Program contract payments

22

 

 

 

 

22

Corporate overhead

19

 

 

1

 

13

 

33

Stock-based compensation

6

 

 

 

 

6

Non-recurring transaction, implementation, legal, and regulatory costs

4

 

 

2

 

1

 

8

Adjusted EBITDA(a)

$94 to $109

 

$11 to $13

 

$(1) to $0

 

(13)

 

$91 to $109

 

 

 

 

 

 

 

 

 

 

Interest expense (net)(b)

69

 

 

(4)

 

 

65

Total capital expenditures

29 to 34

 

 

1

 

 

30 to 35

Distributions to the noncontrolling interests

3

 

 

 

 

3

Cash distributions from equity investments

 

 

3

 

 

3

Net cash tax payments

 

 

 

 

 

 

 

 

1

Adjusted Free Cash Flow(c)

 

 

 

 

 

 

 

 

$(9) to $14

Note: Certain amounts may not summarize to totals due to rounding differences.

(a)

Adjusted EBITDA is defined as earnings before interest, tax, depreciation and amortization, and non-recurring transaction, implementation, legal, and regulatory costs, as well as certain non-cash items such as stock-based compensation expense; less programming payments. In the above table, Adjusted EBITDA equals total revenues minus media programming and production expenses, media selling, general and administrative expenses, non-media expenses, program contract payments, and corporate general and administrative expenses; plus stock-based compensation and non-recurring transaction, implementation, legal, and regulatory costs.

(b)

Interest expense (net) excludes deferred financing costs, original issue discount amortization, and other non-cash interest expense, and is net of interest income.

(c)

Adjusted Free Cash Flow is defined as Adjusted EBITDA less interest expense (net), distributions to non-controlling interest holders, cash taxes paid, and capital expenditures; plus cash distributions received from equity investments.

For the twelve months ending December 31, 2023 ($ in millions)

 

Consolidated

Expense Highlights:

 

 

Media programming & production expenses and media selling, general and administrative expenses

 

$2,377 to $2,383

Non-media expenses

 

68

Program contract payments

 

89

Corporate overhead

 

186

Stock based compensation included in corporate, media, and non-media expenses

 

47

Non-recurring transaction, implementation, legal, and regulatory costs included in corporate, media, and non-media expenses above

 

46

 

 

 

Interest expense (net)(a)

 

253

Total capital expenditures

 

100 to 110

Distributions to noncontrolling interests

 

12

Cash distributions from equity investments

 

45

Net cash tax payments

 

5

Note: Certain amounts may not summarize to totals due to rounding differences.
(a)

Interest expense (net) excludes deferred financing costs, original issue discount amortization, and other non-cash interest expense, and is net of interest income.

Sinclair Conference Call:

The senior management of Sinclair will hold a conference call to discuss the Company's second quarter 2023 results on Wednesday, August 2, 2023, at 4:30 p.m. ET. The call will be webcast live and can be accessed at www.sbgi.net under "Investor Relations/Events and Presentations." 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) 506-0062, with entry code 433619.

About Sinclair:

Sinclair, Inc. is a diversified media company and a leading provider of local news and sports. The Company owns, operates and/or provides services to 185 television stations in 86 markets affiliated with all the major broadcast networks; owns Tennis Channel and multicast networks Comet, CHARGE! and TBD; and owns and provides services to 21 regional sports network brands. Sinclair’s content is delivered via multiple platforms, including over-the-air, multi-channel video program distributors, and the nation’s largest streaming aggregator of local news content, NewsON. The Company regularly uses its website as a key source of Company information which can be accessed at www.sbgi.net.

