UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________.
Commission File Number: 000-26076
SINCLAIR BROADCAST GROUP, INC.
(Exact name of Registrant as specified in its charter)
---------------------------
MARYLAND 52-1494660
(State or other jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or organization)
2000 WEST 41ST STREET
BALTIMORE, MARYLAND 21211
(Address of principal executive offices)
(410) 467-5005
(Registrant's telephone number, including area code)
NONE
(Former name, former address and former fiscal year-if changed since
last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the Registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No[ ]
As of April 30, 1999, there were 48,090,331 shares of Class A Common Stock, $.01
par value; 48,610,231 shares of Class B Common Stock, $.01 par value; 39,181
shares of Series B Preferred Stock, $.01 par value, convertible into 284,952
shares of Class A Common Stock; and 3,450,000 shares of Series D Preferred
Stock, $.01 par value, convertible into 7,561,644 shares of Class A Common
Stock; of the Registrant issued and outstanding.
In addition, 2,000,000 shares of $200 million aggregate liquidation value of
115/8% High Yield Trust Offered Preferred Securities of Sinclair Capital, a
subsidiary trust of Sinclair Broadcast Group, Inc., are issued and outstanding.
<PAGE>
SINCLAIR BROADCAST GROUP, INC. AND SUBSIDIARIES
Form 10-Q
For the Quarter Ended March 31, 1999
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
PAGE
Consolidated Balance Sheets as of December 31, 1998 and
March 31, 1999................................................. 3
Consolidated Statements of Operations for the Three Months
Ended March 31, 1998 and 1999.................................. 4
Consolidated Statements of Stockholders' Equity for the Three Months
Ended March 31, 1999........................................... 5
Consolidated Statements of Cash Flows for the Three Months
Ended March 31, 1998 and 1999.................................. 6
Notes to Unaudited Consolidated Financial Statements................ 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.............................. 12
Item 3. Quantitative and Qualitative Disclosures About Market Risk.......... 17
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K .................................. 19
Signature............................................................... 20
2
<PAGE>
SINCLAIR BROADCAST GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
ASSETS 1998 1999
------------- ------------
<S> <C> <C>
CURRENT ASSETS:
Cash ................................................................................ $ 3,268 $ 5,913
Accounts receivable, net of allowance for doubtful accounts ......................... 196,880 153,579
Current portion of program contract costs ........................................... 60,795 49,538
Prepaid expenses and other current assets ........................................... 5,542 5,232
Deferred barter costs ............................................................... 5,282 6,740
Broadcast assets held for sale ...................................................... 33,747 34,092
Deferred tax asset .................................................................. 19,209 31,909
----------- -----------
Total current assets ......................................................... 324,723 287,003
PROGRAM CONTRACT COSTS, less current portion ............................................ 45,608 37,938
LOANS TO OFFICERS AND AFFILIATES ........................................................ 10,041 9,610
PROPERTY AND EQUIPMENT, net ............................................................. 280,391 275,426
OTHER ASSETS ............................................................................ 93,404 103,907
ACQUIRED INTANGIBLE BROADCASTING ASSETS, net ............................................ 3,100,415 3,083,468
----------- -----------
Total Assets ........................................................................ $ 3,854,582 $ 3,797,352
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable .................................................................... $ 18,065 $ 15,049
Accrued liabilities ................................................................. 96,350 77,826
Current portion of long-term liabilities-
Notes payable and commercial bank financing ..................................... 50,007 56,258
Notes and capital leases payable to affiliates .................................. 4,063 4,930
Program contracts payable ....................................................... 94,780 86,909
Deferred barter revenues ............................................................ 5,625 7,355
----------- -----------
Total current liabilities .................................................... 268,890 248,327
LONG-TERM LIABILITIES:
Notes payable and commercial bank financing ......................................... 2,254,108 2,227,882
Notes and capital leases payable to affiliates ...................................... 19,043 29,655
Program contracts payable ........................................................... 74,802 63,685
Deferred tax liability .............................................................. 184,736 184,736
Other long-term liabilities ......................................................... 33,361 25,699
----------- -----------
Total liabilities ................................................................. 2,834,940 2,779,984
----------- -----------
MINORITY INTEREST IN CONSOLIDATED SUBSIDIARIES .......................................... 3,599 3,612
----------- -----------
COMPANY OBLIGATED MANDATORILY REDEEMABLE SECURITIES OF SUBSIDIARY
TRUST HOLDING SOLELY KDSM SENIOR DEBENTURES ......................................... 200,000 200,000
----------- -----------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Series B Preferred Stock, $.01 par value, 10,000,000 shares authorized and 39,581 ... -- --
and 39,181 shares issued and outstanding, respectively
Series D Preferred Stock, $.01 par value, 3,450,000 shares authorized, and 3,450,000
issued and outstanding .......................................................... 35 35
Class A Common Stock, $.01 par value, 500,000,000 shares authorized
and 47,445,731 and 48,036,430 shares issued and outstanding, respectively ....... 474 480
Class B Common Stock, $.01 par value, 70,000,000 shares authorized
and 49,075,428 and 48,630,231 shares issued and outstanding, respectively ....... 491 486
Additional paid-in capital .......................................................... 768,648 770,077
Additional paid-in capital - equity put options ..................................... 113,502 113,502
Additional paid-in capital - deferred compensation .................................. (7,616) (7,130)
Accumulated deficit ................................................................. (59,491) (63,694)
----------- -----------
Total stockholders' equity ................................................... 816,043 813,756
----------- -----------
Total Liabilities and Stockholders' Equity ................................... $ 3,854,582 $ 3,797,352
=========== ===========
</TABLE>
The accompanying notes are an integral part of these unaudited
consolidated statements.
