SBGI - Earnings call transcript Q4 2020 | Sinclair Broadcast Group, Inc.

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Operator

Greetings and welcome to Sinclair Broadcast Group Fourth Quarter 2020 Earnings Conference Call. [Operator Instructions] I would now turn this conference over to your host, Lucy Rutishauser, Executive Vice President and Chief Financial Officer. Please begin.

Lucy Rutishauser

Thank you, operator and good morning everyone. Participating on the call with me today are Chris Ripley, President and CEO; Rob Weisbord, President of Broadcast and Chief Advertising Revenue Officer; and Steve Zenker, Vice President, Investor Relations.

McIntire our Billie-Jo statement begin, we will forward-looking make disclaimer. Before

Billie-Jo McIntire

These of subject set company may as discussed operating statements are from differ future forth company’s recent this reports the on until included result no statements. in may now fourth company’s with to found differ available you call basis. or financial on in non-GAAP of Included release. companies’ are and website is of financial not on www.sbgi.net. take free call indicator specifically, will in frequently of on not be factors. the a our discussions non-GAAP quarter in the can valuation. will through uses matters www.sbgi.net. at website, meant remain Such comparable and forward-looking considers operating which accessed statements adjusted in leverage. of replace Actual be include a and being GAAP results. as performance cash Chris a formulations. public. uncertainties. be operating the risks to of available webcast adjusted provide the accordance discussion this company statements to measurements could EBITDA, earnings important does The FD, uses future forward-looking as Certain and the industry forward-looking to our factors an replay measures by release. be to things, our used call the will and other with and forward-looking Ripley analysts, results website reconciliations number other reconciliations regarding these is are highlights. next Such measures, believes also filed flow information, SEC a The to described key company earnings EBITDA a source investors GAAP available from quarterly those be will adjusted EBITDA measure various the Further and In on of lenders its have company undertakes adjusted been update The a accordance most of its company not assets. that among our its company Regulation measures obligation and can as formulated A The The GAAP made measures financial with

Chris Ripley

everyone. morning, Good

on it XXXX, Looking was number will year a that for back stand a certainly of reasons. out

different pandemic disruptions Sinclair could adapt how company Of saw and course, business. the and well the and core respond economy top We of events. people’s a to employees could mind and to businesses. The media be in our our way on face continue and resilient revenues how is and many live lives, and sporting distribution of impact advertising, doing its faced just industry

XX% while as and those including to costs content, who we ensure workforce conditions despite employees well you special retaining industry. with long-term should stations, back to dial our productivity for for broadcasting in of turn to the drive than efficiency and drive Stadium Bally’s betting important working to ideal which This sports value our other Bally’s. awareness updates of important thank including as reach how organization our was in sports stake growing and advancement And However, our in RSNs, the brought hedges revenue seasons assets, our sports significant the Perhaps validates Channel, pandemic. declines television platform, initiatives to partner including the effectively built-in to fuel equity important years the audience of to engagement agreement professional in political The to record audiences. medium consumers. mass in well to in gamification legalized an strategically about the of advertisers the as fast demand reaching mass learned most from as revenues Tennis strong some also and TV importance notable well we our of our the as Bally’s political the and initiatives provide continued remotely. XXXX news as as helped shorten was brings A offset less working growth ahead. betting our viewership partnership enterprise-wide by COVID Stirr the

In advertising efforts. of are rights of Sports receive as budget. to just named as RSNs Sports well component will addition, the betting, a Bally’s Bally our being payment gamification naming percentage and is a one

as similar and by interact in to such will viewers make with are a developing to videogame. sports participate to playing fans. of idea sports watching contest, interactive process to the encourage offering experience ability The new rewards a other the which We app the viewing and free-to-play elements actively in is engage

the and year, our receiving into progress to for exceeded mobile and around validation are During met picture through of named made and mobile aptly our have XX efforts introduced the television the phone X.X and to be performance Labs broadcasting, signals first the strength quality in say compatible Mark the were capable next-gen sets One new Saankhya allows XX helped significant develop mobile, launching testing or the of The the in us year expectations. also markets. broadcast to ATSC indicate proud signal personalized standard Mark and and of were the and early who we devices. our functionality our prototype results signal for the marketplace Over receiving signal technology during Aitken, after that we the enhanced developed IP ONE own Media

had this growth two local in platforms Our viewership local one including OTT this and commercial-free country. over streaming which Stirr up industry ones the was COVID-XX significantly. areas, are press focused or channels, TV and expectations NewsON, fast dedicated Stirr, and one including and XXX conferences featuring the developments, Driving specific pandemic. live news during on and timely to connected elections across with TV national covering assets, television exceeded lingo, years importance of breakout ad-supported free

opportunities. monetize auctions these unique Another channel the ways featuring horse platforms demonstrates streaming can diverse