Sinclair, Inc. and Subsidiaries

 

Preliminary Unaudited Consolidated Statements of Operations

 

(In millions, except share and per share data)

 

 

Three Months Ended

June 30,

 

Six Months Ended

June 30,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

REVENUES:

 

 

 

 

 

 

 

Media revenues

$

761

 

 

$

831

 

 

$

1,527

 

 

$

2,106

 

Non-media revenues

 

7

 

 

 

6

 

 

 

14

 

 

 

19

 

Total revenues

 

768

 

 

 

837

 

 

 

1,541

 

 

 

2,125

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES:

 

 

 

 

 

 

 

Media programming and production expenses

 

413

 

 

 

403

 

 

 

811

 

 

 

1,161

 

Media selling, general and administrative expenses

 

190

 

 

 

195

 

 

 

381

 

 

 

415

 

Amortization of program contract costs

 

19

 

 

 

21

 

 

 

41

 

 

 

46

 

Non-media expenses

 

9

 

 

 

10

 

 

 

21

 

 

 

23

 

Depreciation of property and equipment

 

32

 

 

 

24

 

 

 

56

 

 

 

52

 

Corporate general and administrative expenses

 

62

 

 

 

38

 

 

 

120

 

 

 

85

 

Amortization of definite-lived intangible assets

 

41

 

 

 

43

 

 

 

82

 

 

 

136

 

Gain on deconsolidation of subsidiary

 

 

 

 

 

 

 

 

 

 

(3,357

)

Loss (gain) on asset dispositions and other, net of impairment

 

5

 

 

 

(4

)

 

 

11

 

 

 

(9

)

Total operating expenses (gains)

 

771

 

 

 

730

 

 

 

1,523

 

 

 

(1,448

)

Operating (loss) income

 

(3

)

 

 

107

 

 

 

18

 

 

 

3,573

 

 

 

 

 

 

 

 

 

OTHER INCOME (EXPENSE):

 

 

 

 

 

 

 

Interest expense including amortization of debt discount and deferred financing costs

 

(76

)

 

 

(54

)

 

 

(150

)

 

 

(169

)

Gain on extinguishment of debt

 

11

 

 

 

3

 

 

 

11

 

 

 

3

 

(Loss) income from equity method investments

 

(1

)

 

 

3

 

 

 

30

 

 

 

15

 

Other expense, net

 

(38

)

 

 

(105

)

 

 

(27

)

 

 

(165

)

Total other expense, net

 

(104

)

 

 

(153

)

 

 

(136

)

 

 

(316

)

(Loss) income before income taxes

 

(107

)

 

 

(46

)

 

 

(118

)

 

 

3,257

 

INCOME TAX BENEFIT (PROVISION)

 

20

 

 

 

40

 

 

 

224

 

 

 

(647

)

NET (LOSS) INCOME

 

(87

)

 

 

(6

)

 

 

106

 

 

 

2,610

 

Net (income) loss attributable to the redeemable noncontrolling interests

 

 

 

 

(5

)

 

 

4

 

 

 

(9

)

Net income attributable to the noncontrolling interests

 

(2

)

 

 

 

 

 

(14

)

 

 

(25

)

NET (LOSS) INCOME ATTRIBUTABLE TO SINCLAIR

$

(89

)

 

$

(11

)

 

$

96

 

 

$

2,576

 

EARNINGS PER COMMON SHARE ATTRIBUTABLE TO SINCLAIR:

 

 

 

 

 

 

 

Basic earnings per share

$

(1.38

)

 

$

(0.17

)

 

$

1.44

 

 

$

36.00

 

Diluted earnings per share

$

(1.38

)

 

$

(0.17

)

 

$

1.43

 

 

$

36.00

 

Basic weighted average common shares outstanding (in thousands)

 

64,012

 

 

 

70,897

 

 

 

66,862

 

 

 

71,527

 

Diluted weighted average common and common equivalent shares outstanding (in thousands)

 

64,012

 

 

 

70,897

 

 

 

66,947

 

 

 

71,533

 

The Company considers Adjusted EBITDA to be an indicator of the Company's operating performance and the ability to service its debt. The Company also believes that Adjusted EBITDA is frequently used by industry analysts, investors and lenders as a measure of valuation and ability to service its debt. The Company also discloses segment Adjusted EBITDA as an indicator of the operating performance of its segments in accordance with ASC 280, Segment Reporting.