3
<PAGE>
SINCLAIR BROADCAST GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
1998 1999
------------------------------
<S> <C> <C>
REVENUES:
Station broadcast revenues, net of agency commissions ....................... $ 112,631 $ 174,466
Revenues realized from station barter arrangements .......................... 11,207 15,319
--------- ---------
Total revenues ........................................................... 123,838 189,785
--------- ---------
OPERATING EXPENSES:
Program and production ...................................................... 25,812 41,870
Selling, general and administrative ......................................... 27,685 42,977
Expenses realized from station barter arrangements .......................... 9,277 13,105
Amortization of program contract costs and net
realizable value adjustments ............................................. 16,011 21,491
Stock-based compensation .................................................... 472 936
Depreciation and amortization of property and equipment ..................... 4,768 9,030
Amortization of acquired intangible broadcasting assets,
non-compete and consulting agreements and other assets ................... 16,134 31,036
--------- ---------
Total operating expenses ............................................. 100,159 160,445
--------- ---------
Broadcast operating income ........................................... 23,679 29,340
--------- ---------
OTHER INCOME (EXPENSE):
Interest and amortization of debt discount expense .......................... (27,371) (43,190)
Subsidiary trust minority interest expense .................................. (5,813) (5,813)
Interest income ............................................................. 1,317 809
Unrealized gain on derivative instruments ................................... -- 7,100
Other income ................................................................ 109 309
--------- ---------
Loss before income tax benefit ....................................... (8,079) (11,445)
INCOME TAX BENEFIT .............................................................. 4,800 9,830
--------- ---------
NET LOSS ........................................................................ $ (3,279) $ (1,615)
========= =========
NET LOSS AVAILABLE TO COMMON STOCKHOLDERS ....................................... $ (5,867) $ (4,203)
========= =========
Basic loss per common share ..................................................... $ (0.07) $ (0.04)
========= =========
Basic weighted average common shares outstanding ................................ 78,768 96,582
========= =========
Diluted loss per common share ................................................... $ (0.07) $ (0.04)
========= =========
Diluted weighted average common and common equivalent
shares outstanding .......................................................... 87,660 97,003
========= =========
</TABLE>
The accompanying notes are an integral part of these unaudited
consolidated statements.
4
<PAGE>
SINCLAIR BROADCAST GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 1999
(IN THOUSANDS)
<TABLE>
<CAPTION>
ADDITIONAL
PAID-IN
SERIES B SERIES D CLASS A CLASS B ADDITIONAL CAPITAL -
PREFERRED PREFERRED COMMON COMMON PAID-IN EQUITY PUT
STOCK STOCK STOCK STOCK CAPITAL OPTIONS
--------------- ---------- ---------- ---------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, December 31, 1998 .................. $ -- $ 35 $ 474 $ 491 $768,648 $113,502
Class B Common Stock converted .......... --
into Class A Common Stock ........... -- 5 (5) -- --
Dividends payable on Series D
Preferred Stock ..................... -- -- -- -- -- --
Class A Common Stock shares issued
pursuant to employee benefit plans .. -- -- 1 -- 1,429 --
Amortization of deferred
compensation ........................ -- -- -- -- -- --
Net loss ................................ -- -- -- -- -- --
-------------- -------- -------- -------- -------- --------
BALANCE, March 31, 1999 ..................... $ -- $ 35 $ 480 $ 486 $770,077 $113,502
============== ======== ======== ======== ======== ========
<CAPTION>
ADDITIONAL
PAID-IN
CAPITAL - TOTAL
DEFERRED ACCUMULATED STOCKHOLDERS'
COMPENSATION DEFICIT EQUITY
---------------- --------------- ---------------
<S> <C> <C> <C>
BALANCE, December 31, 1998 ............... $ (7,616) $ (59,491) $ 816,043
Class B Common Stock converted
into Class A Common Stock ........ -- -- --
Dividends payable on Series D
Preferred Stock .................. -- (2,588) (2,588)
Class A Common Stock shares issued
pursuant to employee benefit plans -- -- 1,430
Amortization of deferred
compensation ..................... 486 -- 486
Net loss ............................. -- (1,615) (1,615)
--------- --------- ---------
BALANCE, March 31, 1999 .................. $ (7,130) $ (63,694) $ 813,756
========= ========= =========
</TABLE>
The accompanying notes are an integral part of these unaudited
consolidated statements.
5
<PAGE>
SINCLAIR BROADCAST GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
CASH FLOWS FROM OPERATING ACTIVITIES: 1998 1999
---------------- --------------
<S> <C> <C>
Net loss .......................................................................... $ (3,279) $ (1,615)
Adjustments to reconcile net loss to net cash flows from operating activities-
Amortization of debt discount ................................................. 25 25
Depreciation and amortization of property and equipment ....................... 4,767 9,030
Gain on derivative instrument ................................................. -- (7,100)
Amortization of acquired intangible broadcasting assets,
non-compete and consulting agreements and other assets ..................... 16,134 31,036
Amortization of program contract costs and net realizable value adjustments ... 16,011 21,491
Stock-based compensation ...................................................... 472 486
Deferred tax benefit .......................................................... (5,300) (12,700)
Changes in assets and liabilities, net of effects of acquisitions and dispositions-
Decrease in accounts receivable, net .......................................... 30,573 41,455
Increase (decrease) in prepaid expenses and other current assets .............. 268 (1,198)
Decrease in accounts payable and accrued liabilities .......................... (1,835) (14,974)
Net effect of change in deferred barter revenues
and deferred barter costs .................................................. 5 1,780
Decrease in other long-term liabilities ....................................... (174) (562)
Increase (decrease) in minority interest ...................................... (18) 13
Payments on program contracts payable ............................................. (15,297) (21,377)
--------- ---------
Net cash flows from operating activities ................................... 42,352 45,790
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property and equipment ............................................. (3,411) (4,103)
Payments relating to the acquisition of television and radio stations ............. (521,497) (6,724)
Equity investments ................................................................ -- (9,148)
Loans to officers and affiliates .................................................. (484) (198)
Repayments of loans to officers and affiliates .................................... 589 629
Distributions in Joint Venture .................................................... -- 315
Deposit received on future sale of broadcasting assets ............................ 631 --
--------- ---------
Net cash flows used in investing activities ................................ (524,172) (19,229)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from commercial bank financing ........................................... 384,000 49,500
Repayments of notes payable, commercial bank financing and capital leases ........ (31,304) (69,500)
Payments of costs relating to issuance of Senior Subordinated Notes ............... (204) --
Payment of equity put options premium ............................................. (261) --
Dividends paid on Series D Convertible Preferred Stock ............................ (2,588) (2,588)
Proceeds from exercise of stock options ........................................... 476 --
Repayments of notes and capital leases to affiliates .............................. (771) (1,328)
--------- ---------
Net cash flows from financing activities ................................... 349,348 (23,916)
--------- ---------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS .................................. (132,472) 2,645
CASH AND CASH EQUIVALENTS, beginning of period ........................................ 139,327 3,268
--------- ---------
CASH AND CASH EQUIVALENTS, end of period .............................................. $ 6,855 $ 5,913
========= =========
</TABLE>
The accompanying notes are an integral part of these unaudited
consolidated statements.
