Sinclair Broadcast Group(US:SBGI)2021-02-24 20:08Financial Data and Key Metrics Changes - The fourth quarter media revenues reached $986 million, exceeding guidance by $25 million, driven by record political ad revenue of $204 million, which was $10 million higher than expected [29][30] - Adjusted EBITDA for the quarter was $408 million, a $132 million increase year-over-year, surpassing expectations due to higher advertising revenues and lower costs [30][35] - Total company media revenues for the year were $5.843 billion, with adjusted EBITDA of $1.888 billion, down 12% compared to the prior year pro forma [35][36] Business Line Data and Key Metrics Changes - Local sports media revenues for Q4 were $531 million, $257 million lower than the prior year, primarily due to $168 million in distributor rebates accrued [31][34] - Local sports adjusted EBITDA was $209 million for the quarter, $26 million below guidance due to additional distributor rebate accruals [34] - Broadcast and other segments saw media revenues of $986 million, with adjusted EBITDA of $408 million, reflecting strong political advertising and better-than-expected core advertising revenues [29][30] Market Data and Key Metrics Changes - Pro forma distribution revenues increased by 8% year-over-year despite mid single-digit subscriber churn [30] - Core advertising revenues showed improvement, with automotive advertising up 38.5% quarter-over-quarter [88] - The company anticipates continued elevated subscriber churn and challenges in the distribution market due to the pandemic [39][41] Company Strategy and Development Direction - The company is focusing on gamification initiatives, including a partnership with Bally's for sports betting, which is expected to enhance viewer engagement and revenue [10][19] - Plans to launch a new Bally's sports app in spring 2021 to provide a personalized viewing experience [16][17] - The company is transitioning RSN operations to a new state-of-the-art facility, which will allow for the operation of up to 50 RSN channels [21] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the ongoing challenges posed by COVID-19, including uncertainty in subscriber churn and league schedules [16][38] - The company remains optimistic about advertising recovery as economic indicators improve and vaccinations roll out [88][90] - Management expects to exceed budgeted first-quarter revenue numbers from an advertising perspective, driven by a strong recovery in the economy [88] Other Important Information - The company donated over $1 million and helped raise an additional $30 million for charitable causes during the pandemic [13] - The company has $880 million remaining on its share buyback authorization, having retired 21% of its shares outstanding last year [58] Q&A Session Summary Question: What are the assumptions regarding distribution and retransmission? - Management noted that the only significant retransmission renewal this year is with DISH, and they are managing expectations around distributor renewals [46][48] Question: How is the company addressing churn and capital allocation? - The company is building in high single-digit churn for Diamond and mid-single-digit churn for broadcast, while also considering share buybacks and future investment opportunities [57][58] Question: What is the strategy for Bally's partnership and RSN performance? - The strategy involves deep integration with Bally's to drive user engagement and the expectation of achieving performance targets for user thresholds [62] - Management indicated that the RSNs are expected to have a range of EBITDA expectations due to various moving parts and uncertainties [63]