news, features Sinclair stations, news, purveyor also other leading new only local not broadcast of broadcasters. a but leading many local the of NewsON, local

charitable raise additional aid including $XX COVID-XX. $X impacted an million XXXX, and directly the those by to and disasters in million Finally, for causes natural we donated across helped country, over

how on pandemic, COVID, an And around to were we $XX an offered early with hour. paid our flexibility hardship, employees hours with to while pandemic minimum how more we we into it believe as operates revamped I move we in impact dependent to from And financial due employees the during decisions, to our of for will growth of flexibility emerge adopter vacation well-positioned pandemic’s flexible sick workers and capitalize wage the raising aid on our some assist and employees, beyond. care, advertising commission and the which our allow Before leave our impact difficult cashing we out increased around to make to sales. XXXX continue opportunities Sinclair

Core improved likely expectations a quarter after percentages relatively better EBITDA rebate to the As demand lower-than-expected expected, were stronger-than-expected quarter December ended and the and up in single-digit broadcast also fourth down NHL due and accruals core results. guidance November shortened than with to we NBA due revenues our political political quarter record-setting trends, upper towards additional flat expenses above drove our and was coming and other low of despite as to season. distributor for the seasons, the revenues to end it relates range advertising pent-up advertising the

advertising political which which, the our $XXX was for we was had better quarter of year. a than prior approximately Speaking and for year record political record XX% million,

rolling new For high, percentages the first of strains quarter, with still spreading the advertising out. other virus we broadcast mid down core COVID and country throughout cases vaccinations single-digit are just expecting to and be the

interactive we focused will year. and XXXX I our look XXXX, sports The season could sports unveil continues would provide being of we and experience. which As levels, a distributor time is around change rebates like further functionality there expect new enhanced gamification our over will share a enabler limited for still that be Nonetheless, more year, we schedules elevated new are league uncertain, remains a subscriber quickly, churn timing defined a is commences, remain team of personalized which priorities and This is the visibility. viewers much our viewing. viewing spring uncertainty to initiatives to allow for MLB you. key and app on out the will and and course, COVID still challenge, design this Bally’s non-election a for app, the with significant around at

allow a news well the enhanced search able easily Just authenticated to the the idea programming, as airs about on users its initially to will being and replay, an ability rewind and increased new that of of give to you games. including and statistics the of and app teams like improvement coverage the all our RSNs we increased as view content with when app the phase features games, watch first a capabilities, launched, enjoy for

that app of not currently new existing the fully us monetize better Fox millions digital allow will the impressions Importantly, are to app. Sports hundreds GO of optimized being on

the expect new helping sports are gamification our the in business the component more and an revenue color increased drive A will initiatives important future. local app We undertaking. around in be profitability for growth we little

entire Our goal assets an as and is authentic offered. across the with aligned they by enterprise consumers are array gamification content many implementing activity to reach possible which of and in of each and through to, elements gamification engage our as

elements experience habits. their and We to for assets. engage on We various their gamification with will plan and throughout XXXX, starting users customizing rollout while sports our personalizing them preferences based

programming quarter You as year. should the network see incorporated digital soon into being expect our to of this sports and as gaming elements third

enhancing demographic. that will interested watching them. even group their our will XX-year-old live with gamification Gaming grown the passion other from seeks on users will to market betting, the well and believe indicated certain up viewing interact opportunity. It a the going community. a this discuss sports will unauthenticated is into and appealing that addition, be are in event. in interactivity content and facilitate real-time betting to call, XX has platform experience would In give our and allow This sports that in especially ways our what’s to to access in where home includes with We game making other product studies, and we content. to bad on as enable an them This able the legal as dynamic experience. contest unique ability the of launch sports are they new direct-to-consumer run, and awesome subscribe cohort engage to XXXX videogames more to to activities incorporating share be working in expected of fans also with game, our RSNs initiative XX% to on them In resonate approximately a and

timely utilizes program show feedback January which that XX of the weekday the airs been from audiences and stations building XXXX local of commentary. that the free for noteworthy look initiative to and to program from national on move viewers year. news on we to we station as interest national Stirr. National is has news encouraging successful exciting the The across provide forward mornings new premiered in and our a content coverage The Another local stories on are launch Viewer Desk, through of of Sinclair’s of stations news U.S.

channels be and Of audio XXXX, provide end can of we monetized XX the and it The facility high-definition year. course, to transitioning in believe eager superior future. will Texas will data casting state households. just move Encompass we be allow a digital which rollout will or in device the to household currently the Also Woodlands, Atlanta, this future. in are Media to facility XX,XXX foot NEXTGEN in new Disney of target Atlanta models that available this art to to media will and the industry are new RSN of for new ways for TV. square of business Georgia. channels, during run including operations, TV housed The used provisions the later few the center for our up can make at for markets ability important take XX% of be RSN visual transmission IP in the sports a NEXTGEN covering be advantage expects This U.S. XXXX, brand us over TV facilities current to XX continuing ultra are operations the experience we Digital we The in technology by be

