Sinclair Broadcast Group(SBGI) - 2025 Q1 - Quarterly Report

Forward-Looking Statements and Risk Factors Forward-Looking Statements This report contains forward-looking statements based on current expectations and projections, subject to various risks and uncertainties, with no obligation for the company to update them, cautioning readers against undue reliance - The forward-looking statements are based on current expectations and are subject to risks, uncertainties, and assumptions[8] - The company does not commit to updating or revising any forward-looking statements, which are only valid as of the date they are made[15] Risk Factors Summary The company identifies several categories of risks that could materially affect future results, including industry-specific risks like MVPD subscriber churn and programming costs, regulatory risks from the FCC, company-specific risks such as debt service and monetizing NextGen TV, and general risks including economic conditions and cybersecurity threats - Industry risks include adverse impacts from economic conditions, MVPD subscriber churn due to OTT platforms, and the rising cost and availability of programming content[9] - Regulatory risks involve potential changes in FCC rules regarding ownership, retransmission consent, and the rollout of NextGen TV[12] - Company-specific risks include the ability to service debt, successfully renegotiate retransmission agreements, deploy and monetize NextGen TV, and manage risks associated with artificial intelligence[12] - General risks encompass changes in national economies, geopolitical conditions like the war in Ukraine, natural disasters, and cybersecurity incidents[16] PART I. FINANCIAL INFORMATION Financial Statements This section presents the unaudited consolidated financial statements for Sinclair, Inc. and its subsidiary, Sinclair Broadcast Group, LLC (SBG), for the quarterly period ended March 31, 2025, including balance sheets, statements of operations, comprehensive income, equity, and cash flows, along with detailed notes Sinclair, Inc. Financial Statements (Unaudited) For the quarter ended March 31, 2025, Sinclair, Inc. reported total revenues of $776 million, a decrease from $798 million in the prior year period, and a net loss of $154 million, a significant shift from a net income of $25 million in Q1 2024, primarily driven by higher interest expenses and a loss from investments, with total assets decreasing slightly to $5.78 billion from $5.89 billion at year-end 2024 Sinclair, Inc. Consolidated Statement of Operations Highlights (in millions) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Total Revenues | $776 | $798 | | Media Revenues | $770 | $792 | | Operating Income | $14 | $42 | | Interest Expense | $(144) | $(76) | | Net (Loss) Income | $(154) | $25 | | Net (Loss) Income Attributable to Sinclair | $(156) | $23 | | Diluted EPS | $(2.30) | $0.35 | Sinclair, Inc. Consolidated Balance Sheet Highlights (in millions) | Metric | March 31, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $631 | $697 | | Total Current Assets | $1,504 | $1,485 | | Total Assets | $5,779 | $5,885 | | Total Current Liabilities | $724 | $605 | | Total Liabilities | $5,411 | $5,369 | | Total Equity | $368 | $516 | Sinclair, Inc. Consolidated Cash Flow Highlights (in millions) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash from operating activities | $5 | $(4) | | Net cash (used in) from investing activities | $(42) | $54 | | Net cash used in financing activities | $(29) | $(57) | Notes to Sinclair, Inc. Financial Statements The notes detail the company's operations across its local media and tennis segments, including the acquisition of CPX Interactive for approximately $30 million, an agreement to sell four TV stations for $30 million, significant debt refinancing activities in Q1 2025 to extend maturities, the settlement of the Diamond Litigation for $495 million, and a declared quarterly dividend of $0.25 per share - Sinclair operates two reportable segments: local media (185 broadcast stations) and tennis (Tennis Channel and related properties)[41] Revenue by Segment (Q1 2025 vs Q1 2024, in millions) | Segment | Q1 2025 Revenue | Q1 2024 Revenue | | :--- | :--- | :--- | | Local Media | $694 | $727 | | Tennis | $68 | $63 | | Other | $21 | $15 | | Eliminations | $(7) | $(7) | | Total | $776 | $798 | - In Q1 2025, the company acquired the remaining 75% of CPX Interactive for approximately $30 million and entered an agreement to sell four stations for about $30 million, recording an estimated loss of $17 million on the sale[65][66] - Completed a series of financing transactions in Q1 2025, including issuing $1.43 billion in new notes to repay debt due in 2026 and extending other debt maturities[78][80][83] - A global settlement was approved for the Diamond Litigation, with Sinclair making a cash payment of $495 million to DSG, and Sinclair's equity interest in DSG was terminated upon DSG's emergence from bankruptcy on January 2, 2025[108] - The Board of Directors declared a quarterly dividend of $0.25 per share in May 2025[72] Sinclair Broadcast Group, LLC Financial Statements (Unaudited) For the quarter ended March 31, 2025, Sinclair Broadcast Group, LLC (SBG), which comprises the local media segment, reported total media revenues of $694 million, down