6
<PAGE>
SINCLAIR BROADCAST GROUP, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
BASIS OF PRESENTATION
The accompanying consolidated financial statements include the accounts of
Sinclair Broadcast Group, Inc., Sinclair Communications, Inc. and all other
consolidated subsidiaries, which are collectively referred to hereafter as "the
Company, Companies or SBG." The Company owns and operates television and radio
stations throughout the United States. Additionally, included in the
accompanying consolidated financial statements are the results of operations of
certain television stations programmed pursuant to local marketing agreements
(LMAs) and radio stations programmed pursuant to joint sales agreements (JSAs).
INTERIM FINANCIAL STATEMENTS
The consolidated financial statements for the three months ended March 31, 1998
and 1999 are unaudited, but in the opinion of management, such financial
statements have been presented on the same basis as the audited consolidated
financial statements and include all adjustments, consisting only of normal
recurring adjustments, necessary for a fair presentation of the financial
position and results of operations, and cash flows for these periods.
As permitted under the applicable rules and regulations of the Securities and
Exchange Commission, these financial statements do not include all disclosures
normally included with audited consolidated financial statements, and,
accordingly, should be read in conjunction with the consolidated financial
statements and notes thereto as of December 31, 1997 and 1998 and for the years
then ended. The results of operations presented in the accompanying financial
statements are not necessarily representative of operations for an entire year.
2. CONTINGENCIES AND OTHER COMMITMENTS:
Lawsuits and claims are filed against the Company from time to time in the
ordinary course of business. These actions are in various preliminary stages,
and no judgments or decisions have been rendered by hearing boards or courts.
Management, after reviewing developments to date with legal counsel, is of the
opinion that the outcome of such matters will not have a material adverse effect
on the Company's financial position or results of operations.
7
<PAGE>
3. FINANCIAL INFORMATION BY SEGMENT (IN THOUSANDS):
As of March 31, 1999, the Company consisted of two principal business segments -
television broadcasting and radio broadcasting. As of March 31, 1999, the
Company owned or provided programming services pursuant to LMAs to 57 television
stations located in 37 geographically diverse markets in the continental United
States. As of March 31, 1999, the Company owned 51 radio stations in 10
geographically diverse markets. Substantially all revenues represent income from
unaffiliated companies.
<TABLE>
<CAPTION>
TELEVISION
THREE MONTHS ENDED
MARCH 31
--------------------------------
1998 1999
---------- ----------
<S> <C> <C>
Net broadcast revenues ..................................................... $ 97,341 $ 148,094
Barter revenues ............................................................ 10,380 14,264
---------- ----------
Total revenues ............................................................. 107,721 162,358
---------- ----------
Station operating expenses ................................................. 42,308 65,395
Expense realized from barter arrangements .................................. 9,277 13,105
Depreciation, program amortization and stock-based compensation ............ 20,474 30,290
Amortization of intangibles and other assets ............................... 13,141 26,651
---------- ----------
Station broadcast operating income ......................................... $ 22,521 $ 26,917
========== ==========
Total assets ............................................................... $1,904,140 $3,282,258
========== ==========
Capital expenditures ....................................................... $ 2,481 $ 3,105
========== ==========
Payments of program contracts payable ...................................... $ 14,437 $ 20,727
========== ==========
<CAPTION>
RADIO
THREE MONTHS ENDED
MARCH 31,
--------------------------------
1998 1999
---------- ----------
<S> <C> <C>
Net broadcast revenues ..................................................... $ 15,290 $ 26,372
Barter revenues ............................................................ 827 1,055
---------- ----------
Total revenues ............................................................. 16,117 27,427
---------- ----------
Station operating expenses ................................................. 11,189 19,452
Depreciation, program amortization and stock-based compensation ............ 777 1,167
Amortization of intangibles and other assets ............................... 2,993 4,385
---------- ----------
Station broadcast operating income ......................................... $ 1,158 $ 2,423
========== ==========
Total assets ............................................................... $ 470,693 $ 515,094
========== ==========
Capital expenditures ....................................................... $ 930 $ 998
========== ==========
Payments of program contracts payable ...................................... $ 860 $ 650
========== ==========
</TABLE>
8
<PAGE>
4. SUPPLEMENTAL CASH FLOW INFORMATION (IN THOUSANDS):
During the three months ended March 31, 1998 and 1999, the Company made certain
cash payments of the following:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-----------------------------
1998 1999
---- ----
<S> <C> <C>
Interest payments........................................................ $ 38,271 $ 46,843
=========== ==========
Subsidiary trust minority interest payments.............................. $ 5,813 $ 5,813
=========== ==========
Income tax payments $ 424 $ 2,884
=========== ==========
</TABLE>
5. EARNINGS PER SHARE:
The Company adopted SFAS 128 "Earnings per Share" which requires the disclosure
of basic and diluted earnings per share and related computations as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
--------------------------
1998 1999
----------- -----------
<S> <C> <C>
Weighted-average number of common shares...................................... 78,768 96,582
Diluted effect of outstanding stock options .................................. 1,790 136
Diluted effect of conversion of preferred shares.............................. 7,102 285
----------- -----------
Weighted-average number of common and common
equivalent shares outstanding............................................. 87,660 97,003
=========== ===========
Net loss...................................................................... $ (3,279) $ (1,615)
Preferred stock dividends payable............................................. (2,588) (2,588)
------------ ------------
Net loss available to common stockholders..................................... $ (5,867) $ (4,203)
============ ============
Basic loss per common share................................................... $ (0.07) $ (0.04)
============ ============
Diluted loss per common share................................................. $ (0.07) $ (0.04)
============ ============
</TABLE>
6. ACQUISITIONS AND DISPOSITIONS:
PENDING ACQUISITIONS AND DISPOSITIONS
Buffalo Acquisition. In August 1998, the Company entered into an agreement with
Western New York Public Broadcasting Association to acquire the television
station WNEQ in Buffalo, NY for a purchase price of $33 million in cash (the
"Buffalo Acquisition"). The Company expects to close the sale upon FCC approval
and the termination of the applicable waiting period under the HSR Act. In
addition, the sale is contingent upon FCC de-reservation of the station for
commercial use.