The Company considers Adjusted Free Cash Flow to be an indicator of the Company's operating performance. The Company also believes that Free Cash Flow is a commonly used measure of valuation for companies in the local media industry. In addition, this measure is frequently used by industry analysts, investors and lenders as a measure of valuation for local media companies.

Non-GAAP measures are not formulated in accordance with GAAP, are not meant to replace GAAP financial measures and may differ from other companies’ uses or formulations. The Company does not provide reconciliations on a forward-looking basis. Further discussions and reconciliations of the Company's non-GAAP financial measures to comparable GAAP financial measures can be found on its website www.SBGI.net.

Sinclair, Inc. and Subsidiaries

 

Reconciliation of Non-GAAP Measurements - Unaudited

 

All periods reclassified to conform with current year GAAP presentation

 

(in millions)

 

 

Three Months Ended

June 30,

 

Six Months Ended

June 30,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

Reconciliation of Net Income to Adjusted EBITDA

 

 

 

 

 

 

 

Net (loss) income attributable to Sinclair

$

(89

)

 

$

(11

)

 

$

96

 

 

$

2,576

 

Add: Income (loss) from redeemable noncontrolling interests

 

 

 

 

5

 

 

 

(4

)

 

 

9

 

Add: Income from noncontrolling interests

 

2

 

 

 

 

 

 

14

 

 

 

25

 

Add: Income tax (benefit) provision

 

(20

)

 

 

(40

)

 

 

(224

)

 

 

647

 

Add: Other (income) expense

 

(3

)

 

 

5

 

 

 

(3

)

 

 

11

 

Add: Loss (income) from equity method investments

 

1

 

 

 

(3

)

 

 

(30

)

 

 

(15

)

Add: Loss from other investments and impairments

 

52

 

 

 

105

 

 

 

53

 

 

 

159

 

Add: Gain on extinguishment of debt/insurance proceeds

 

(11

)

 

 

(3

)

 

 

(11

)

 

 

(3

)

Add: Interest expense

 

76

 

 

 

54

 

 

 

150

 

 

 

169

 

Less: Interest income

 

(11

)

 

 

(4

)

 

 

(23

)

 

 

(5

)

Less: Gain on deconsolidation of subsidiary

 

 

 

 

 

 

 

 

 

 

(3,357

)

Less: Loss (gain) on asset dispositions and other, net of impairment

 

5

 

 

 

(4

)

 

 

11

 

 

 

(9

)

Add: Amortization of intangible assets & other assets

 

41

 

 

 

43

 

 

 

82

 

 

 

136

 

Add: Depreciation of property & equipment

 

32

 

 

 

24

 

 

 

56

 

 

 

52

 

Add: Stock-based compensation

 

12

 

 

 

4

 

 

 

35

 

 

 

28

 

Add: Amortization of program contract costs

 

19

 

 

 

21

 

 

 

41

 

 

 

46

 

Less: Cash film payments

 

(23

)

 

 

(26

)

 

 

(46

)

 

 

(52

)

Add: Amortization of sports programming rights

 

 

 

 

 

 

 

 

 

 

326

 

Less: Cash sports programming rights payments

 

 

 

 

 

 

 

 

 

 

(325

)

Add: Transaction and transition service, COVID, legal and other non-recurring expense

 

24

 

 

 

13

 

 

 

30

 

 

 

19

 

Adjusted EBITDA

$

107

 

 

$

183

 

 

$

227

 

 

$

437

 

 

Three Months Ended

June 30,

 

Six Months Ended

June 30,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

Reconciliation of Net Income to Adjusted Free Cash Flow

 

 

 

 

 

 

 

Net (loss) income attributable to Sinclair

$

(89

)

 

$

(11

)

 

$

96

 

 

$

2,576

 

Add: Income (loss) from redeemable noncontrolling interests

 

 

 

 

5

 

 

 

(4

)

 

 

9

 

Add: Income from noncontrolling interests

 

2

 

 

 

 

 

 

14

 

 

 

25

 

Less: Distributions to noncontrolling interests

 

(4

)

 

 

(2

)

 

 

(8

)

 

 

(6

)

Add: Cash distributions from equity investments

 

5

 

 

 

6

 

 

 

