Sinclair Reports Fourth Quarter 2007 Results

Sinclair Reports Fourth Quarter 2007 Results

Increases Annual Dividend by $0.10 to $0.80 Per Common Share

Renews $150.0 Million Share Repurchase Program

BALTIMORE, Feb. 6 /PRNewswire-FirstCall/ -- Sinclair Broadcast Group, Inc. (NASDAQ:SBGI) , the "Company" or "Sinclair," today reported financial results for the three months and twelve months ended December 31, 2007.

Commenting on the fourth quarter 2007, David Smith, President and CEO of Sinclair, stated, "We finished 2007 on a very positive note. Our advertising time sales during the fourth quarter of 2007 were up on a local and national basis, excluding political revenues, while advertising spending by the automotive sector, which has been down for some time, posted a 1.9% increase in the quarter and a 1.2% increase in December. For the year, we grew our cash flow, which is an impressive result considering that 2007 was a non-political election year.

"As we enter 2008, we are eagerly looking forward to the revenue benefits that come with what may be record advertising spending levels in a presidential election year. The Super Bowl, which aired on our 19 FOX affiliates, generated an additional $4.9 million in revenues for us, while our CW and MyNetworkTV stations will likely show growth in their second year as new networks."

Mr. Smith continued, "In light of the momentum we have going into the first quarter, we are very pleased that our Board of Directors has once again decided to increase our annual common stock dividend by $0.10 per share. This brings the annual dividend rate to $0.80 per share. At an approximate $8.90 current stock price, this represents a 9.0% common stock dividend yield, one of the highest, not only in the broadcast sector, but in the country.

"In light of our high dividend yield and the continued disparity between public and private television broadcast trading multiples, and our view that our stock price does not reflect our significant cash flow, the Board of Directors has renewed its authorization for the purchase of up to $150.0 million worth of the Company's Class A common shares, which may be repurchased in the open market or through negotiated private transactions."

Financial Results:

Net broadcast revenues from continuing operations were $165.7 million for the three months ended December 31, 2007, a decrease of 2.1% versus the prior year period result of $169.2 million. Operating income was $47.0 million in the three-month period as compared to $38.2 million in the prior year period, an increase of 23.2%. The Company had net income available to common shareholders of $13.0 million in the three-month period versus net income available to common shareholders of $13.4 million in the prior year period. The Company reported diluted earnings per common share of $0.15 for the three-month period versus diluted earnings per common share of $0.16 in the prior year period.

Net broadcast revenues from continuing operations were $622.6 million for the twelve months ended December 31, 2007, down 0.7% versus the prior year period result of $627.1 million. Operating income was $159.2 million in the twelve-month period, an increase of 0.3% versus the prior year period result of $158.7 million. The Company had net income available to common shareholders of $22.7 million in the twelve-month period, which included a $30.7 million extinguishment of debt charge associated with the partial call of the Company's 8% senior subordinated notes due 2012 and full redemption of the Company's 8.75% senior subordinated notes due 2011. The Company had net income available to common shareholders of $54.0 million in the twelve-month period ended December 31, 2006. Diluted earnings per common share, including the extinguishment of debt charges, were $0.26 in the twelve-month period versus diluted earnings per common share of $0.63 in the prior year period.