St. Louis Acquisition. In August 1998, the Company entered into an agreement to
acquire radio station KXOK-FM in St. Louis, Missouri for a purchase price of
$14.1 million in cash. The purchase price is subject to be increased or
decreased, depending upon whether or not closing occurs within 210 days of the
agreement. The Company expects to close the purchase upon FCC approval.
9
<PAGE>
STC Disposition. In March 1999, the Company entered into an agreement to sell to
Sunrise Television Corporation ("STC") the television stations WICS-TV in the
Springfield, Illinois market and KGAN-TV in the Cedar Rapids, Iowa market (the
"STC Disposition"). In addition, the Company agreed to sell the Non-License
Assets and rights to program WICD-TV in the Springfield, Illinois market. STC
agreed to pay $81.0 million for the television stations and the programming
rights. In April 1999, the Justice Department requested additional information
in response to STC's filing under the Hart-Scott-Rodino Antitrust Improvements
Act. The sale of these stations by Sinclair to STC has been delayed pending the
resolution of the questions asked by the Justice Department.
7. INTEREST RATE DERIVATIVE AGREEMENTS:
As of March 31, 1999, the Company had several interest rate swap agreements
which expire from July 7, 1999 to July 15, 2007. The swap agreements set rates
in the range of 5.5% to 8.1%. Floating interest rates are based upon the
three-month London Interbank Offered Rate (LIBOR) rate, and the measurement and
settlement is performed quarterly. Settlements of these agreements are recorded
as adjustments to interest expense in the relevant periods. The notional amounts
related to these agreements were $920 million at March 31, 1999, and decrease to
$200 million through the expiration dates. In addition, the Company has entered
into floating rate derivatives with notional amounts totaling $450 million.
Based on the Company's currently hedged position, $1.7 billion or 73% of the
Company's outstanding indebtedness is hedged.
The Company has no intentions of terminating these instruments prior to their
expiration dates unless it were to prepay a portion of its bank debt. The
counter parties to these agreements are international financial institutions.
The Company estimates the fair value of these instruments at March 31, 1999 to
be $3.5 million. The fair value of the interest rate hedging derivative
instruments is estimated by obtaining quotations from the financial
institutions, which are a party to the Company's derivative contracts (the
"Banks"). The fair value is an estimate of the net amount that the Company would
pay at March 31, 1999 if the contracts were transferred to other parties or
canceled by the Banks.
8. TREASURY OPTION DERIVATIVE INSTRUMENT:
In August 1998, the Company entered into a treasury option derivative contract
(the "Option Derivative"). The Option Derivative contract provides for 1) an
option exercise date of September 30, 2000, 2) a notional amount of $300 million
and 3) a five-year treasury strike rate of 6.14%. If the interest rate yield on
five-year treasury securities is less than the strike rate on the option
exercise date, the Company would be obligated to pay five consecutive annual
payments in an amount equal to the strike rate less the five-year treasury rate
multiplied by the notional amount beginning September 30, 2001 through September
30, 2006. If the interest rate yield on five-year treasury securities is greater
than the strike rate on the option exercise date, the Company would not be
obligated to make any payments.
Upon the execution of the Option Derivative contract in 1998, the Company
received a cash payment representing an option premium of $9.5 million which was
recorded in "Other long-term liabilities" in the accompanying balance sheets.
The Company is required to periodically adjust its liability to the present
value of the future payments of the settlement amounts based on the forward
five-year treasury rate at the end of an accounting period. The fair market
value adjustment for the three months ended March 31, 1999 resulted in an income
statement benefit (unrealized gain) of $7.1 million.
10
<PAGE>
9. SUBSEQUENT EVENTS:
Barnstable Disposition. In April 1999, the Company entered into an agreement to
sell to Barnstable Broadcasting, Inc. ("Barnstable") radio stations WFOG-FM and
WGH-AM/FM serving the Norfolk, Virginia market (the "Barnstable Disposition").
The stations are being sold to Barnstable for a sales price of $23.7 million and
the Company expects to close the transaction during the third quarter of 1999,
subject to FCC and DOJ approval.
Guy Gannett Acquisition. In September 1998, the Company agreed to acquire from
Guy Gannett Communications ("Guy Gannett") its television broadcasting assets
for a purchase price of $317 million in cash (the "Guy Gannett Acquisition"). In
September 1998, the Company entered into an agreement to sell the Guy Gannett
television station WOKR-TV in Rochester, New York to the Ackerley Group, Inc.
("Ackerley") for a sales price of $125 million (the "Ackerley Disposition"). In
April 1999, the Company closed on the purchase of WOKR-TV and simultaneously
completed the sale of WOKR-TV to Ackerley. Also in April 1999, the Company
closed on the purchase of WGME-TV in Portland, Maine, WGGB-TV in Springfield,
Massachusetts, and WTWC-TV in Tallahassee, Florida making cash payments totaling
$115.7 million including the acquisition of working capital. The Company
financed these acquisitions through a combination of bank borrowings and
proceeds from the CCA Disposition described below. As of the date of this
report, the remaining purchase price due Guy Gannett upon closing the remainder
of the assets to be purchased is approximately $81.0 million. As mentioned above
the Company intends to sell the remaining Guy Gannett assets to STC for a sales
price of $81.0 million.