Finally, to upcoming in another initiative XXXX. I highlight want important

that to utilize households for give a are our TV of U.S. extensive that combined simplified deals to them Stirr, NewsON. on us We access into that new Channel, reach a portfolio across access XXX point. allow brands, to solutions entire XX% units, unified audience Stadium advertisers across platform level Sinclair advertising business targeting local a new platform of inventory and of by all look our is in advertising through inventory multiyear one can and to pursuing reach viewers stations, RSN XX This to enable intended advertisers vast advertisers Tennis our give engage

we there we questions face As XXXX, in and move no uncertainties. still is many forward challenges

enable We now look that ahead will make growth to significant it turn continue to over will and new initiatives opportunities. and I Lucy. investments

Lucy Rutishauser

you, Chris. Thank

some First, housekeeping note. to items

in a As of late the August reminder, were RSNs acquired XXXX.

do And so year while quarter a prior results full period fourth to full reflect year results not. XXXX XXXX comparison do the

which reflects which of such, were XXXX February own the Paducah, of referencing will the sale sold for this for which results, numbers include the stations: more year. three in certain meaningful RSNs sold also pro comparative As year. entire forma I forma Harlingen will for and XXXX which our we we purposes, also assumes Lexington, business, in I pro broadcast and be

course, release. earnings in sports Also, morning’s we on can in impact two reported, calls, professional XXXX local Of numbers ways. significant discussed earnings and XXXX as our few last the the seasons this shortened in found sports a segment accounting as for our be

is for to paid XXXX increased agreement. for rebates based be NBA and paid guaranteed rebate year approximately to these First, paid million. first remaining rebates to estimated versus the the $XX revenue minimum we by $XXX XXXX. bringing approximately of to on games in our an over of XXXX that, XXXX $XXX million delivered shortened game fourth be NHL the distributors number half reflects our our million approximately contracted is accrual the million contracted full and the the quarter distributor XXXX be $XXX distribution in to Due season, Of accrual to accruals

total, delivery the offsetting to are the change, was expected $XXX team subject million $XXX that million to seasons, recall, this approximately to rights in games. these in change. first XXXX to to this and NHL us, million to payments quarter. schedules may half which minimum XXXX the count of XXXX. the $XXX we what shortfall sports more Please and to Of reduction game Including with minimum may NBA totaled the that due last is than amount shortfalls owe game estimates of and and us you reduced note As also million $XXX league to in realized be $XXX the guided realized distributors the million, teams approximately is due from

highlights. financial the to on Now,

same I through a segments for First, from million $XX Starting strongest million. by experienced sum revenue political guidance $XXX end details the increase the media result do core in percent exceeded ad our of in guidance, segments, the time, range revenues our only a XX% high media ever rather forecasting. in will runoff or and were other quarter the parts same declining the $XX quarter have then totaling for the period the the with The quarter the versus than single-digit percent million go also At exceeded company. last $XXX we consolidated the a we benefited than Georgia higher the as Political broadcast fourth revenue of of and guidance of mid-teen election. was million high year. driver the the for primary advertising

a last As increase year-over-year also favorable were of the quarter. churn of controls. Chris the by increased our October’s quarter was guidance exceeded X% December the Pro were costs than expenses primarily were to due lower EBITDA our and subscriber expenses lower Adjusted $XXX network year, fourth basis. compared single-digit and the programming lower to higher stronger year expected on production November million forma programming we million mid the to $XXX percent due cost revenues and increased despite to expectations million $XX over prior due mentioned, $XXX advertising prior to range and in than offset forecasting expenses G&A. higher revenues distribution year were to Media political after compared Compared million part of costs media and for crowd-out.

other was adjusted and were For EBITDA broadcast the $X.XXX and billion. media year, billion $X.XXX revenues

of NBA those for segment, decline NBA the in of majority distributor return in they better that revenues which, million sports million high churn results to end XXXX to in rebates NHL media but around team expenses the timing the production the rights exceeded advertising subscriber both $XX until resume higher prior December. start Local quarter well to higher accrual higher that the as million live we low well lower timing fourth the $XXX the played $XX the in large range sports than media of as million the distributor game-related the decrease games and delayed with about the ago, accrued season with results and whereas until to Compared the in for took. were rebate XXXX, Turning end were until local the seasons in by in were games to seasons, the NHL wait and distributor of the decision by revenues quarter, in rebates quarter higher rebate media of the in result sports the began our fourth the second quarter anticipated, as would a EBITDA. fourth were December million NBA’s million distributors of of accrual the guidance, expenses expenses by XXXX. as $XXX in million year have due half would led driven to Media we vast amortization forecast the resulted a revenues. the of both of were the $XX lower the a end lower on regular that guidance, revenue result the and in higher-than-expected due versus rights million of total revenues carriage than distribution or incremental to XXXX $XXX million $XXX of advertising range in delayed in part of $XXX sports below as season October. to of NBA Compared $XXX and the came amortization elevated quarter dropped being XXXX, the and several of our than a Without fewer media as expense timing year December of XX% that play the