   Operating Statistics and Income Statement Highlights:    --  Political revenues were $2.2 million in the fourth quarter 2007 versus       $21.1 million in the fourth quarter 2006, which was an election year.    --  Local advertising revenues were up 1.1% in the quarter versus the       fourth quarter 2006, while national advertising revenues declined       18.6% primarily due to lower political revenues in a non-election       year. Excluding political revenues, local advertising revenues were up       8.0% and national advertising revenues were up 2.5%. Advertising       spending by the automotive, medical, services, and telecom categories       were up while retail and movies were down. Automotive, which       represents approximately 21% of time sales was up 1.9% in the quarter.       Local revenues, excluding political revenues, represented 66.2% of       advertising revenues.    --  Time sales on our FOX and CBS stations were up 0.4% and 10.6% in the       quarter, respectively. Stations affiliated with ABC, MyNetworkTV and       NBC were down 18.3%, 10.4% and 22.0%, respectively. Our CW stations       were flat. Excluding political revenues, our ABC stations were up       12.1%, our FOX stations were up 10.8%, our CBS stations were up 7.6%,       and our CW stations were up 2.2%. Our MyNetworkTV and NBC stations       were down 7.0% and 4.9%, respectively.    --  On November 1, 2007, the Company sold the assets of WGGB-TV, its ABC       affiliate in Springfield, Massachusetts, to Gormally Broadcasting LLC       for $21.2 million in cash.    --  In December 2007, the Company expanded the news on WEAR-TV (ABC 3) in       Pensacola, Florida by adding a 1-hour, 4:00pm news program.    --  During the fourth quarter 2007, the Company invested $17.0 million in       various real estate ventures and acquired Alarm Funding for $6.0       million.    --  On February 1, 2008, the Company purchased the non-licensed assets of       KFXA-TV (FOX 28) in Cedar Rapids, Iowa for $17.1 million and obtained       the right to purchase the licensed assets, pending FCC approval, for       $1.9 million. The Company's CBS affiliate in Cedar Rapids, KGAN-TV       (CBS 2), will provide sales and other non-programming related services       to KFXA-TV pursuant to a joint sales agreement.    --  In the first quarter 2008 and through February 1, 2008, the Company       has invested $4.4 million in various real estate ventures and $3.0       million in the Patriot Capital II fund, which provides financing to       small businesses.     Balance Sheet and Cash Flow Highlights:    --  Debt on the balance sheet, net of $21.0 million in cash, was       $1,323.4 million at December 31, 2007 versus net debt of       $1,343.9 million at September 30, 2007.    --  In January 2008, the Company repurchased in the open market       $6.9 million face value of its 8% senior subordinated notes due 2012.    --  As of December 31, 2007, 52.8 million Class A common shares and       34.5 million Class B common shares were outstanding, for a total of       87.3 million common shares outstanding.    --  Capital expenditures in the fourth quarter were $9.3 million.    --  Common stock dividends paid in cash in the fourth quarter were       $13.0 million.    --  Program contract payments for continuing operations were $18.9 million       in the fourth quarter.     Forward-Looking Statements:  

The matters discussed in this press release, particularly those in the section labeled "Outlook," include forward-looking statements regarding, among other things, future operating results. When used in this press release, the words "outlook," "intends to," "believes," "anticipates," "expects," "achieves," and similar expressions are intended to identify forward-looking statements. Such statements are subject to a number of risks and uncertainties. Actual results in the future could differ materially and adversely from those described in the forward-looking statements as a result of various important factors, including and in addition to the assumptions identified in this release, the impact of changes in national and regional economies, successful execution of outsourcing agreements, pricing and demand fluctuations in local and national advertising, volatility in programming costs, the market acceptance of new programming, the CW Television Network and MyNetworkTV programming, our news share strategy, our local sales initiatives, the execution of retransmission consent agreements and the other risk factors set forth in the Company's most recent reports on Form 10-Q and Form 10-K, as filed with the Securities and Exchange Commission. There can be no assurances that the assumptions and other factors referred to in this release will occur. The Company undertakes no obligation to publicly release the result of any revisions to these forward-looking statements except as required by law.

Outlook:

In accordance with Regulation FD, Sinclair is providing public dissemination through this press release of its expectations for certain of its first quarter 2008 and full year 2008 financial performance. The Company assumes no obligation to update its expectations. All matters discussed in the "Outlook" section are forward-looking and, as such, persons relying on this information should refer to the "Forward-Looking Statements" section above.

All assumptions and historical periods have been adjusted to exclude WGGB-TV, which was sold November 1, 2007, and which was accounted for under discontinued operations accounting. This Outlook section does not reflect the February 1, 2008 purchase of KFXA-TV and the resulting Joint Sales Agreement.

"We are off to a strong start in 2008 from a revenue, cash flow and programming basis," commented David Amy, EVP and CFO. "Our core time sales are currently reflecting increased spending by the telecommunication and service businesses, while automotive is currently pacing only slightly down to first quarter 2007. Our FOX stations should benefit from highly-rated programs such as American Idol and the Super Bowl, while our MyNetworkTV stations continue to improve. Additionally, we are expecting to generate record levels of political advertising revenues this year, most of which should be realized in the second half of the year. Our revenues from retransmission consent agreements will grow to just over $67.0 million this year from approximately $59.0 million in 2007. We will also benefit from our 2007 refinancings and the lower interest rate environment which should lower our net interest costs by approximately $19.0 million."