CCA Disposition. In February 1999, the Company entered into an agreement to sell
to Communications Corporation of America ("CCA") the non-license assets of
KETK-TV and KLSB-TV in Tyler-Longview, Texas for a sales price of $36 million
(the "CCA Disposition"). In addition, CCA has an option to acquire the license
assets of KETK-TV for an option purchase price of $2 million. In April 1999, the
Company closed on the sale of the Non-License assets for $36 Million and expects
to close on the license assets of KETK-TV when CCA receives FCC approval.
11
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
The following information should be read in conjunction with the unaudited
consolidated financial statements and notes thereto included in this Quarterly
Report and the audited financial statements and Management's Discussion and
Analysis contained in the Company's Form 10-K, as amended, for the fiscal year
ended December 31, 1998.
The matters discussed in this report include forward-looking statements. When
used in this report, the words "intends to," "believes," "anticipates,"
"expects" 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 the impact of changes in national and regional economies,
successful integration of acquired television and radio stations (including
achievement of synergies and cost reductions), pricing fluctuations in local and
national advertising, volatility in programming costs, the availability of
suitable acquisitions on acceptable terms and the other risk factors set forth
in the Company's prospectus filed with the Securities and Exchange Commission on
April 19, 1998, pursuant to rule 424(b)(5). The Company undertakes no obligation
to publicly release the result of any revisions to these forward-looking
statements that may be made to reflect any future events or circumstances.
The following table sets forth certain operating data for comparison of the
three months ended March 31, 1998 and 1999:
OPERATING DATA (dollars in thousands):
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31,
-----------------------------------
1998 1999
--------- ---------
<S> <C> <C>
Net broadcast revenues (a) .............................................. $ 112,631 $ 174,466
Barter revenues ......................................................... 11,207 15,319
--------- ---------
Total revenues .......................................................... 123,838 189,785
--------- ---------
Operating costs (b) ..................................................... 53,497 84,847
Expenses from barter arrangements ....................................... 9,277 13,105
Depreciation and amortization (c) ....................................... 37,385 62,493
Interest expense ........................................................ 27,371 43,190
Subsidiary trust minority interest expense (d) .......................... 5,813 5,813
Interest and other income ............................................... 1,426 1,118
Unrealized gain of derivative instrument ................................ -- 7,100
--------- ---------
Loss before income tax benefit .......................................... (8,079) (11,445)
Income tax benefit ...................................................... 4,800 9,830
--------- ---------
Net loss ................................................................ $ (3,279) $ (1,615)
========= =========
Net loss available to common stockholders ............................... $ (5,867) $ (4,203)
========= =========
BROADCAST CASH FLOW (BCF) DATA:
Television BCF (e) ............................................... $ 45,787 $ 67,351
Radio BCF (e) .................................................... 4,586 7,890
--------- ---------
Consolidated BCF (e) ............................................. $ 50,373 $ 75,241
========= =========
Television BCF margin (f) ........................................ 47.0% 45.5%
Radio BCF margin (f) ............................................. 29.9% 29.9%
Consolidated BCF margin (f) ...................................... 44.7% 43.1%
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31,
-----------------------------------
1998 1999
--------- ---------
<S> <C> <C>
OTHER DATA:
Adjusted EBITDA (g) .............................................. $ 45,767 $ 70,456
Adjusted EBITDA margin (f) ....................................... 40.6% 40.4%
After tax cash flow (h) .......................................... $ 10,207 $ 16,999
Program contract payments ........................................ 15,297 21,377
Corporate expenses ............................................... 4,606 4,785
Capital expenditures ............................................. 3,411 4,103
Cash flows from operating activities ............................. 42,352 45,790
Cash flows from investing activities ............................. (524,172) (19,229)
Cash flows from financing activities ............................. 349,348 (23,916)
</TABLE>
- ----------
a) "Net broadcast revenue" is defined as broadcast revenue net of agency
commissions.
b) "Operating costs" include program and production expenses and selling,
general and administrative expenses.
c) Depreciation and amortization includes amortization of program contract
costs and net realizable value adjustments, depreciation and amortization
of property and equipment, stock based compensation, and amortization of
acquired intangible broadcasting assets and other assets including
amortization of deferred financing costs.
d) Subsidiary trust minority interest expense represents distributions on the
HYTOPS.
e) "Broadcast cash flow" is defined as broadcast operating income plus
corporate overhead expense, stock-based compensation, depreciation and
amortization (including film amortization), less cash payments for program
rights. Cash program payments represent cash payments made for current
programs payable and do not necessarily correspond to program usage. The
Company has presented broadcast cash flow data, which the Company believes
are comparable to the data provided by other companies in the industry,
because such data are commonly used as a measure of performance for
broadcast companies. However, broadcast cash flow does not purport to
represent cash provided by operating activities as reflected in the
Company's consolidated statements of cash flows, is not a measure of
financial performance under generally accepted accounting principles and
should not be considered in isolation or as a substitute for measures of
performance prepared in accordance with generally accepted accounting
principles. Management believes the presentation of broadcast cash flow
(BCF) is relevant and useful because 1) BCF is a measurement utilized by
lenders to measure the Company's ability to service its debt, 2) BCF is a
measurement utilized by industry analysts to determine a private market
value of the Company's television and radio stations and 3) BCF is a
measurement industry analysts utilize when determining the operating
performance of the Company.
f) "Broadcast cash flow margin" is defined as broadcast cash flow divided by
net broadcast revenues. "Adjusted EBITDA margin" is defined as Adjusted
EBITDA divided by net broadcast revenues.
g) "Adjusted EBITDA" is defined as broadcast cash flow less corporate expenses
and is a commonly used measure of performance for broadcast companies.
