Sinclair Broadcast Group (SBGI) Tops Q1 EPS by 1c; Offers Q2, FY16 Outlook

Sinclair Broadcast Group (NASDAQ: SBGI) reported Q1 EPS of $0.25, $0.01 better than the analyst estimate of $0.24. Revenue for the quarter came in at $578.9 million versus the consensus estimate of $569.43 million.

Three Months Ended March 31, 2016 Operating Highlights:

• Media revenues, before barter, increased 14.3% to $531.3 million versus $464.8 million in the first quarter of 2015.
  • Political revenues were $24.4 million versus $2.2 million in the first quarter of 2015.
  • Revenues from our digital offerings increased 28.1% in the first quarter as compared to the first quarter of 2015.

Guidance:

Second Quarter 2016

• Media revenues, before barter, are expected to be approximately $598.3 million to $603.0 million, up 18.9% to 19.8% year-over-year. Embedded in these anticipated results are:
  • $15 million to $17 million in political revenues as compared to $4 million in the second quarter of 2015.

• Barter and trade revenue are expected to be approximately $36 million in the second quarter of 2016.

• Barter expense is expected to be approximately $32 million. $4 million of trade expense is included in television expenses (defined below).

• Media production expenses and media selling, general and administrative expenses (together, "television expenses"), excluding barter expense but including trade expense, are expected to be approximately $366 million, including $2 million in stock-based compensation expense.

• Program contract amortization expenses are expected to be approximately $30 million.

• Program contract payments are expected to be approximately $29 million.

• Corporate overhead is expected to be approximately $16 million, including $2 million of stock-based compensation expense.

• Research and development costs related to ONE Media are expected to be $4 million.

• Other non-media revenues less other non-media expenses are expected to generate $6 million of operating cash flow, assuming current equity interests.

• Depreciation on property and equipment is expected to be approximately $24 million, assuming the capital expenditure assumption below.

• Amortization of acquired intangibles is expected to be approximately $43 million.

• Net interest expense is expected to be approximately $53 million ($51 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.

• Cash taxes paid are expected to be approximately $29 million, based on the assumptions discussed in this "Outlook" section. The Company's effective tax rate is expected to be approximately 33%.

• Capital expenditures are expected to be approximately $27 million.

Full Year 2016

• Barter and trade revenue is expected to be approximately $130 million.

• Barter expense is expected to be approximately $114 million. $16 million of trade expense is included in television expenses.

• Media production expenses and media selling, general and administrative expenses (together, "television expenses"), excluding barter expense but including trade expense, are expected to be approximately $1.438 billion, including $7 million of stock-based compensation expense, and $141 million related to new acquisitions and costs related to our revenue-generating initiatives.

• Program contract amortization expense is expected to be approximately $122 million.

• Program contract payments are expected to be approximately $111 million.

• Corporate overhead is expected to be approximately $66 million, including $8 million of stock-based compensation expense.

• Research and development costs related to ONE Media are expected to be $13 million.

• Other non-media revenues less other non-media expenses are expected to generate $24 million of operating cash flow, assuming current equity interests.

• Depreciation on property and equipment is expected to be approximately $96 million, assuming the capital expenditure assumption below.

• Amortization of acquired intangibles is expected to be approximately $172 million.

• Net interest expense is expected to be approximately $209 million (approximately $199 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.

• The Company's effective tax rate is expected to be approximately 33%.

• Capital expenditures are expected to be $95 million, which assumes investments in HD news, building consolidation projects, and master control upgrades.

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

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