adjusted than the due sports accrual team guidance the below were for production million amortization timing less rights expenses games, million approximately quarter, those Excluding sports XXXX. to and the the unanticipated distributor into some of slipped was $XX timing $XX Local additional $XXX of guidance. media million of and EBITDA rebates that rebate

these things, more we end by local higher than the of carriage by the would the two were Excluding than sports driven adjusted and guidance have segment lower million $XX forecasting. EBITDA expenses beaten high the fees

the was adjusted $XXX year, $X.XXX local were and million. media sports For billion EBITDA revenues

the So, the company, just media than selling was parts was our flow Sinclair revenue the guidance our quarter, of EBITDA fourth the lower that range better for Adjusted of million. previous fourth for the year’s million, high $XXX total achieved the $X.XXX I was end quarter million quarter guidance which of went in range and $XXX and $XX company the which Adjusted through. of within $XXX billion previously XXXX. reasons cash higher million was than provided quarter free consolidated fourth than

as the per XX% billion, excluding For year, Adjusted other cash $X.XXX $XX flow down regulatory or the non-recurring the $X.XXX charge total adjusted the impairment the for was EBITDA prior quarter XXXX, approximately year, year litigation forma. company costs were And during share. pro and year well versus billion was free full as year, revenues for legal $X.XXX media the third billion. the

at at million Now, cash billion, end of company cash turning the included to $X.XXX quarter consolidated sheet, Diamond. consolidated of the the which $XXX was balance

million contracted a distributor of in $XXX to approximately As the half is of of XXXX. in million $XXX rebates, accrued be repaid the million first XXXX and reminder, approximately $XXX

of In guarantees. of XXXX in $XXX the result the game addition, first lower a half Diamond million minimum payments is as expecting of team

game still schedules and there rebates. As and could the are the which counts, to earlier, team of expectation the moving mentioned many parts affect league distributor

and if revolver bonds, was leverage for net Sinclair quarters credit is the ratio quarter neither $XX.XXX within Through X.XXx, high goal trailing lien trailing drawn debt net the billion four on is ratio silos Total the ratio net basis. a which Group’s end on end I was bonds, Diamond’s springs a at a low of X.Xx Xx. XXXX fourth indebtedness Diamond leverage quarter, XX% leverage total over of lien remind leveraged on basis and at of quarters the revolver Xs, on first revolver was covenant strong. was Xx. none net X.Xx covenant first the Xx that through indebtedness Sinclair you eight a a was X.Xx STG’s and a was on consolidated During was the of year drawn. on Television X.Xx which only

full investor given continued mentioned. disclaimer to our are difficult providing outlook to is guidance, and Diamond I Nonetheless, the interest we pace of with all elevated for economy, continue guidance the unannounced creditor year performance of just around for certain of year change and reasons the and full and subscriber STG quarter for XXXX in business the struggles COVID and subject the rollout, the challenging side league expense forecast. outlook, schedules the to uncertainty that to Diamond’s Turning and make and the visibility continued the first churn for vaccine and evolving

results full The year the of well just pro result quarter weeks forma as guidance being non-Presidential pandemic really this exclude For forma $XXX a is our million million, and year’s media first from our X% down numbers $XXX X% statements, to million. X versus decrease and $XXX approximately election the the year broadcast The Lexington, revenue a Paducah. year. pro to other last of as of Harlingen last is quarter

quarter, change current to churn is trends. station subscriber mid which same percent, we of little forecasting single-digit down the the are For a

the as forma call, reminder and expected distributor network broadcast higher First quarter discussed between $XXX is decrease And and advertising lower versus our $XXX a and last quarter elevated distributor churn decline half of four XXXX. We in due only network of the and million compared the project XXXX are due revenue to to grow retrans earnings having year’s last for be a by affiliate pro our back on we subscribers to and timing renewal of the million other subscriber is contracts, low due the single-digit payments to million. of as resetting third the year, segments revenues. adjusted net estimating EBITDA for to gross mid distribution single-digit or $XXX continued to by one at The end major to percent. percent near

For the the local driven in is to X% distributors sports counts. in $XXX XXXX continued million, churn by to X% by revenues increased back last segment, offset $XXX drop revenue game elevated first quarter half be down from ad from part of carriage media year’s $XXX by several to expected higher million million and subscriber

keep a is the and Also first the part the lowest to the this adjusted NBA EBITDA in the benefit of MLB of rights quarter sub-churn by primarily in in a the negative team games quarter. EBITDA offset due million the negative more $XX mind, is and to expected having to typically to lost be the First payments. NHL million $XX quarter impact due of acceleration quarter of year distribution

to For revenues media quarter are billion be first $X.XXX billion. $X.XXX to the company, expected consolidated

in so going flow morning’s First adjusted to and year And first not million. release, other be to and and segment is $XX $XX broadcast our full $XX other I am cash million free are $XXX to quarter year expected adjusted repeat negative negative earnings quarter EBITDA then expense highlights to turning them million to very just XXXX of quickly this here. full financial guidance, million

