Sinclair Broadcast Group, Inc. which owns and/or operates Paducah-market stations KBSI (FOX 23) and WDKA (My49), St. Louis ABC affiliate KDNL (ABC30), and Nashville stations WZTV (FOX 17), WUXP (My30) and WNAB (CW58), today reported financial results for the three months and six months ended June 30, 2013.
"The first half of 2013 has been very successful for the company, not only with respect to the company's results but on growing our platform through additional acquisitions of broadcast assets, especially our most recently announced planned acquisition of the Allbritton stations and their local news cable/satellite channel," commented David Smith, President and CEO of Sinclair. "Since April 1, 2013, we have announced definitive agreements for the acquisition of 35 additional stations bringing the total number of acquired or announced stations in the past two years to 91. The effect is to not only grow our national footprint and reach, but to unlock operating synergies, gain access to valuable spectrum, and build a platform whereby we can expand content offerings and shape the future of the broadcast industry. We are excited about the successes we have achieved and the additional value that we have created and anticipate creating for our shareholders."
Net broadcast revenues from continuing operations were $279.3 million for the three months ended June 30, 2013, an increase of 28.4% versus the prior year period result of $217.6 million. The company had operating income of $84.3 million in the three-month period, as compared to operating income of $71.9 million in the prior year period. Net income attributable to the company was $17.8 million in the three-month period, which includes a $16.3 million one-time loss from extinguishment of debt, versus net income of $30.1 million in the prior year period.
The company reported diluted earnings per common share of $0.19 for the three-month period ended June 30, 2013 versus diluted earnings per common share of $0.37 in the prior year period. Excluding the loss associated with the extinguishment of debt, diluted earnings per share would have been $0.30.
Net broadcast revenues from continuing operations were $532.2 million for the six months ended June 30, 2013, an increase of 30.3% versus the prior year period result of $408.5 million. The company had operating income of $147.9 million in the six-month period, as compared to operating income of $131.8 million in the prior year period. Net income attributable to the company was $34.8 million in the six-month period, versus net income of $59.4 million in the prior year period.
The company reported diluted earnings per common share of $0.40 in the six-month period ended June 30, 2013 versus diluted earnings per common share of $0.73 in the prior year period. Excluding the loss associated with the extinguishment of debt, diluted earnings per share would have been $0.51.
Discontinued Operations accounting has been adopted in the financial statements for all periods presented in this press release for the sale of WLAJ-TV, Sinclair's ABC affiliate in Lansing, Mich., which closed in March, and for the sale of WLWC-TV, the CW affiliate in the Providence, R.I./New Bedford, Mass. market which closed in April. Therefore, the related results from operations, net of related income taxes, have been reclassified from income from continuing operations and reflected as net income from discontinued operations. Prior current year amounts have been reclassified to conform to current year GAAP presentation.
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Operating Statistics and Income Statement Highlights:
- Political revenues were $1.5 million in the second quarter 2013 versus $11.4 million in second quarter 2012.
- Local net broadcast revenues, which include local time sales, retransmission revenues, and other broadcast revenues, were up 35.9% in the second quarter 2013, while national net broadcast revenues, which include national time sales and other national broadcast revenues, were up 7.0% versus the second quarter 2012. Excluding political revenues, local net broadcast revenues were up 37.3% and national net broadcast revenues were up 26.1% in the second quarter 2013 versus the second quarter of 2012. On a same station basis, excluding political revenues, local net broadcast revenues were up 12.5%, while national net broadcast revenues were up 4.3%, versus the second quarter of 2012.
- Advertising categories, on a same station basis, that reported the largest spending increases in the second quarter 2013, as compared to the same period last year, were automotive, which was up 6.0%, telecommunications, furniture, grocery and direct response. Categories that declined were schools, paid programming, and restaurants.
- On May 1, 2013, the company closed on the purchase of certain stock and/or broadcast assets of four television stations, located in four markets, owned by Cox Media Group for $99.0 million, less working capital adjustments including $4.3 million of accounts receivable acquired, and an agreement to provide sales services to one other station.
- On June 3, 2013, the company closed on the purchase of the non-license assets and entered into an agreement to provide sales services to WUTB-TV (MNT) in Baltimore from FOX Television Stations for $2.4 million.
- In June, the company entered into a definitive merger agreement to acquire certain stock and broadcast assets of four television stations owned by TTBG LLC ( TTBG ) for $115.35 million and to assume TTBG agreements to provide sales and other services to two stations. The transaction is expected to close late in the third quarter/early fourth quarter of 2013 subject to the approval of the FCC and customary closing conditions.
- In June, the company announced it entered into a definitive agreement to purchase the assets of Dielectric, a unit of SPX Corporation and the nation's largest manufacturer of broadcast television, radio and wireless antennas, transmission lines, and RF systems for $4.65 million.
- Effective July 15, 2013, the company terminated its contract with Inergize Digital, a digital management solutions company owned by Nexstar Broadcasting.
- In July, the company announced it entered into a definitive agreement to purchase the stock of Perpetual Corporation and the equity interest of Charleston Television, LLC, both owned and controlled by the Allbritton family ( Allbritton ) for an aggregate purchase price of $985.0 million. The Allbritton stations consist of seven ABC Network affiliates and NewsChannel 8, a 24-hour local cable/satellite news network covering the Washington D.C. metropolitan area. The company expects the transaction to close in the fourth quarter of 2013, subject to the approval of the FCC, antitrust clearance, as applicable, and customary closing conditions. To comply with FCC local television ownership rules, Sinclair expects to sell the license and certain related assets of its existing stations in Birmingham, Ala., Harrisburg/Lancaster/Lebanon/York, Pa. and Charleston, S.C. and to provide sales and other non-programming support services to each of these stations pursuant to customary shared services and joint sales agreements.
Balance Sheet and Cash Flow Highlights:
- Debt on the balance sheet, net of $550.8 million in cash and cash equivalents, was $1,898.4 million at June 30, 2013 versus net debt of $2,245.0 million at March 31, 2013.
- On May 7, 2013, the company closed on the issuance of 18.0 million primary shares of Class A common stock priced at $27.25 per share, and on May 15, 2013, the Class B shareholders sold 2.4 million secondary shares in the overallotment process.
- As of June 30, 2013, 73.5 million Class A common shares and 26.3 million Class B common shares were outstanding, for a total of 99.8 million common shares outstanding.
- On June 14, 2013, the company paid a $0.15 per share quarterly cash dividend to its shareholders.
- Capital expenditures in the second quarter 2013 were $9.7 million.
- Program contract payments for continuing operations were $22.7 million in the second quarter 2013.