Sinclair Broadcast Group(US:SBGI)2023-02-22 19:21Financial Data and Key Metrics Changes - In Q4 2022, media revenues increased by 19% year-over-year, driven by higher political ad revenues and core advertising, despite lower distribution revenues and management fees [42][51] - For the full year, media revenues were up 10%, or almost 8% when adjusted for cyber incident impacts [42][51] - Adjusted EBITDA for Q4 was $309 million, at the high end of guidance, while pro forma adjusted EBITDA for the year was $890 million [89][90] - The company ended Q4 2022 with a cash balance of $884 million, contributing to total liquidity of over $1.5 billion [65] Business Line Data and Key Metrics Changes - Core advertising is expected to be flat to down mid-single-digit percent in Q1 2023, primarily due to mild macroeconomic weakness [45][60] - Media expenses in Q4 2022 were up 7% year-over-year, attributed to higher programming fees and sales expenses [43] - Compulse is expected to turn profitable in the latter half of 2023 while maintaining high growth [20] Market Data and Key Metrics Changes - The advertising environment is showing mixed trends, with local advertising remaining strong while national advertising is experiencing weakness [123] - Political ad sales for 2022 surpassed the previous midterm election year by over 30%, indicating strong demand for political advertising [51] Company Strategy and Development Direction - The company is focusing on investments in technology, including next-gen broadcast technology, ad-tech, and cloud operations, with a total spend of approximately $75 million in 2023 [52][31] - The company expects net retransmission revenues to decline in 2023 but grow in 2024 and 2025, projecting a three-year CAGR of low single digits [33][94] - The company is committed to monetizing its assets, with an estimated $1.2 billion in fair market value from investments not reflected in the stock price [35] Management's Comments on Operating Environment and Future Outlook - The management expressed caution regarding the economic environment, noting uncertainty about a potential recession and its impact on consumer demand [37] - The company anticipates lower EBITDA and free cash flow in 2023 due to strategic investments and the absence of political revenues [55][108] - Management is optimistic about the upcoming political season in 2024, expecting it to be record-breaking [108] Other Important Information - The company has made significant contributions to charitable causes, raising close to $12 million in 2022 [36] - The company is transitioning to more energy-efficient solutions, with plans to analyze energy usage and set targets for future savings [57] Q&A Session Summary Question: Can you provide additional color on the retransmission negotiations with Fubo? - The company indicated that the situation with Fubo is not financially impactful, but there is a growing consensus in the industry that the negotiation dynamics with virtual distributors need to change [69] Question: What is the outlook for net retransmission revenues? - The company expects a down year for net retrans in 2023 but anticipates growth in 2024 and 2025, with a three-year CAGR projected to be low single digits [94][141] Question: How is the advertising environment shaping up for 2023? - The company noted that local advertising remains strong, while national advertising is weaker, with expectations for orders to improve towards the end of March [123] Question: What is the expected impact of the new investments on future profitability? - The $75 million investment is primarily for transformation efforts, with significant cost savings expected starting in 2024 [95] Question: Can you provide insights on the performance of Compulse? - Compulse is expected to achieve profitability in the second half of 2023 while continuing to grow [20]