from $727 million in Q1 2024, and posted a net loss of $101 million, compared to a net income of $6 million in the prior-year period, largely due to increased interest expenses from debt refinancing, with total assets standing at $4.62 billion SBG, LLC Consolidated Statement of Operations Highlights (in millions) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Total Media Revenues | $694 | $727 | | Operating Income | $12 | $41 | | Interest Expense | $(144) | $(76) | | Net (Loss) Income | $(101) | $6 | | Net (Loss) Income Attributable to SBG | $(102) | $5 | SBG, LLC Consolidated Balance Sheet Highlights (in millions) | Metric | March 31, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $277 | $291 | | Total Assets | $4,617 | $4,689 | | Total Liabilities | $5,346 | $5,315 | | Total Deficit | $(729) | $(626) | Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses key operational events, including a multi-year affiliation renewal with NBC and a distribution agreement with YouTube TV, noting a 5% decline in Local Media revenue due to a cyclical drop in political advertising, while Tennis segment revenue grew 8%, and expresses confidence in liquidity after completing a major debt refinancing to extend maturities and strengthen its balance sheet - Key corporate developments in Q1 2025 include renewing affiliation agreements with NBC, reaching a distribution agreement with YouTube TV, and launching new content like the BFFR podcast[271] - In February 2025, the company completed a significant debt recapitalization to strengthen the balance sheet and extend its debt maturity profile[274] Local Media Segment Revenue (Q1 2025 vs Q1 2024, in millions) | Revenue Type | Q1 2025 | Q1 2024 | % Change | | :--- | :--- | :--- | :--- | | Distribution | $395 | $384 | 3% | | Core Advertising | $271 | $284 | (5)% | | Political Advertising | $6 | $24 | (75)% | | Total Media Revenues | $694 | $727 | (5)% | - The decrease in Local Media revenue was primarily driven by a cyclical $18 million (75%) decrease in political advertising revenue, as 2025 is an off-year election cycle[283] - Tennis segment revenue increased 8% to $68 million, driven by higher distribution fees and advertising revenue from an expanded tournament calendar[292][293][294] - As of March 31, 2025, Sinclair had $631 million in cash and $650 million in available borrowing capacity, with management believing liquidity is sufficient for the next twelve months[317][322] Quantitative and Qualitative Disclosures About Market Risk The company reports that there have been no material changes from the quantitative and qualitative disclosures about market risk previously detailed in its Annual Report on Form 10-K for the year ended December 31, 2024 - There have been no material changes to the market risk disclosures from the company's 2024 Form 10-K[335] Controls and Procedures Based on an evaluation as of March 31, 2025, the management of both Sinclair, Inc. and SBG, including their respective CEOs and CFOs, concluded that their disclosure controls and procedures were effective at a reasonable assurance level, with no material changes in internal control over financial reporting during the quarter - Management, including the CEO and CFO, concluded that disclosure controls and procedures for both Sinclair, Inc. and SBG were effective as of March 31, 2025[338] - No changes in internal control over financial reporting occurred during the quarter ended March 31, 2025, that have materially affected, or are reasonably likely to materially affect, internal controls[339] PART II. OTHER INFORMATION Legal Proceedings This section directs readers to Note 4, "Commitments and Contingencies," within the consolidated financial statements for a detailed discussion of pending lawsuits and other legal matters - For information on legal proceedings, the report refers to Note 4 of the Consolidated Financial Statements[342][343] Risk Factors The company states that there have been no material changes to the risk factors previously disclosed in its Annual Report on Form 10-K for the year ended December 31, 2024 - There have been no material changes to the risk factors disclosed in the Annual Report on Form 10-K for the year ended December 31, 2024[344] Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities or use of proceeds during the period - None reported[345] Defaults Upon Senior Securities The company reported no defaults upon senior securities during the period - None reported[346] Mine Safety Disclosures This item is not applicable to the company - None reported[347] Other Information During the first quarter of 2025, no directors or officers of Sinclair or SBG adopted or terminated any Rule 10b5-1 trading plans for the purchase or sale of the company's securities - No directors or officers adopted or terminated a Rule 10b5-1 trading arrangement during the three months ended March 31, 2025[348] Exhibits This section lists all exhibits filed with the Form 10-Q, including the company's Annual Incentive Plan, certifications from the CEO and CFO as required by the Sarbanes-Oxley Act, and the iXBRL formatted financial statements - The report includes exhibits such as the Sinclair, Inc. Annual Incentive Plan, CEO and CFO certifications pursuant to Rule 13a-14(a) and Section 906 of Sarbanes-Oxley, and iXBRL data files[349]