Adjusted EBITDA does not purport to represent cash provided by operating
activities as reflected in the Company's consolidated statements of cash
flows, is not a measure of financial performance under generally accepted
accounting principles and should not be considered in isolation or as a
substitute for measures of performance prepared in accordance with
generally accepted accounting principles. Management believes the
presentation of Adjusted EBITDA is relevant and useful because 1) Adjusted
EBITDA is a measurement utilized by lenders to measure the Company's
ability to service its debt, 2) Adjusted EBITDA is a measurement utilized
by industry analysts to determine a private market value of the Company's
television and radio stations and 3) Adjusted EBITDA is a measurement
industry analysts utilize when determining the operating performance of the
Company.
h) "After tax cash flow" is defined as net income (loss) available to common
shareholders plus stock-based compensation, depreciation and amortization
(excluding film amortization), and the deferred tax provision (or minus the
deferred tax benefit). After tax cash flow is presented here not as a
measure of operating results and does not purport to represent cash
provided by operating activities. After tax cash flow should not be
considered in isolation or as a substitute for measures of performance
prepared in accordance with generally accepted accounting principles.
Management believes the presentation of after tax cash flow (ATCF) is
relevant and useful because 1) ATCF is a measurement utilized by lenders to
measure the Company's ability to service its debt, 2) ATCF is a measurement
utilized by industry analysts to determine a private market value of the
Company's television and radio stations and 3) ATCF is a measurement
analysts utilize when determining the operating performance of the Company.
13
<PAGE>
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1999 AND 1998.
Net broadcast revenues increased to $174.5 million for the three months ended
March 31, 1999 from $112.6 million for the three months ended March 31, 1998, or
55.0%. The increase in net broadcast revenues for the three months ended March
31, 1999 as compared to the three months ended March 31, 1998 comprised $58.6
million related to the acquisition of television and radio stations and LMA
transactions consummated by the Company in 1998 (collectively, the "1998
Acquisitions") and $3.3 million related to an increase in revenue on a same
station basis, representing a 3.1% increase over the prior year's first quarter
net broadcast revenue for those stations. The increase in revenue on a same
station basis is primarily related to an increase in local advertising revenue.
Total operating costs increased to $84.8 million for the three months ended
March 31, 1999 from $53.5 million for the three months ended March 31, 1998 or
58.5%. The increase in expenses for the three months ended March 31, 1999 as
compared to the three months ended March 31, 1998 comprised $30.3 million
related to the 1998 Acquisitions and $1.0 million related to an increase of 2.2%
in operating costs on a same station basis.
Depreciation and amortization increased $25.1 million to $62.5 million for the
three months ended March 31, 1999 from $37.4 million for the three months March
31, 1998. The increase in depreciation and amortization is related to fixed
asset and intangible asset additions associated with businesses acquired during
1998.
Broadcast operating income increased $5.6 million to $29.3 million for the three
months ended March 31, 1999, from $23.7 million for the three months ended March
31, 1998, or 23.6%. The net increase in broadcast operating income for the three
months ended March 31, 1999 as compared to the year ended March 31, 1998 was
primarily attributable to the 1998 Acquisitions.
Interest expense increased to $43.2 million for the three months ended March 31,
1999 from $27.4 million for the three months ended March 31, 1998, or 57.7%. The
increase in interest expense resulted from indebtedness incurred to finance the
1998 Acquisitions.
Income tax benefit increased to $9.8 million for the three months ended March
31, 1999 from $4.8 million for the three months ended March 31, 1998. The
increase in income tax benefit for the three months ended March 31, 1999 as
compared to the three months ended March 31, 1998 primarily related to the
increase in pre-tax loss for the three months ended March 31, 1999. The
Company's effective tax rate increased to 85.9% for the three months ended March
31, 1999 from 59.4% for the three months ended March 31, 1998. The Company's
increase in its effective tax rate during the period primarily resulted from an
increase in permanent differences between taxable income and book income
projected for 1999, as compared to 1998.
Net loss for the three months ended March 31, 1999 was $1.6 million or $0.04 per
share compared to net loss of $3.3 million or $0.07 per share for the three
months ended March 31, 1998. Net loss decreased for the three months ended March
31, 1999 as compared to the three months ended March 31, 1998 due to an increase
in total revenues, the recognition of an unrealized gain on the treasury option
derivative instrument and an increase in the benefit for income taxes, partially
offset by an increase in operating expenses, depreciation, amortization and
interest expense.
The net deferred tax liability decreased to $152.8 million as of March 31, 1999
from $165.5 million at December 31, 1998. Accordingly, the increase in the
Company's current net deferred tax asset as of March 31, 1999 as compared to
December 31, 1998 primarily resulted from the anticipation that the pre-tax loss
and related current deferred tax asset recorded for the first quarter of 1999
will be used to offset future taxable income during the current year.
Broadcast cash flow increased to $75.2 million for the three months ended March
31, 1999 from $50.4 million for the three months ended March 31, 1998, or 49.2%.
The increase in broadcast cash flow for the three months ended March 31, 1999 as
compared to the three months ended March 31, 1998 primarily resulted from the
1998 Acquisitions and an increase in net broadcast revenue on a same station
basis. The Company's Broadcast Cash
14
<PAGE>
Flow Margin decreased to 43.1% for the three months ended March 31, 1999 from
44.7% for the three months ended March 31, 1998. This decrease in Broadcast Cash
Flow Margin primarily resulted from a slight increase in operating expenses
compared to the current period's increase in net broadcast revenue.
Adjusted EBITDA increased to $70.5 million for the three months ended March 31,
1999 from $45.8 million for the three months ended March 31, 1998, or 53.9%.
The increase in Adjusted EBITDA for the three months ended March 31, 1999 as
compared to the three months ended March 31, 1998 primarily resulted from the
1998 Acquisitions and an increase in net broadcast revenue on a same station
basis. The Company's Adjusted EBITDA Margin decreased to 40.4% for the three
months ended March 31, 1999 from 40.6% for the three months ended March 31,
1998.
After Tax Cash Flow increased to $17.0 million for the three months ended March
31, 1999 from $10.2 million for the three months ended March 31, 1998, or 66.7%.
