Sinclair Broadcast Group(SBGI) - 2019 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Media revenues for Q1 2019 were $673 million, a 5% increase or $30 million higher than Q1 2018, at the high end of guidance [21] - Distribution revenue was $352 million, a 12% increase over the prior year [21] - Non-media EBITDA was approximately $10 million, significantly better than prior guidance [24] - Free cash flow for the quarter was $101 million, exceeding the high-end of prior guidance by $25 million [26] - Total debt at the end of Q1 was $3.883 billion, with total liquidity of roughly $1.5 billion [31] Business Line Data and Key Metrics Changes - Political revenues in Q1 were $2 million compared to $7 million in Q1 2018, aligning with guidance [21] - Core advertising revenues are expected to be flat to slightly up in Q2, with a positive outlook for the remainder of the year [33][34] - Digital business revenues grew 10% in Q1 compared to the same period last year [34] Market Data and Key Metrics Changes - The company expects core revenues to be up for the year, with significant contributions from the service sector and retail [50] - The company anticipates a strong political advertising cycle in 2020, which is expected to drive broadcast media spending [34] Company Strategy and Development Direction - The acquisition of 21 regional sports networks from Disney for $9.6 billion is seen as a transformative move, expanding local sports focus and diversifying content sources [9][10] - The company is focused on digital platforms, political advertising, and programming enhancements as growth opportunities [10] - The company aims to achieve investment-grade status in the long term while managing leverage post-acquisition [87] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the core advertising market, citing improvements in key categories such as services and retail [50] - The company is preparing for a strong political advertising cycle in 2020, which is expected to positively impact revenues [34] - Management highlighted the importance of the RSN acquisition in enhancing the company's competitive position in the market [9] Other Important Information - The company has been recognized for its quality news reporting, with 192 news awards to date [12] - The launch of the Marquee Sports Network is on track for February 2020, with significant partnerships in place [11] - The company is making strides in deploying ATSC 3.0 technology, with plans to initiate deployment in 20 to 30 markets in 2019 [16] Q&A Session Summary Question: What is driving the acceleration in distribution revenues? - Management indicated that renewals and timing of payments from virtual platforms are contributing to the acceleration [41] Question: What is the outlook for core advertising growth? - Management expressed confidence in core advertising growth, particularly in the service and retail sectors [50] Question: How is the company addressing the RSN acquisition's impact on share repurchases? - Management confirmed that share repurchase activity would be suspended due to the upcoming RSN acquisition [44] Question: What is the status of the ATSC 3.0 rollout? - Management reported that testing is ongoing, with significant improvements in signal quality being achieved [93] Question: What are the expectations for auto advertising revenue? - Management anticipates low single-digit growth in the auto category for the full year [86]