   --  The Company expects first quarter 2008 station net broadcast revenues       from continuing operations, before barter, to be approximately $160.2       to $162.5 million as compared to first quarter 2007 station net       broadcast revenues, before barter, of $148.3 million. This assumes       $2.2 million in political revenues versus $0.6 million received in the       first quarter last year, $5.0 million in Super Bowl revenues as       compared to $0.1 million last year, and revenues from retransmission       consent agreements of $16.7 million versus $10.9 million in first       quarter last year.    --  The Company expects barter revenue and barter expense each to be       approximately $15.0 million in the first quarter.    --  The Company expects continuing operations station production expenses       and station selling, general and administrative expenses (together,       "television expenses"), before barter expense, and including       stock-based compensation expense, in the quarter to be approximately       $75.0 million, a 8.5% increase from first quarter 2007 television       expenses of $69.2 million. On a full year basis, television expenses       are expected to be approximately $299.8 million, or up a nominal 3.8%,       as compared to 2007 television expenses of $288.7 million. The 2008       television expense forecast includes $0.4 million of stock-based       compensation expense for the quarter and $1.5 million for the year, as       compared to the 2007 actuals of $0.3 and $1.5 million for the quarter       and year, respectively.    --  The Company expects program contract amortization expense to be       approximately $19.7 million in the quarter and $85.1 million for the       year, as compared to the 2007 actuals of $21.3 million and $96.4       million for the quarter and year, respectively.    --  The Company expects program contract payments to be approximately       $21.2 million in the quarter and $82.0 million for the year, as       compared to the 2007 actuals of $20.5 million and $77.7 million for       the quarter and year, respectively.    --  The Company expects corporate overhead, including stock-based       compensation expense, to be approximately $7.1 million in the quarter       and $28.4 million for the year, as compared to the 2007 actuals of       $6.0 million and $24.3 million for the quarter and year, respectively.       The 2008 corporate overhead forecast includes $0.4 million of       stock-based compensation expense for the quarter and $2.2 million for       the year, as compared to the 2007 actuals of $0.3 million and $2.2       million for the quarter and year, respectively.    --  The Company expects other operating division revenues less other       operating division expenses to be approximately $0.4 million in the       first quarter, assuming current equity interests.    --  The Company expects depreciation on property and equipment to be       approximately $11.0 million in the quarter and $44.3 million for the       year, assuming the capital expenditure assumptions below, and as       compared to the 2007 actuals of $10.7 million and $43.1 million for       the quarter and year, respectively.    --  The Company expects amortization of acquired intangibles to be       approximately $4.5 million in the quarter and $18.8 million for the       year, as compared to the 2007 actuals of $4.2 million and $17.6       million for the quarter and year, respectively.    --  The Company expects net interest expense to be approximately $20.2       million in the quarter and $74.5 million for the year, assuming no       changes in the current interest rate yield curve, and changes in debt       levels based on the assumptions discussed in this "Outlook" section.       This is compared to the 2007 actuals of $26.0 million and $93.6       million for the quarter and year, respectively.    --  The Company expects the first quarter effective tax rate for       continuing operations to be approximately 41%, including a current tax       provision from continuing operations of approximately $3.2 million in       the quarter based on the assumptions discussed in this "Outlook"       section. For the year, the effective tax rate on continuing operations       is expected to be approximately 40.5%, including a current tax       provision of $16.8 million.    --  The Company expects dividends paid on the Class A and Class B common       shares to be approximately $15.3 million in the first quarter and       $67.8 million for the year, assuming current shares outstanding and an       $0.80 per share annual dividend rate. This is compared to total       dividends paid in 2007 of $49.5 million. The increased dividend rate       will go into effect with the dividend paid in April 2008.    --  The Company expects to spend approximately $12.3 million in capital       expenditures in the quarter and approximately $33.0 million for the       year. Of this amount, approximately $6.8 million represents projects       that were budgeted in 2007, but will roll into 2008.     Sinclair Conference Call:  

The senior management of Sinclair will hold a conference call to discuss its fourth quarter 2007 results on Wednesday, February 6, 2008, at 8:30 a.m. ET. After the call, an audio replay will be available at www.sbgi.net under "Investor Information/Earnings Webcast." The press and the public will be welcome on the call in a listen-only mode. The dial-in number is (877) 407-9205.

About Sinclair:

Sinclair Broadcast Group, Inc., one of the largest and most diversified television broadcasting companies, owns and operates, programs or provides sales services to 58 television stations in 35 markets. Sinclair's television group reaches approximately 22% of U.S. television households and is affiliated with all major networks. Sinclair owns equity interests in various non-broadcast related companies.

Notes:

"Discontinued Operations" accounting has been adopted in the financial statements for all periods presented in this press release. As such, the results from operations, net of related income taxes, have been reclassified from income from continuing operations and reflected as net income from discontinued operations.

Prior year amounts have been reclassified to conform to current year GAAP presentation.

