Barclays High Yield Bond & Syndicated Loan Conference June...
Transcript of Barclays High Yield Bond & Syndicated Loan Conference June...
Barclays High Yield Bond & Syndicated Loan ConferenceJune 2016
2
Safe Harbor
The following information contains, or may be deemed to contain, "forward-looking statements" (as
defined in the U.S. Private Securities Litigation Reform Act of 1995). Any statements about our
expectations, beliefs, plans, objectives, assumptions or future events or performance are not historical
facts and may be forward-looking. We base these forward-looking statements on our expectations,
assumptions, estimates and projections about our business and the industry in which we operate as of
the date of this presentation. By their nature, forward-looking statements involve risks and uncertainties
because they relate to events and depend on circumstances that may or may not occur in the future and
cannot be predicted, quantified or controlled, and as such these statements could cause actual results to
differ materially from those set forth in, contemplated by or underlying any forward-looking statements.
Statements made in these presentation materials and during this presentation and factors set forth under
the title “Risk Factors” in our Form 10-K, 10-Qs, and 8-Ks filed with the SEC, describe factors, among
others, that could contribute to or cause any material difference in outcome from those set forth in,
contemplated by or underlying any forward-looking statements. However, additional factors and risks not
currently known to us or that we deem immaterial may also materially and adversely affect our financial
condition and results of operation, and you should review the factors and risks we describe in reports we
file with the Securities and Exchange Commission or that are provided to you by us from time to time.
You are cautioned not to place any undue reliance on any forward-looking statements, which speak only
as of the date made. All subsequent forward-looking statements are expressly qualified in their entirety
by the cautionary statements contained or referred to herein. We undertake no obligation to update
these statements or publicly release revisions to these statements to reflect subsequent events, except as
required by law.
3
Sinclair Broadcast Group –Connecting People With Content
Leader
Creator
Innovator
Free cash flow generator
Only Broadcaster with Economies of Scale, National Reach, and Diversified Asset Base:
173 TV stations
483 channels
81 markets
50 Multi-station markets
77 news markets
44M TV households
No market more than 5% of revenue
Largest ABC, CBS, FOX, CW, MNT affiliate groups; 3rd largest NBC group; affiliations with Spanish-language networks
4
Leading Broadcaster
Note: After pending transactions
5
Creating & Diversifying Content Offerings
Net Time Sales by Content Type
30% 29% 29%
8%
4%
0%
10%
20%
30%
40%
Local News Syndicated Network Local Sports Paid/DR
2015 Ad Revenues by Content Type
6
Creating & Diversifying Original Content
Benefits: Lower programming costs; syndication & streaming rights
Local News Over 2,200 hours per week
Over 50% of SBG newscasts ranked #1 or #2 in their markets
National news show, ‘Full Measure with Sharyl Attkisson’
Circa – next generation digital-first news
Sports Tennis Channel
American Sports Network - College and high school sports, racing
ROH Wrestling
Syndication Tornante JV - First run/low cost game, talk, court, and comedy shows
7
Creating New Sales Channels
Programmatic/Audience Network:
Compete for advertising budgets reserved for cable network buys
OxMyx Media Group, Programmatic JV with Visible World
Aggregate and sell Sinclair and other broadcasters’ impressions on a national scale across multiple dayparts
Automate the spot buying process
Warehouse linear and non-linear inventory
8
Creating Multiple Delivery Platforms
Digital:
Break local news on Desktop, Mobile Apps, Social Media
Package digital sales with/without linear TV spots
Engage Millennials
Offer Advertising Agency services
Compete for Internet advertising dollars
Addressable and dynamic ad insertion
24/7 Networks:
Tennis Channel
American Sports Network
COMET – Sci-Fi partnered with MGM
9
Creating Multiple Delivery Platforms
Multicast Channels:
Leader in over-the-air broadcast channel offerings (473 channels)
Digital-only Magazines:
Seattle, Cincinnati and D.C. ‘Refined’ digital lifestyle/City magazines
Companion TV show
10
Innovating Industry Technology
Digital Content Management & Video Management Systems:
Automate content workflow - Break news first on digital platforms
Customizable Mobile Apps with playlist functionality
Alarm clock features
Dedicated Weather Apps
Dynamic ad insertion with addressable ads
Patent-pending VMS
NGBP will allow broadcasters to do what they do today, only BETTER!
