Sinclair, Inc. · NASDAQ:SBGI
Sinclair — Sinclair Broadcast Group — Furey Research Partners 4th Annual Nantucket Small-Cap Investor Summit 2014
34 slides from Sinclair's conference presentation, June 2014
Slide 1: Sinclair Broadcast Group at Furey Nantucket Small-Cap Investor Summit
SBG SINCLAIR BROADCAST GROUP Furey Research Partners 4tn Annual Nantucket Small-Cap Investor Sum June 24-26, 2014
Slide 2: Safe Harbor
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
Slide 3: Investment Highlights
SINCLAIR BROADCAST GROUP (Nasdaq: SBGI) Leading Broadcaster Multiple Growing Revenue Streams Investment Strong Balance Sheet Highlights Generating After-Tax Free Cash Flow Creating Shareholder Value
Slide 4: Leading Broadcaster: Only SBG Has Both National Reach & Size
Leading Broadcaster: Only SBG Has Both National Reach & Size 1621 Owned and Operated2 Television Stations 162 108 75 74 53 42 42 30 29 27 27 21 14 8 SBGI Nexstar Gray MEG/Lin Raycom Gannett Tribune CBS Hearst NBC FOX Scripps Meredith ABC U.S. TV Households Reach of Approximately 39%1 44% 39% 38% 37%
Slide 5: Leading Broadcaster: Diversified Assets
Leading Broadcaster: Diversified Assets Pro forma for announced transactions
Slide 6: Diversified by Channel Affiliation and by Content
Diversified by Channel Affiliation and by Content FOX, 42 Revenue Mix by Content Non- Network, Paid, 4.60% 67 CBS, 30 Sports, Spanish, 8% 19 Syndicated, NBC, 20 CW, 41 33.40% Local MNT, 33 News, ABC, 31 26.20% Channel Affiliation Mix Network Prog., 27.80% Includes primary and DigiNet channels
Slide 7: Leading Consolidator: Accretive Acquisitions, net
Leading Consolidator: Accretive Acquisitions, net Stations Acquired, net: 104 Average Seller Multiple: 9.6x SBG Average Purchase Multiple: 6.7x Total Net Assets Acquired: $3.1 Billion Total EBITDA Acquired: $322 Million Synergies Created: $139 Million
Slide 8: Benefits of Size & Reach
Benefits of Size & Reach Operating Leverage Revenue & Cost Synergies Improved Content New Revenue Streams
Slide 9: Leading Broadcaster: Growing Portfolio
Leading Broadcaster: Growing Portfolio 2011 A 2013 PF Stations 58 162 Markets 35 78 U.S. Reach 22% 39% Total Revenue $765M $1.8B EBITDA $269M $686M After-Tax Free Cash Flow $145M $368M EBITDA Conversion Ratio 54% 54%
Slide 10: Longer Term Revenue Growth Opportunities
Longer Term Revenue Growth Opportunities Spectrum Monetization 3 Years Out Content Partnerships 2 Years Out Local Cable News Channel 1 Year Out Infancy Digital Interactive Stages Retransmission Fees Early Stages Core Advertising Business
Slide 11: Industry Fundamentals
Industry Fundamentals
Slide 12: TV Advertising: Increasing Share
TV Advertising: Increasing Share TV expected to remain the preferred medium for advertisers 2016 spending expected to exceed $90 billion 4.9% CAGR (2012 – 2016) U.S. Ad Spending by Medium 2012 2016 Digital / Online Digital / Online 14% 16% TV TV 35% 37% Direct Mail Direct Mail 20% 15% Outdoor Outdoo
Slide 13: Broadcast TV: Dominant Branding Medium
Broadcast TV: Dominant Branding Medium Age Group Purchase Decisions Influenced by Each Medium TV Newspaper Radio Magazines Internet 41% 37% 12% 7% 5% 5% 3% 2% 3% 2% 18–34 35–64 Source: TVB
Slide 14: Broadcast TV: Leading Local News Source
Broadcast TV: Leading Local News Source Young Adults Rank Local TV as Primary Source for Local News 18–29 30-44 44-60 61+ 84% 78% 79% 71% 20% 13% 12% 12% 14% 8% 3% 1% TV Newspaper Social Media Source: Stepleader. Each medium includes its primary , social and web distributions
Slide 15: Importance of Local News
Importance of Local News Y Building trust, staying relevant, advocating SBG News Platform: Y 1700 hours of local news content per week ¥ 11.6M households watching ¥ Expanding news and dayparts ¥ Morning news shares up 9% (ov ‘10 vs Nov 13 P25-54) Vv Allbritton D.C. News bureau ¥Y Local News cable ne
Slide 16: Local News Dominates Regardless of Market Size
Local News Dominates Regardless of Market Size Late Evening News (M-F, persons 25-54, May ‘14) 209,000 29,000 13,000 13,000 WABC (ABC) ESPN CNN FOX News New York City 11:00pm – 11:30pm Source: Nielsen Note: Sinclair does not own or operate stations in New York City