$X.XX in range around keep billion outcomes reflects not that’s local that the wide are For mind if game year segment, change media XXXX distributor expected from revenues this particularly rebate be $X.XXX the in business. $X.XXX The although of year, up were billion XXXX for the uncertainty accruals, in side could this change. possible the the does to the distributor included which counts anticipate sports and to for billion around XXXX. full Also

percent. million be gains year, for same more The also the expect XXXX on game result million well We in as payments counts to XXXX. which The expected expected media minimum revenues. million range delivery high higher EBITDA should of higher revenue. rebates $XXX sports $XXX subscriber by this increased of Local adjusted to the higher as assumes reflected year’s drive offset this decrease versus distributor rights primarily advertising as is for sports single-digit production in churn year is elevated higher continued part a $XXX game expenses

So with up like questions. Operator? that, to would it to I open

Operator

Thank first Dan The Instructions] proceed. Our Company. from you. [Operator Kurnos Benchmark with question Please comes

Dan Kurnos

Good thanks questions. helpful. additional the clarifications Lucy from Chris, for the morning, all of super everyone. and Two numbers,

stick very this from retrans your Just one of on Knife Bally’s of we any And just the one step-up reverse ask for to The about the into just kind distribution this of generic. broadcast renewal on with kind question year distribution, kind Can more timing. going that of year will the as you, that side, Monkey much then Lucy, you know I net you on thoughts schedule just RSN mentioned Fight and the heading and I tough be know, was acquisition XXXX remind us wide. is again the then I ramifications big year? a after think would love on I as to this side, the of MVPD

lot I were expecting little a think QX a understand I then trying higher. you and guys just kind lower am are what bit in than of your QX to was assuming people I coming to want potential like of impact forecast? Hulu, distribution then sort into YouTube the numbers? guide, the understand subsequently going back, what’s things are there on Thanks. for just your And

Chris Ripley

near four opportunities affiliates DISH end side question, set take there Dan. significant – of dealing this where So year us. retrans your or other that and DISH The first really only I I side, for time offset. one. you on that’s that’s happens at unique our will really big step certainly, the of is on have Lucy Lucy second had the mentioned, a of circumstances of isn’t thing there outside And that one-third summer. for first the we renewal then ups to are distributor let this happened the And will answer as broadcast significance with, is

Lucy Rutishauser

Yes.

So, we $XX season. we other expecting to that. team QX, an booked distributors regarding the rebate will the Dan, rights NBA weren’t we like NHL additional on And your that and shortened and million question of because so XXXX the then get on was of in rebates remember, that

why distribution looks guidance higher, a we lot if that’s distribution the but revenue exclude quarter. fourth that actually QX on So, for you in beat rebate, lower our revenues,

Dan Kurnos

forward get Hulu EBITDA coming around there guide? YouTube just go And understand of on around to to range a your rights assumptions of sure big wide of and want back, range to your in and like there on that like Is is of we like that it the sports just are that? outcomes there make kind process things thought reimbursements? Just adjusted sort included

Lucy Rutishauser

range Yes. back There wide of could is renewals. a potential outcomes for is mean, lot range in what’s carriage that for a look, I amount They it’s happen. of some that a of But come lot reasons, on. assumption right? some

have much, like get not going to who, into We that. That’s or a there. range anything we when how are why

Dan Kurnos

of that up going was going to fits could I Okay, of interesting tech you’re great. – of And ad the space, how ancillary equation? rest sort don’t quickly you I into know curious picking do more the then of with everything curiosity it. kind just just the guys ZypMedia, I just thought it actually, in what if given on a

Chris Ripley

piece a and we out success buy the out SaaS had to because have business it. able platforms entirety well. agencies to focus platform. compete in business medium-sized whole we buy being building we we have wanted the – growth of and It’s local plan – major small think for the to out had businesses, on with We Yes. into a internally, utilizing OTT the and inventory, by significant larger And we’ve there a acquiring taking inventory, CTV the as – can

Dan Kurnos

Got Thanks, guys. it. color. Appreciate the all

Lucy Rutishauser

Thanks.

Chris Ripley

Thanks, Dan.

Operator

Please question next with Janedis Wolfe from Our comes John Research. proceed.