The increase in After Tax Cash Flow for the three months ended March 31, 1999 as
compared to the three months ended March 31, 1998 primarily resulted from the
1998 Acquisitions and internal growth, offset by interest expense on the debt
incurred to consummate the 1998 Acquisitions.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary sources of liquidity are cash provided by operations and
availability under the 1998 Bank Credit Agreement. As of March 31, 1999, the
Company had $5.9 million in cash balances and net working capital of
approximately $38.7 million. As of March 31, 1999, the remaining balance
available under the Revolving Credit Facility was $204.5 million. Based on pro
forma trailing cash flow levels for the twelve months ended March 31, 1999, the
Company had approximately $93.3 million available of current borrowing capacity
under the Revolving Credit Facility. The 1998 Bank Credit Agreement also
provides for an incremental term loan commitment in the amount of up to $400
million which can be utilized upon approval by the Agent bank and the raising of
sufficient commitments from banks to fund the additional loans.
As of May 4, 1999 the Company has current acquisition commitments of
approximately $23.4 million net of proceeds totaling $104.7 million anticipated
from the sale of television stations related to the 1999 STC Disposition and the
Barnstable Disposition (collectively, the "Pending Transactions"). The Company
announced in the fourth quarter of 1998 that it intended to enter into
agreements to sell selected television and radio stations not central to its
business strategy. Also as of May 4, 1999, in addition to the Pending
Transactions, the Company was actively planning to sell an additional $35
million in properties. The Company intends to evaluate whether further
divestitures are appropriate after completing these sales. Except as described
below, the Company anticipates that funds from operations, existing cash
balances, the availability of the Revolving Credit Facility under the 1998 Bank
Credit Agreement and the proceeds from the sale of certain stations will be
sufficient to meet its working capital requirements, capital expenditure
commitments, debt service requirements and current acquisition commitments.
In April 1999, the Company closed on the acquisition of all but three stations
from Guy Gannett. The Company is required to complete the acquisition of these
stations at an acquisition price of approximately $81.0 million by no later than
July 30, 1999 (July 5, 1999 under certain circumstances) and the Company will be
required to pay damages if the closing does not occur by that date. The Company
has agreed to sell these stations to STC for approximately $81.0 million in the
STC Disposition and will purchase the stations as soon as STC can acquire the
stations. In April 1999, the Justice Department requested additional information
in response to STC's filing under the Hart-Scott-Rodino Antitrust Improvements
Act. The sale of the stations to STC has been delayed pending resolution of the
questions raised by the Justice Department. The Company estimates that, if it is
unable to complete the STC Disposition, the Company would have to raise
approximately
15
<PAGE>
$40 million from dispositions of other stations, or raise approximately $20
million from the issuance of common or preferred stock, in order to acquire the
remaining stations from Guy Gannett and remain in compliance with covenants
under its bank credit agreement.
On April 19, 1999, the Company entered into an agreement (the "ATC Agreement")
with American Tower Corporation, an independent owner, operator and developer of
broadcast and wireless communication sites in the United States. Under the
agreement, the Company will provide American Tower access to tower sites in
eleven of the Company's markets including Nashville, TN, Dayton, OH, Richmond,
Va., Mobile, AL, Pensacola, Fla., San Antonio, TX, and Syracuse, NY. American
Tower will construct new towers in each of these markets and will lease space on
the towers to the Company. This will provide the Company the additional tower
capacity required to develop its digital television transmission needs in these
markets at an initial capital outlay lower than would be required if the Company
constructed these towers itself. The terms of future leases are still being
negotiated with American Tower Corporation. If the Company and American Tower
cannot agree on the terms and conditions of the new master lease that will
govern the landlord/tenant relationship between the parties, neither party will
have any obligation to the other under the ATC Agreement, which will then become
a nullity.
Net cash flows from operating activities increased to $45.8 million for the
three months ended March 31, 1999 from $42.4 million for the three months ended
March 31, 1998. The Company made income tax payments of $2.9 million for the
three months ended March 31, 1999 as compared to $0.4 million for the three
months ended March 31, 1998. The Company made interest payments on outstanding
indebtedness and payments for subsidiary minority interest expense totaling
$52.7 million during the three months ended March 31, 1999 as compared to $44.1
million for the three months ended March 31, 1998. Additional interest payments
for the three months ended March 31, 1999 as compared to the three months ended
March 31, 1998 primarily related to additional interest costs on indebtedness
incurred to finance businesses acquired during 1998. Program rights payments
increased to $21.4 million for the three months ended March 31, 1999 from $15.3
million for the three months ended March 31, 1998. This increase in program
rights payments comprised $4.9 million related to the 1998 Acquisitions and $1.2
million related to an increase in programming costs on a same station basis,
which increased 7.8%.
Net cash flows used in investing activities decreased to $19.2 million for the
three months ended March 31, 1999 from $524.2 million for the three months ended
March 31, 1998. For the three months ended March 31, 1999, the Company made cash
payments of approximately $6.7 million related to the acquisition of television
and radio broadcast assets. During the three months ended March 31, 1999, the
Company made equity investments in broadcast television related businesses of
approximately $9.1 million. The Company made payments for property and equipment
of $4.1 million for the three months ended March 31, 1999. The Company expects
that expenditures for property and equipment will increase for the year ended
December 31, 1999 over prior years as a result of a larger number of stations
owned by the Company. In addition, the Company anticipates that future
requirements for capital expenditures will include capital expenditures incurred
during the ordinary course of business and additional strategic station
acquisitions and equity investments if suitable investments can be identified on
acceptable terms.
The Company used $23.9 million for financing activities for the three months
ended March 31, 1999 and was provided $349.3 million by financing activities for
the three months ended March 31, 1998. During the three months ended March 31,
1999, the Company repaid $12.5 million and $57 million under the 1998 Bank
Credit Agreement Revolving Credit Facility and Term Loan Facility, respectively.
In addition, the Company utilized borrowings under the Revolving Credit Facility
of $49.5 million during the period.
SEASONALITY
The Company's results usually are subject to seasonal fluctuations, which result
in fourth quarter broadcast operating income being greater usually than first,
second and third quarter broadcast operating income. This seasonality is
primarily attributable to increased expenditures by advertisers in anticipation
of holiday season spending and an increase in viewership during this period. In
addition, revenues from political advertising tend to be higher in even numbered
years.