Provides for mobility
IP end-to-end
Increases capacity
UHD/4K content delivery
New business use cases:
Targeted advertising
Data leasing
Subscription-based offerings
11
Next Generation Broadcast Platform –Pro Consumer
12
NGBP Economics – Sinclair Only
$46mm$154mm
$1.5bn
$.000021 $.000022 $.00022
Current Spectrum (Additional Channels)
Future Spectrum (Additional Channels)
Future Spectrum (Wireless)
Broadcast Priceper Gigabyte
Wired / Wireless Wholesale Price per Gigabyte
$0.01 – 0.05Wired
$0.01 – 0.05Wired
$2.00-$3.00Wireless
Source: CompanyAssumes full capacityWholesale wireless pricing: Google paying Sprint $2 per GB/ Retail wireless pricing: T-Mobile plan priced at $10 per GB1 Current pricing2 Assumes 1/10,000th of the wireless price
$652
$786
$1,071
$1,502
$1,899
$273$341
$442
$592
$718
$450-488 (1) $488-525 (1)
$153 $179 $238$320
$371
-
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
Avg2010/2011 Avg2011/2012 Avg2012/2013 Avg2013/2014 Avg2014/2015 Avg2015/2016 Avg2016/2017
Media Revenues EBITDA FCF
13
Growing Key Financial Metrics
4-Year CAGRs (FY2011 – FY2015):Net Broadcast Revenue: 33%EBITDA: 28%Free Cash Flow: 26%
• Acquisitions net of dispositions.• Media Revenues, EBITDA and FCF are all As Reported (in millions)• A reconciliation of Net Income to EBITDA, and Net Income to Free Cash Flow, is included on the Company’s website under
Non-GAAP metrics(1) Public guidance on 2/24/16 for 2015/2016 combined FCF of $900 - $975 million and 2016/2017 combined of $975 - $1,050 million
5.4x
6.3x
4.0x4.2x 4.3x
4.6x 4.7x5.0x
Low to Mid-3xs
-
1.0
2.0
3.0
4.0
5.0
6.0
7.0
2006 2009 2010 2011 2012 2013 2014 2015 2016
2016:AcquiredTC for $350M
14
Declining Net Leverage
**Stations acquired net of dispositions.
Great Recession
2012: Acquired 31 stations for
$1.1B
2013: Acquired 58 stations for
$1.0B
2014: Acquired 14 stations for
$1.2B
Pre-Recession
15
Strong Balance Sheet
$304
$632 $640
$950
$950 $550$350
2016 2017 2018 2019 2020 2021 2022 2023 2024 2026
Revolver
Senior Unsecured Notes
Term Loans
No near-term refinancing risk for 2 years
Healthy credit statistics
Total Net Leverage (‘14/’15 avg) of 4.7x
Total Net Leverage (‘15/’16 avg) of 4.0x estimated
5.0% Avg. Cost of Debt
$1,694
Excludes capital lease obligations, amortization of debt, VIE and non-recourse debt
FCF Metrics
2016/2017 FCF Yield ~ 16%
50% EBITDA conversion for 2015
2016/2017 FCF per share of $5.33
2015 Uses of FCF:
18% Acquisitions/Investments
17% Dividends
16% Scheduled debt repayment
8% Share repurchases
Free Cash Flow
16
Free Cash Flow Generator
($ in Millions)
FCF and EBITDA Conversion are As ReportedFCF uses includes pending transactions(1) Public guidance on 5/4/16 for 2015/2016 combined FCF of $900 - $975 million and 2016/2017 combined FCF of $975 - $1,050 million
$179
$238
$320
$372
$469
Avg '11/'12 Avg '12/'13 Avg '13/'14 Avg '14/'15 Avg '15/'16
17
Outperforming Equity Returns
Ticker: SBGIMarket Cap: $2.9BEnterprise Value: $6.6B
Source: Yahoo Finance as of May 11, 2016Shows the cumulative return on SBGI stock and the S&P 500 from 12/31/2012 through 5/11/2016.
SBGI: 47% p.a.S&P 500: 13% p.a.
0%
250%
2012 2013 2014 2015 2016
Cumulative Equity Performance 2012 - 2016
SBGI
S&P 500
18
Value Drivers
Components Metric Commentary/Opportunities
Core Business Core ad – GDP growth
Net Retrans – Teen growth %
Digital – mid-20% growth in
2016E
Political – $270-280M in 2016E
$4.74 - $5.13 FCF/share est.
average for 2015/2016
$5.13 - $5.53 FCF/share est.
average for 2016/2017
All segments growing
NGBP/ATSC 3.0 Multicast capacity
Wholesale data
Mobility
Multicast – adds $100M
Wholesale – adds $1.5B
Excludes One Media intellectual
property licensing
Digital Assets Content & Video Management
Systems
CIRCA
Refined
Compete for Internet $
Millennial users
Increased impressions
Proprietary technology
Dynamic Ad insertion
Customizable Apps
Content Assets ASN, NC8, ROH, Full Measure,
SOP
Higher ratings
Lower programming costs
Syndication rights
Streaming rights
Network Assets Tennis Channel
COMET
ASN
Higher CPMs
Subscribers
Live Sports and niche programming
Increased distribution
Programmatic Audience Network
OXMYX
Compete for Network $
Aggregate impressions
Automate the buying process
Eventually include linear and non-
linear impressions
Other OperatingDivisions
Real estate, signage company,
Alarm company
$300-400M of value ($3-4/share) $200M of net invested capital
19
Why Sinclair Broadcast Group
Broadcast leader with scale, reach and diversification
Original content creator (local news, live sports, first run
syndication)
Revenue innovator (retrans, Digital CMS, programmatic)
Multi-platform distributor (OTA, MVPD, digital, networks,
mobile apps)
Technology innovator (NGBP)
Free cash flow generator