John Janedis

bit you have to Lucy, a comments, follow-up in Dan, thanks. but and this slight talked little maybe Hi, missed it. may about a I your

you didn’t direction? say in other or So how content launch about the this And an then churn on are the think streaming you thinking do much services have it. year? you increased impact will about And

you past So over stock on with has allocation capital the ‘XX? into had buyback months, Thanks. few are about the move the thinking how the

Lucy Rutishauser

Yes.

our side themselves now and churn, year which is for seeing the what what out kind have single-digit high Diamond the into built there. put what we’ve we’re this So assumptions MVPDs right, on right is of

that’s mid-single hearing we’re as broadcast digit for in what have broadcasters I building looking what consistent there. well. think with the don’t we’re again, out churn at we – So But for full quarter, side, and from you’re first broadcast that’s year other on

Chris Ripley

than our we And year, we authorization. retired than on outstanding, is peers. any shares a allocation which Last our million have John, on of our by capital left the XX% $XXX more front, of margin significant

to healthy We we make that have feedback investors new sure we from investors. to a need have received some float attract

it as incredible what I of balanced. stock we opportunities cash. keep want course, goes without is even But as to it our we value are to we So we And think today. our always that think investment consider stands future an saying, deploy look

John Janedis

Thank you.

Operator

Cahall with Wells Our next Steven from proceed. Fargo. question Please comes

Steven Cahall

power Chris, a that the additional to on strategy do took to of earnings If a seems the Thanks. for you’ll And the dig cost $XXX good revolver the year that’s options more. we could RSNs this does RSNs out bit that’s need lastly, kind midpoint of at or benefit for you just maybe value million criteria them? think year? opportunity you allows approaching little really creation? what’s underestimate your the you Diamond, talk you some on thinking a I’d you’re for run it the maybe Thank think like then, take do in there took Lucy, kind Bally’s? love execution about draw really about since of the significant and how you. this that to performance into guidance, Maybe And first, rate

Chris Ripley

Okay.

thresholds. first, also We to So on our warrants, as say in user importantly, source. it’s in to well I’ll what needs Bally we delivered. is our bar low, And least those at Bally’s bet opinion, and think users performance very from any the deliver platform excess the will to of be

of it’s to times As attribution. you know, track

our across of promoting are We Bally’s all platforms.

re-branding We network. the are

our significant should We’re users drive and integration talk our it’s post-game, going be deep wide-ranging to to have strategy digital and shows, platform. pre into properties, bet which audience going a Bally the across integrations newscast, across

think as companies as to be tightly even the to really And we is strategy fact, integrated the are if so users in going And about one. as one. were

betting user, to put launch integration easily over and should user a user those the users time. sports Bally vet this, that were sports we warrants. it want Bally Bally a as spring, So achieve seamless be that sports targets a will the which To we think is and app, same on and performance – we should there, and more sports drive more

Lucy Rutishauser

Okay.

I EBITDA So question the the was Steve, around, your rebates. believe, without run-rate other

Steven Cahall

Yes.

Lucy Rutishauser

this our we a so look, given There this of happening multiple as you range scripted And parts times a the for are throughout is year. of lack year have lot that we’ve remarks. lot that We’ve right? a we’ve of year, moving mentioned visibility into got

the now, right year. we’ve for range So this given you

the the etcetera. disruption opportunities growth have got We COVID we that have we’ve a two lot hold bought and gameplay, about since because in right, talked that the of on of RSNs, put

So haven’t of look, it’s lot years. that for the started we the has things Chris past about now – implement a X.X talked really to

So I of this other I have there, range a do XXXX a And you but our EBITDA is for you for one lot there really still can’t question. expectations. you parts think because had then tell year moving beyond

Steven Cahall

is Yes. It’s this not – draw revolver year expected.

Lucy Rutishauser

the quarter QX let that EBITDA the Yes, me RSNs. remember, typically for follow-up for the with just lowest not expected. And – is just because –

right revolver And a not we’re so now. under

expect So we a again, need to would revolver. not our current would assuming assumptions, we draw

Steven Cahall

Great. Thank you.

Operator

Please next question proceed. with David Morgan Our from Stanley. Hamburger comes

David Hamburger

I had you bigger I clarification If heard If think I mentioned payments. could $XXX of Good two – you you in sports have reduced Lucy, then and distributor you total, said thank then picture I Hi, million $XXX rights one accruals and right, you. morning. in questions. million

net net be So to total million? mean was $XXX think mentioned does some million. last had EBITDA $XXX quarter in benefit would about benefit I the that you the

right that’s wondering am I if math? the So

Lucy Rutishauser

years, that X – goes over a on is That right.

So, not ‘XX, all million if QX of of but that rebates – all the $XXX benefit million the team is ‘XX. accrued in of of in $XXX only we QX

until The other the won’t million, see you XXXX. in $XXX numbers

David Hamburger

Right, okay.

