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Sinclair Broadcast Group Inc. Reports Operating Results (10-Q)

August 08, 2012 | About:
10qk

10qk

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Sinclair Broadcast Group Inc. (SBGI) filed Quarterly Report for the period ended 2012-06-30.

Sinclair Broadcast Group, Inc. has a market cap of $947.5 million; its shares were traded at around $11.82 with a P/E ratio of 9.3 and P/S ratio of 1.2. The dividend yield of Sinclair Broadcast Group, Inc. stocks is 4.1%.

Highlight of Business Operations:

We made payments to Cunningham under these LMAs and other agreements of $4.0 million and $4.2 million for the three months ended June 30, 2012 and 2011, respectively, and $7.9 million and $8.4 million, for the six months ended June 30, 2012 and 2011, respectively. For the three months ended June 30, 2012 and 2011, Cunninghams stations provided us with approximately $24.8 million and $22.6 million, respectively, and approximately $48.1 million and $45.9 million for the six months ended June 30, 2012 and 2011, respectively, of net broadcast revenues. The financial statements for Cunningham are included in our consolidated financial statements for all periods presented. Our Bank Credit Agreement contains certain cross-default provisions with certain material third-party licensees. As of June 30, 2012, Cunningham was the sole material third-party licensee.

We measure segment performance based on operating income (loss). Our broadcast segment includes stations in 45 markets located predominately in the eastern, mid-western and southern United States. Our other operating divisions segment primarily earned revenues from sign design and fabrication; regional security alarm operating and bulk acquisitions and real estate ventures. All of our other operating divisions are located within the United States. Corporate costs primarily include our costs to operate as a public company and to operate our corporate headquarters location. Corporate is not a reportable segment. We had approximately $171.0 million and $168.9 million of intercompany loans between the broadcast segment, operating divisions segment and corporate as of June 30, 2012 and 2011, respectively. We had $5.0 million and $4.9 million in intercompany interest expense related to intercompany loans between the broadcast segment, other operating divisions segment and corporate for the three months ended June 30, 2012, and 2011, respectively. For the six months ended June 30, 2012 and 2011, we had $9.9 million and $9.7 million, respectively, in intercompany interest expense. Intercompany loans and interest expense are excluded from the tables below. All other intercompany transactions are immaterial.

Net broadcast revenues. Net broadcast revenues increased $60.6 million when comparing the second quarter 2012 to the same period in 2011, of which $46.0 million was related to stations acquired during the first and second quarters in 2012. Net broadcast revenues increased $96.9 million when compared to the six months ended June 30, 2012 to the same period in 2011, of which $64.4 million was related to stations acquired during the six months ended June 30, 2012. Additionally, revenues earned pursuant to the Local Marketing Agreement (LMA) with the Freedom stations during the first quarter 2012 included $2.2 million for management services performed and $7.8 million of pass-through costs. The remaining increase, for both the three and six month periods, was due to increases in advertising revenues generated from the automotive, political and direct response sectors. These increases were partially offset by a decrease in the telecommunication, schools and fast food industries. Excluding the stations acquired in the first and second quarters of 2012, automotive, which typically is our largest category, represented 21.2% of net time sales for both the three and six months ended June 30, 2012.

Local Revenues. Excluding political revenues, our local broadcast revenues, which include local times sales, retransmission revenues and other local revenues, were up $38.0 million for the second quarter 2012 when compared to the same period in 2011, of which $32.7 million related to the stations acquired in the first and second quarters of 2012. Excluding political revenues, our local broadcast revenues were up $69.6 million for the six months ended June 30, 2012 compared to the same period in 2011, of which $46.4 million related to the stations acquired in the first and second quarters of 2012. Additionally, revenues earned pursuant to the LMA with the Freedom stations during the first quarter 2012 included $2.2 million for management services performed and $7.8 million of pass-through costs. The remaining increase, for both the three and six month periods, is due to an increase in advertising spending particularly in the automotive and direct response industries and an increase in retransmission revenues from MVPDs. These increases were partially offset by a decrease due to a decline in advertising revenues from the fast food and school industries and a change in networks for the Super Bowl programming from FOX to NBC.

Triangle Sign & Service, LLC (Triangle), a sign designer/fabricator, Alarm Funding Associates, LLC (Alarm Funding), a regional security alarm operating and bulk acquisition company, real estate ventures and other nominal businesses make up our other operating divisions segment. Revenues for our other operating divisions increased $1.1 million to $12.1 million during the second quarter 2012 compared to $11.0 million during the same period in 2011. For the six months ended June 30, 2012, revenues for our other operating divisions increased $5.7 million to $26.1 million compared to $20.4 million during the same period in 2011. The increase is primarily due to acquisitions of new alarm monitoring contracts for Alarm Funding, increased revenues due to the Ring of Honor wrestling franchise we purchased in second quarter of 2011 and improved leasing activity for our consolidated real estate ventures. Expenses of our other operating divisions include operating expenses, depreciation and amortization and applicable other income (expense) items such as interest expense, which increased $2.1 million to $12.7 million during the second quarter 2012 compared to $10.6 million during the same period in 2011. For the six months ended June 30, 2012, expenses including other operating divisions expense, depreciation and amortization and applicable other income (expense) items, such as interest expense, which increased $7.2 million to $27.5 million compared to $20.3 million during the same period in 2011. This increase was primarily due to the corresponding increase in revenue.

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