41

 

 

 

51

 

Add: Income tax (benefit) provision

 

(20

)

 

 

(40

)

 

 

(224

)

 

 

647

 

Add: Other non-cash (income) expense

 

(3

)

 

 

5

 

 

 

(3

)

 

 

11

 

Add: Loss (income) from equity method investments

 

1

 

 

 

(3

)

 

 

(30

)

 

 

(15

)

Add: Loss from other investments and impairments

 

52

 

 

 

105

 

 

 

53

 

 

 

159

 

Add: Gain on extinguishment of debt/insurance proceeds

 

(11

)

 

 

(3

)

 

 

(11

)

 

 

(3

)

Add: Amortization of deferred financing and bond discounts/premiums

 

4

 

 

 

2

 

 

 

7

 

 

 

8

 

Less: Gain on deconsolidation of subsidiary

 

 

 

 

 

 

 

 

 

 

(3,357

)

Less: Loss (gain) on asset dispositions and other, net of impairment

 

5

 

 

 

(4

)

 

 

11

 

 

 

(9

)

Add: Amortization of intangible assets & other assets

 

41

 

 

 

43

 

 

 

82

 

 

 

136

 

Add: Depreciation of property & equipment

 

32

 

 

 

24

 

 

 

56

 

 

 

52

 

Add: Stock-based compensation

 

12

 

 

 

4

 

 

 

35

 

 

 

28

 

Add: Amortization of program contract costs

 

19

 

 

 

21

 

 

 

41

 

 

 

46

 

Less: Cash film payments

 

(23

)

 

 

(26

)

 

 

(46

)

 

 

(52

)

Less: Capital expenditures

 

(20

)

 

 

(24

)

 

 

(40

)

 

 

(44

)

Less: Cash taxes paid

 

(2

)

 

 

(15

)

 

 

(4

)

 

 

(15

)

Add: Amortization of sports programming rights

 

 

 

 

 

 

 

 

 

 

326

 

Less: Cash sports programming rights payments

 

 

 

 

 

 

 

 

 

 

(325

)

Add: Transaction and transition service, COVID, legal and other non-recurring expense

 

24

 

 

 

13

 

 

 

30

 

 

 

19

 

Adjusted Free Cash Flow

$

25

 

 

$

100

 

 

$

96

 

 

$

267

 

Adjusted EBITDA less interest expense (net), distributions to non-controlling interest holders, cash taxes paid, and capital expenditures; plus

cash distributions received from equity investments

Three months ended June 30, 2023

Local

Media

 

Tennis

 

Other

 

Corporate

and

Eliminations

 

Consolidated

($ in millions)

 

 

 

 

Total revenues

$

699

 

 

$

60

 

$

14

 

 

$

(5

)

 

$

768

 

Media programming and production expenses

 

369

 

 

 

40

 

 

5

 

 

 

(1

)

 

 

413

 

Media selling, general and administrative expenses

 

175

 

 

 

12

 

 

6

 

 

 

(3

)

 

 

190

 

Depreciation and amortization expenses

 

67

 

 

 

5

 

 

1

 

 

 

 

 

 

73

 

Amortization of program contract costs

 

19

 

 

 

 

 

 

 

 

 

 

 

19

 

Corporate general and administrative expenses

 

46

 

 

 

 

 

 

 

 

16

 

 

 

62

 

Non-media expenses

 

3

 

 

 

 

 

7

 

 

 

(1

)

 

 

9

 

Gain on asset dispositions and other, net of impairment

 

(2

)

 

 

 

 

7

 

 

 

 

 

 

5

 

Operating income

 

22

 

 

 

3

 

 

(12

)

 

 

(16

)

 

 

(3

)

 

 

 

 

 

 

 

 

 

 

Reconciliation of GAAP Operating Income to Adjusted EBITDA:

Operating income

$

22

 

 

$

3

 

$

(12

)

 

$

(16

)

 

$

(3

)

Depreciation and amortization expenses

 

67

 

 

 

5

 

 

1

 

 

 

 

 

 

73

 

Amortization of program contract costs

 

19

 