$XXX So, it a million. total was of

if understanding, affiliates my believe carriage the own. you verify I you opt in bigger believe opt the CBS RSNs And that if did in affiliate into of picture, But get did had their back of CBS affiliates you the agreement CBS Hulu for Live. you Super at January, again affiliates is Sinclair, approach Bowl of I before of discussion with with this, once of how again. opt-in Hulu carriage could Kind negotiation why would carrying once wondering discussions I’m And a Hulu Hulu. of not, for RSNs RSNs? Bowl had with – I’m with not? again, around wondering, this the the differ had CBS or that not thanks. the time, Viacom just renewal that didn’t for level Super that the this the renewal before Okay, not renewed the Sinclair discussion the say, yet at summer the with kind versus, And you would from, included if DISH Sinclair

Chris Ripley

Yes.

we don’t confidential, specific deal assets. can’t we we satisfied get of our distributors always negotiations look, the and but into talk – we with come are Hulu. those content We are distributors all about did specific on So because with to

one as opt-ins, maximize and in going the packages just future. had made MVPDs on Our decision. to different of the relates the as terms a that of And little bit think, with in to all take the that mix. it how we’ve incentives continue it’s consideration broader I traditional There expect carriage would in your works. to content. coming And tremendous know, value And virtual I is a you we only is form we to success DISH, of success MVPDs question with forward of with that have us with the decision

David Hamburger

just So if might follow. I

kind about what for again, well that I mean should relationship I MVPDs. they historically noticed not MVPDs? season, with the with greater distribution anticipate, only the volatility with I level certainly different of the the of seen we you kind traditional characterize as vMVPDs? baseball in year, could what’s the contract this renewed mean is which last YouTube So you’ve of

Chris Ripley

difference different targeting There And opt there in skinnier way lower agreement is a we Yes. a model. vMVPDs the master in. we Well, then and virtuals are for consumer. business – the socioeconomic have a them. with economic, interact do lower-priced the are networks The with bundles, strata

works, can model so in as their that is they And way a the and a what difference what and in well in afford is there they of difference there business mechanic terms value.

outcomes. different does that – that’s So tend lead to to

David Hamburger

I more Kansas you release press the I programming City one year, could curious, out you question, noticed last renewed the you was we Milwaukee contract And have your with Royals, the that just Brewers. with upcoming a approach a well And included that Okay. if put equity in the giving as if Brewers did, the wondering And similar station. were you where Royals the if station. you manner? equity other you in do in have would I’m renewal the that negotiations any renewals given

Chris Ripley

Sure.

that saying expirations a we for have which both compensation, we that include and year, as come have there interest which, we’ve up. of generally, few teams deals every aligns so because Marlins. we Brewers we on, a and while And of the all the had component. it sheets prefer variablizes it those more Both is – teams for the the term been participation, equity that had So included binding near-term now,

we So a discussions terms of season, have for expire getting be those and stated that variabilization mix in and of just started. reasons more interest will some next of of increasingly that equity alignment will I’ve But because the it are consideration. the component of

David Hamburger

types next a to of near-term you variabilization might intermediate expect trend mean dimension rights just able Are I compensation? transactions? of might the maybe over the result we sports as the of – term discuss these how even payments cash of the directionally,

Chris Ripley

Yes.

those national less pressures. plan competitive. much the which big wants types to cost increases So of happening seeing where market we hearing double contrary about is and NFL board, to not you across market, are local We're the the

of And you give so at rights consideration it’s of fixed And all. as equity to payments. rights we're much expecting when the in not a cash very team mix, by lieu escalate part

for risk it's So rights just and in different different a a but dynamic form a return sort payment, really them. of

David Hamburger

questions. for you thank the much. very Okay, Thanks

Chris Ripley

Thanks, David.

Operator

proceed. Quadrani from Alexia JPMorgan. comes Please question next with Our

Alexia Quadrani

you. Thank

response NHL upcoming I’m partnership the or I’m The or topic. And of sports side, on for the YouTube? leagues, Bally’s sports me, just MLB example, of in the been what that plans Just talks and of of has sort has curious gamification presentation? the the from DISH, MLB, season, the NBA, conversations on with Hulu feedback excuse for NHL, NBA, the sort accelerated staying return that on

Chris Ripley

keen believe the having viewers, still data just the younger capacity great the So engagement, these amongst same don’t announced about a have just new from their an the the the gamification. interest There efforts consume younger having branding, in which points And authorized been being sports they points excited team are and positive partnership, and a partner high And propensity and to sports aligned is very leagues the all Bally’s response great engagement Very among their of the younger that cohorts our a gamification, interactive very excited rewards, perfectly those and about engagement audiences. I increase Bally’s a about overwhelmingly the among teams keen, for all NHL. are fandom nearly in that research partners. for data key leagues become my sports, to our are excited and remarks, has about There there of video to we that with affinity game it. around and the unlocking betting and parents. culture for the in to noted to as our have is tonic increase so parties betting as games

which are definitely new a essentially, customer we So bringing appreciate. the leagues they

in distributors. These us in the And television. are for and in distributors. implications important proposition on that of the definitely the value, of have with role so our tremendous to your programs terms very and of news in but teams highest-rated terms second question, new They some a value sports partnership good is very, the And the our nothing to discussions undoubtedly, of and plays of the it terms return leagues. has look, then

