Note: EPS may not be comparable

Sinclair Broadcast Group (NASDAQ: SBGI) reported Q4 EPS of $4.32, versus $0.57 reported last year. Revenue for the quarter came in at $734 million versus the consensus estimate of $732.14 million.

Three Months Ended December 31, 2017 Financial Results:

• Total revenues decreased 8.0% to $734.0 million, versus $797.7 million in the prior year period which included $113 million of political advertising in the 2016 presidential election year.
• Operating income was $357.6 million, including $15 million of transaction, legal and other one-time costs, and $9 million in one-time bonuses to our employees as a result of favorable tax reform legislation, versus operating income of $233.4 million in the prior year period.
• Net income attributable to the Company was $443.5 million versus net income of $120.9 million in the prior year period, including a $272 million non-recurring tax benefit related to re-measurement of our deferred tax assets and liabilities as a result of the reduction of the federal income tax rate from 35% to 21% pursuant to the U.S. Tax Cuts and Jobs Act, and a $225 million gain recognized for vacating spectrum in certain markets.
• Diluted earnings per common share was $4.32 as compared to $1.32 in the prior year period.

First Quarter 2018

• Media revenues are expected to be approximately $638 million to $644 million, up 5.2% to 6.2% year-over-year. Embedded in the anticipated 2018 results are:
  • Approximately $8 million in political revenues as compared to $2 million in the first quarter of 2017
  • $4 million of trade revenue as compared to $4.3 million in the first quarter of 2017. Previously, trade revenue was reflected in Barter Revenue; however, under the new revenue recognition rules, barter revenue and barter expense are no longer reflected in our financial statements.
• Media production expenses and media selling, general and administrative expenses (together, "media expenses") and including trade expense, are expected to be approximately $437 million, including $3 million in stock-based compensation expense.
• Program contract amortization expenses are expected to be approximately $27 million.
• Program contract payments are expected to be approximately $29 million.
• Corporate overhead is expected to be approximately $30 million, including $6 million of stock-based compensation expense and $5 million of transaction, legal and other one-time costs.
• Research and development costs related to ONE Media are expected to be $9 million.
• Other non-media revenues less other non-media expenses are expected to be $2 million, assuming current equity interests.
• Depreciation on property and equipment is expected to be approximately $26 million, assuming the capital expenditure assumption below.
• Amortization of acquired intangibles is expected to be approximately $41 million.
• A gain of approximately $83 million is expected to be recognized related to the sale of spectrum in Milwaukee.
• A gain of approximately $2 million is expected to be recognized related to the reimbursement by the government for spectrum repack.
• Net interest expense is expected to be approximately $66 million ($64 million on a cash basis), assuming no changes in the current interest rate yield curve and changes in debt levels based on the assumptions discussed in this "Outlook" section. Interest expense includes $17 million of ticking fees related to the Term B loans raised in December 2017 related to the Tribune acquisition. The funds will be drawn when the transaction closes.
• Net cash taxes paid are expected to be approximately $1 million, based on the assumptions discussed in this "Outlook" section. The Company's effective tax rate is expected to be a benefit of approximately 15%.
• Total capital expenditures are expected to be approximately $42 million, of which $8 million relates to the spectrum repack and is expected to be reimbursed by the government.

Full Year 2018

• Media expenses, including trade expense, are expected to be approximately $1,813 million to $1,817 million, of which $165 million relates to acquisitions and revenue-generating initiatives, and $7 million to stock-based compensation expense.
• Program contract amortization expense is expected to be approximately $105 million.
• Program contract payments are expected to be approximately $111 million.
• Corporate overhead is expected to be approximately $90 million, including $13 million of stock-based compensation expense, and $9 million of transaction, legal and one-time costs.
• Research and development costs related to ONE Media are expected to be $33 million.
• Other non-media revenues less other non-media expenses are expected to be $15 million, assuming current equity interests.
• Depreciation on property and equipment is expected to be approximately $104 million, assuming the capital expenditure assumption below.
• Amortization of acquired intangibles is expected to be approximately $167 million.
• A gain of approximately $83 million is expected to be recognized related to the sale of spectrum in Milwaukee.
• A gain of approximately $39 million is expected to be recognized related to the reimbursement by the government for spectrum repack.
• Net interest expense is expected to be approximately $218 million (approximately $211 million on a cash basis), assuming no changes in the current interest rate yield curve, and changes in debt levels based on recent corporate developments and the assumptions discussed in this \"Outlook\" section. Interest expense includes $27 million of ticking fees on the Term B loans raised in December 2017 related to the Tribune acquisition, assuming the transaction closes in the second quarter of 2018. The funds will be drawn when the transaction closes.
• The Company's effective tax rate is expected to be approximately 10% with cash taxes paid of approximately $46 million.
• Total capital expenditures are expected to be approximately $179 million to $189 million, which includes approximately $69 million related to the spectrum repack which is expected to be reimbursed by the government.

For earnings history and earnings-related data on Sinclair Broadcast Group (SBGI) click here.