Slide 17: Revenue Growth: Retransmission Fees
Revenue Growth: Retransmission Fees TV broadcast captures only 9% of $35 billion in affiliate fees paid by MVPDs, despite TV broadcast representing 40% of audience share (should receive $14B in affiliate fees vs $3B today). Broadcast Retransmission Revenue 19% CAGR ($ in Billions) Cable Nets Retrans
Slide 18: Revenue Growth: Digital Interactive
Revenue Growth: Digital Interactive Integrates local news with social media, websites, text alerts and mobile apps TV Industry Internet Advertising Revenue 8% CAGR ($ in Billions) $1.9 $1.8 $1.7 $1.5 2013E 2014E 2015E 2016E Source: SNL Kagan
Slide 19: Sinclair Digital Interactive Strategy
Sinclair Digital Interactive Strategy
Slide 20: Why the Networks Need Their Affiliates
Why the Networks Need Their Affiliates ¥ Local branding of network content v¥ Local news lead-in/ lead-out programming ¥ Contribution to sports rights fees Y Reverse retrans payments >» SBG SINCLAIR BROADCAST GROUP
Slide 21: Power of the Network/Affiliate Relationship
Power of the Network/Affiliate Relationship 4,277,000 897,000 Fox Broadcasting FX Cable Fox Broadcasting and FX Cable household avg. May ‘14, M-F Prime
Slide 22: Broadcast Model: More Value & Optionality
Broadcast Model: More Value & Optionality Broadcast is Superior to Cable Networks, But Undervalued SBGI FOX DISCA SNI AMCX Original Content Dual Revenue Stream (Ads, Affil Fees) National Advertisers Local and Political Advertisers Over-the-air Distribution Reaching 100% of the marketplace Mobile Dis
Slide 23: Broadcast Dominates Cable Networks
Broadcast Dominates Cable Networks Oprah’s Master Class is one of the lower rated shows on Oprah’s OWN network 5,518,000 589,000 88,000 Oprah Winfrey Show Tyler Perry Show Oprah's Master Class (OWN) (Broadcast) Oprah Winfrey Show household avg. in its last season, M-F Oprah’s Master Class household
Slide 24: Local Broadcast Content Dominates Cable Networks
Local Broadcast Content Dominates Cable Networks Local Viewing: El Paso, TX National Viewing 5,900 299,000 4,077 2,669 1,421 100,000 1,021 ROH AMC Scripps Cable News Discovery (1) ROH CNBC No. of 1 4 6 5 14 Channels: ROH 1 hour viewing in 32% of country vs. CNBC total day viewing in 91% of country R
Slide 25: Broadcast Content Beats Cable Networks
Broadcast Content Beats Cable Networks Oklahoma City P18-49 M-F Prime-time Nov ‘13 15,175 14,874 5,119 3,964 1,820 KOCB (CW) Discovery Cable News Scripps AMC No. of 1 14 5 6 4 channels Source: Nielsen Nov ’13
Slide 26: Broadcast Spectrum: The New Bit Cloud
Broadcast Spectrum: The New Bit Cloud None are capital intensive projects, leaving us more free cash flow. None involve data plans, making broadcast mobile TV consumers preferred choice.
Slide 27: Hidden Value: SBG Equity Upside
Hidden Value: SBG Equity Upside
Slide 28: Financial Highlights
Financial Highlights
Slide 29: 2013 Highlights: Solid Results in Non-Political Year
2013 Highlights: Solid Results in Non-Political Year
Slide 30: 2014 Revenue Drivers & Highlights: Momentum Continues
2014 Revenue Drivers & Highlights: Momentum Continues Olympics on NBC Super Bowl on World Political Fox Cup on ABC Digital Retransmission Interactive Fees Newly Acquired Stations
Slide 31: Balance Sheet Strengths
Balance Sheet Strengths Y No refinancing risk ¥ Long-dated maturities 2018-2022 Y Healthy credit statistics ¢ PF 2-year Blended Leverage = 4.75x ¥ 5.1% Cost of Debt vY Access to capital and FCF generation
Slide 32: Free Cash Flow & Liquidity Metrics
Free Cash Flow & Liquidity Metrics (1) 2-year avg as of 6/11/14
Slide 33: Uses of Free Cash Flow & Liquidity
Uses of Free Cash Flow & Liquidity
Slide 34: Why SBGI: Key Investment Highlights
Key Investment Highlights Largest television broadcaster with substantial scale1 Diverse operations with broad national reach Strong industry trends bolstering growth Why Solid track record of accretive acquisitions and equity value creation Robust free cash flow generation and return of capital to