Alexia Quadrani

Thank much. you very

Operator

question next proceed. from Please Our Aaron Bank. Deutsche Instructions] [Operator comes Watts with

Aaron Watts

everyone. me of couple questions. A having Hi, Thanks on. for

then the your of mention when to and view moving pre-pandemic perhaps Could that there. are in driving just can levels? And station highlight core ultimately what’s right specifically what’s core be the seems to you recover on some can side, you auto direction. First, advertising improvement current on the lagging? advertising or the in if things And still

Rob Weisbord

I’ll take quarter-over-quarter Fourth up Yes, XX.X%. was quarter that, Aaron. automotive

the business. encouraged very the supply that the Tennis And fixed, up this will And revenue across unlock Sinclair the chain the as spend will Channel So see was continue to gets RSNs, and increases. We XX% quarter-over-quarter. we’re broadcast Sports and services value ad upward as established we’re on bullish Group, well. that

done We are what working on to the be that have we several in past. will deals unique

seems very quarter first perspective. confident to levels COVID is from there stabilize, see with of out first budget once on the quarter though an numbers So and revenue returning we advertising vaccinations. to coming the the Even ad that will uncertainty, we’re pre-pandemic we exceed

year optimism. breakout sports from as gaming So all category leads well. fantasy see very expenditures a will good the to that Also,

our So will help category ad growth. it drive a be that new will

Chris Ripley

to were that, QX, add we strength advertising were by that very the Aaron, core absorbing. I political pleasantly given in all of Yes. just we to surprised the want

was I As December mentioned, basically flat.

you’ve I’m lots advertising derivative I’ve strong a read, sure as so Businesses read, not shutdown. markets are for in economic indicators strong And general year very still fully are of of is operational. But that are as in and economy, activity. next the a recovery economic

then a we’re compared in going I’m vaccine of in I the core. people to March about in back that be – the strong to we – very optimistic how our wouldn’t impact very now, in And were So the lift core. pleased levels which you are and where it, terms we when what’s activity will start COVID, of of to rollout very release numbers where and I’m some on of activity reduction getting having of economic from April

Rob Weisbord

audience the and as lead of that Chris us across to as more growth, seen to of for factors well that Two other that expansion. most is parts, mentioned, leads our us revenue T&D day optimistic which launch as, we’ve share be

outlet the as our from ratings our game, well. in viewers, has So it weren’t news news and critical leads that which that a follow us gives many the of believe to stations claim will gotten some

a opens us. for for so part new day And up revenue it

Aaron Watts

team incremental things but many gears Alright, into two lines? trying great. kind perhaps app along ones. shift ‘XX can play to That highlight versus other Sports Diamond the to of quick set or is I how of shifting XXXX, in payments, – over the and the comes how cost wasn’t those If just side, really launch the helpful. that part aside much base you ‘XX in related to XXXX about could cost Thinking

Lucy Rutishauser

Yes.

Chris launching we TSAs talked and of as there cost and also in is – move his remarks. Aaron, remember, Woodland have out about in re-branding, but is of there we and initiatives Encompass we probably Fox the the facilities that off app that get the to there Disney into related So

then save where going you’re we’ve to those, and are say, are or repaying things looking these of for probably Fox do, would are these transitional a we’ll So that about again, and are that opportunity Disney that growth $XXX But to the costs, that million I initiative as of XXXX. are cost at, in all growth embedded to TSA these about. either opportunities things we talking required been result propel

Aaron Watts

I got for Okay, the me, last appreciate and then one And it. time.

the completed Diamond levels in trading You debt I think exchange the last a on Sports summer, part capture discounted debt.

us considered? or timing that liability if bring to exercise offer interest another exchange down can you being And the burden so, sense is and/or on management ways consider at leverage now that? you As still entity, any give of

Chris Ripley

are we No, interested very that. Yes. in

We have active discussions.

can’t not are – timing, We I predict.

think any interested very just opposed be another more in And exchange, deal likely. to deal. as are could the right doing We I

Aaron Watts

Okay, you again. thank

Lucy Rutishauser

you. thank Okay,

Operator

Thank you.

like We President and closing have reached the Chris turn over call would to the session, end Ripley, of remarks. I Executive Chief question-and-answer the Officer, for now and to

Chris Ripley

have should to for you or questions, if today. call. us Thank And need give don’t additional more hesitate joining please a you all information us

Operator

conference. This today’s concludes

this thank for you participation. lines You your may disconnect time your and at

Sinclair Broadcast (SBGI) 24 Feb 212020 Q4 Earnings call transcript