 

 

 

 

 

 

 

 

 

 

19

 

Gain on asset dispositions and other, net of impairment

 

(2

)

 

 

 

 

7

 

 

 

 

 

 

5

 

Program contract payments

 

(23

)

 

 

 

 

 

 

 

 

 

 

(23

)

Stock-based compensation

 

10

 

 

 

 

 

 

 

 

2

 

 

 

12

 

Adjustments

 

18

 

 

 

 

 

4

 

 

 

2

 

 

 

24

 

Adjusted EBITDA

 

111

 

 

 

8

 

 

 

 

 

(12

)

 

 

107

 

Three months ended June 30, 2022

Local

Media

 

Tennis

 

Other

 

Corporate

and

Eliminations

 

Consolidated

($ in millions)

 

 

 

 

Total revenues

$

760

 

 

$

58

 

$

27

 

 

$

(8

)

 

$

837

 

Media programming and production expenses

 

360

 

 

 

39

 

 

7

 

 

 

(3

)

 

 

403

 

Media selling, general and administrative expenses

 

169

 

 

 

14

 

 

14

 

 

 

(2

)

 

 

195

 

Depreciation and amortization expenses

 

61

 

 

 

5

 

 

2

 

 

 

(1

)

 

 

67

 

Amortization of program contract costs

 

21

 

 

 

 

 

 

 

 

 

 

 

21

 

Corporate general and administrative expenses

 

34

 

 

 

 

 

 

 

 

4

 

 

 

38

 

Non-media expenses

 

3

 

 

 

 

 

9

 

 

 

(2

)

 

 

10

 

Gain on asset dispositions and other, net of impairment

 

(4

)

 

 

 

 

 

 

 

 

 

 

(4

)

Operating income

 

116

 

 

 

 

 

(5

)

 

 

(4

)

 

 

107

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of GAAP Operating Income to Adjusted EBITDA:

Operating income

$

116

 

 

$

 

$

(5

)

 

$

(4

)

 

$

107

 

Depreciation and amortization expenses

 

61

 

 

 

5

 

 

2

 

 

 

(1

)

 

 

67

 

Amortization of program contract costs

 

21

 

 

 

 

 

 

 

 

 

 

 

21

 

Gain on asset dispositions and other, net of impairment

 

(4

)

 

 

 

 

 

 

 

 

 

 

(4

)

Program contract payments

 

(26

)

 

 

 

 

 

 

 

 

 

 

(26

)

Stock-based compensation

 

4

 

 

 

 

 

 

 

 

1

 

 

 

5

 

Adjustments

 

12

 

 

 

 

 

 

 

 

1

 

 

 

13

 

Adjusted EBITDA

 

184

 

 

 

5

 

 

(3

)

 

 

(3

)

 

 

183

 

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, the rate of decline in the number of subscribers to services provided by traditional multi-channel video programming distributors; the Company’s ability to generate cash to service its substantial indebtedness; the successful execution of outsourcing agreements; the successful execution of retransmission consent agreements; the successful execution of network and MVPD affiliation agreements; the Company’s ability to compete for viewers and advertisers; pricing and demand fluctuations in local and national advertising; volatility in programming costs; the impact of pending and future litigation claims against the Company; the potential impacts of the war in Ukraine and the COVID-19 pandemic on the Company’s business operations, financial results and financial position and on the world economy; the market acceptance of new programming; the Company’s ability to identify and consummate acquisitions and investments, to manage increased leverage resulting from acquisitions and investments, and to achieve anticipated returns on those investments once consummated; the impact of any loss of key personnel, including talent; material legal, financial and reputational risks and operational disruptions resulting from a breach of the Company’s information systems, including due to the cybersecurity event in October 2021; the impact of FCC and other regulatory proceedings against the Company; uncertainties associated with potential changes in the regulatory environment affecting the Company’s 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.

Category: Financial

Contacts

Investor Contacts:

Christopher C. King, VP, Investor Relations

Billie-Jo McIntire, AVP, Investor Relations

(410) 568-1500

Media Contact:

Sinclair@5wpr.com

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