YEAR 2000
The Company has commenced a process to assure Year 2000 compliance of all
hardware, software, broadcast equipment and ancillary equipment that are date
dependent. The process involves four phases:
Phase I - Inventory and Data Collection. This phase involves an identification
of all items that are date dependent. Sinclair commenced this phase in the third
quarter of 1998, and Management estimates it has completed approximately 50% of
this phase as of the date hereof. The Company expects to complete this phase by
the end of the second quarter of 1999.
Phase II - Compliance Requests. This phase involves requests to information
technology systems vendors for verification that the systems identified in Phase
I are Year 2000 compliant. Sinclair will identify and begin to
16
<PAGE>
replace items that cannot be updated or certified as compliant. Sinclair has
completed the compliance request phase of its plan as of the date hereof. In
addition, Sinclair has verified that its accounting, traffic, payroll, and local
and wide area network hardware and software systems are compliant. In addition,
Sinclair is currently in the process of ascertaining that all of its personal
computers and PC applications are compliant. Sinclair is currently reviewing its
news-room systems, building control systems, security systems and other
miscellaneous systems. The Company expects to complete this phase by the end of
the second quarter of 1999.
Phase III - Test, Fix and Verify. This phase involves testing all items that are
date dependent and upgrading all non-compliant devices. Sinclair expects to
complete this phase during the first, second and third quarters of 1999.
Phase IV - Final Testing, New Item Compliance. This phase involves review of all
inventories for compliance and retesting as necessary. During this phase, all
new equipment will be tested for compliance. Sinclair expects to complete this
phase by the end of the third quarter of 1999.
The Company has developed a contingency/emergency plan to address Year 2000
worst case scenarios. The contingency plan includes, but is not limited to,
addressing (i) regional power facilities, (ii) interruption of satellite
delivered programming, (iii) replacement or repair of equipment not discovered
or fixed during the year 2000 compliance process and (iv) local security
measures that may become necessary relating to the Company's properties.
The contingency plan involves obtaining alternative sources if existing sources
of these goods and services are not available. Although the contingency plan is
designed to reduce the impact of disruptions from these sources, there is no
assurance that the plan will avoid material disruptions in the event one or more
of these events occur.
To date, Sinclair believes that its major systems are Year 2000 compliant. This
substantial compliance has been achieved without the need to acquire new
hardware, software or systems other than in the ordinary course of replacing
such systems. Sinclair is not aware of any non-compliance that would be material
to repair or replace or that would have a material effect on Sinclair's business
if compliance were not achieved. Sinclair does not believe that non-compliance
in any systems that have not yet been reviewed would result in material costs or
disruption. Neither is Sinclair aware of any non-compliance by its customers or
suppliers that would have a material impact on Sinclair's business.
Nevertheless, there can be no assurance that unanticipated non-compliance will
not occur, and such non-compliance could require material costs to repair or
could cause material disruptions if not repaired.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As noted above, the Company's net loss for the three months ended March 31, 1999
included recognition of a gain of $7.1 million on a treasury option derivative
instrument. Upon execution of the treasury option derivative instrument during
1998, the Company received a cash payment of $9.5 million. The treasury option
derivative instrument will require the Company to make five annual payments
equal to the difference between 6.14% minus the interest rate yield on five-year
treasury securities on September 30, 2000 times the $300 million notional amount
of the instrument. If the yield on five-year treasuries is equal to or greater
than 6.14% on September 30, 2000, the Company will not be required to make any
payment under the terms of this instrument. If the rate is below 6.14% on that
date, the Company will be required to make payments, as described above, and the
size of the payment will increase as the rate goes down. For each accounting
period, the Company recognizes an unrealized gain on loss equal to the change in
the projected liability under this arrangement based on interest rates as of the
end of the period. The gain recognized for the three months ended March 31, 1999
reflects an adjustment of the Company's liability under this instrument, which
was $11.3 million as of March 31, 1999, to the present value of future payments
based on the
17
<PAGE>
eighteen-month forward five-year treasury rate as of March 31, 1999. If the
forward rate for five-year treasury notes issued on September 30, 2000 were to
equal the eighteen-month forward five-year treasury rate on March 31, 1999
(5.46%), Sinclair would be required to make five annual payments of
approximately $2.0 million each. If the yield on five-year treasuries declines
further in periods before September 30, 2000, Sinclair will be required to
recognize further losses. In any event, Sinclair will not be required to make
any payments until September 30, 2000.
18
<PAGE>
PART II
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
A) EXHIBITS
27 Financial Data Schedule
19
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report on Form 10-Q to be signed on its behalf
by the undersigned thereunto duly authorized in the city of Baltimore, Maryland
on the 10th day of May, 1999.
SINCLAIR BROADCAST GROUP, INC.
By: /s/ David B. Amy
-----------------------------
David B. Amy
Chief Financial Officer
Principal Accounting Officer
20
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> US DOLLAR
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<EXCHANGE-RATE> 1
<CASH> 5,913
<SECURITIES> 0
<RECEIVABLES> 157,970
<ALLOWANCES> 4,391
<INVENTORY> 0
<CURRENT-ASSETS> 287,003
<PP&E> 353,590
<DEPRECIATION> 78,164
<TOTAL-ASSETS> 3,797,352
<CURRENT-LIABILITIES> 248,327
<BONDS> 751,900
200,000
35
<COMMON> 966
<OTHER-SE> 812,755
<TOTAL-LIABILITY-AND-EQUITY> 3,797,352
<SALES> 0
<TOTAL-REVENUES> 189,785
<CGS> 0
<TOTAL-COSTS> 160,445
<OTHER-EXPENSES> (8,218)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 49,003
<INCOME-PRETAX> (11,445)
<INCOME-TAX> 9,830
<INCOME-CONTINUING> (1,615)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,615)
<EPS-PRIMARY> (0.04)<F1>
<EPS-DILUTED> (0.04)<F1>
<FN>
F1) This information has been prepared in accordance with SFAS No. 128, Earnings
Per Share. The basic and diluted EPS calculations have been entered in place of
primary and diluted, respectively.
</FN>
</TABLE>