   Sinclair Broadcast Group, Inc. and Subsidiaries   Unaudited Consolidated Statements of Operations   (in thousands, except per share data)                                  Three Months Ended        Twelve Months Ended                                   December 31,               December 31,                                 2007        2006          2007       2006   REVENUES:     Station broadcast      revenues, net of      agency commissions       $165,671    $169,212     $622,643    $627,075     Revenues realized from      station barter      arrangements               17,572      16,425       61,790      54,537     Other operating      divisions' revenues        14,826       9,857       33,667      24,610       Total revenues           198,069     195,494      718,100     706,222    OPERATING EXPENSES:     Station production      expenses                   39,151      35,938      148,707     144,236     Station selling,      general and      administrative      expenses                   38,669      36,241      140,026     137,995     Expenses recognized      from station barter      arrangements               15,667      14,672       55,662      49,358     Amortization of program      contract costs and net      realizable value      adjustments                22,908      25,251       96,436      90,551     Other operating      divisions' expenses        14,171       9,085       33,023      24,193     Depreciation of      property and      equipment                  10,487      10,129       43,147      45,319     Corporate general      and administrative      expenses                    5,446       5,736       24,334      22,795     Amortization of      definite-lived      intangible assets      and other assets            4,563       4,703       17,595      17,529     Impairment of      intangibles                     -      15,589            -      15,589       Total operating        expenses                151,062     157,344      558,930     547,565       Operating income          47,007      38,150      159,170     158,657   OTHER INCOME (EXPENSE):     Interest expense      and amortization of      debt discount      and deferred      financing costs           (21,700)    (28,434)     (95,866)   (115,217)     Interest income                 50         745        2,228       2,008     Gain (loss) from sale      of assets                      17         408          (21)        143     Loss from extinguishment      of debt                         -           -      (30,716)       (904)     Gain from derivative      instruments                 1,292           -        2,592       2,907     Income from equity and      cost method investments       782         146          601       6,338     Other income, net              283         711        1,227       1,159       Total other expense      (19,276)    (26,424)    (119,955)   (103,566)       Income from continuing        operations before        income taxes             27,731      11,726       39,215      55,091    INCOME TAX PROVISION         (16,483)     (1,661)     (18,800)     (6,589)      Income from continuing      operations                 11,248      10,065       20,415      48,502   DISCONTINUED OPERATIONS:     Income from discontinued      operations, net of related      income tax benefit of      $445, $2,939, $270 and      $3,121, respectively          677       3,380        1,219       3,701     Gain from discontinued      operations, net of related      income tax provision of      $489, $0, $489, and $885,      respectively                1,065           -        1,065       1,774   NET INCOME                   $12,990     $13,445      $22,699     $53,977    EARNINGS PER COMMON SHARE:     Basic and diluted earnings      per common share from      continuing operations       $0.13       $0.12        $0.23       $0.57     Basic and diluted earnings      per common share from      discontinued operations     $0.02       $0.04        $0.03       $0.06     Basic and diluted earnings      per common share            $0.15       $0.16        $0.26       $0.63     Weighted average common      shares outstanding         87,187      85,680       86,910      85,680     Weighted average common      and common equivalent      shares outstanding         87,212      85,694       87,015      85,694     Dividends declared per      common share               $0.175      $0.125       $0.625       $0.45      Unaudited Consolidated Historical Selected Balance Sheet Data:   (In thousands)                                                 December 31,    December 31,                                                       2007            2006    Cash & cash equivalents                          $20,980         $67,408   Total current assets                             238,616         311,118   Total long term assets                         1,986,039       1,960,462   Total assets                                   2,224,655       2,271,580    Current portion of debt                           46,789         102,250   Total current liabilities                        225,246         284,928   Long term portion of debt                      1,297,560       1,311,373   Total long term liabilities                    1,743,568       1,719,322   Total liabilities                              1,968,814       2,004,250    Minority interest in consolidated    subsidiaries                                      3,067             685    Total stockholders' equity                       252,774         266,645   Total liabilities & stockholders' equity      $2,224,655      $2,271,580     Unaudited Consolidated Historical Selected Statement of Cash Flows Data:   (In thousands)                                                 Three Months  Twelve Months                                                       Ended          Ended                                                December 31,   December 31,                                                        2007           2007    Net cash flow from operating activities           $55,088       $146,214   Net cash flow used in investing activities         (9,567)       (56,373)   Net cash flow used in financing activities        (34,984)      (136,269)    Net increase (decrease) in cash & cash    equivalents                                       10,537        (46,428)   Cash & cash equivalents, beginning of    period                                            10,443         67,408   Cash & cash equivalents, end of period            $20,980        $20,980  

First Call Analyst:
FCMN Contact:

Source: Sinclair Broadcast Group, Inc.

CONTACT: David Amy, EVP & Chief Financial Officer, or Lucy Rutishauser,
VP-Corporate Finance & Treasurer, +1-410-568-1500, both of Sinclair Broadcast
Group, Inc.

Web site: http://www.sbgi.net/

Company News On-Call: http://www.prnewswire.com/comp/110203.html

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