2. Safe Harbor
This presentation may include forward-looking statements regarding, among
other things, future operating results. 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. Such factors have been set forth in the Company’s
most recent reports on Forms 10-Q, 10-K and 8-K, as filed with the SEC. No
representations or warranties are made by the Company or any of its affiliates as
to the accuracy of any such statements or projections. Whether or not any such
forward looking statements or projections are in fact achieved will depend upon
future events, some of which are not within the control of the Company.
Accordingly, actual results may vary from the projected results and such
variations may be material. The Company undertakes no obligation to update
these forward-looking statements.
3. Sinclair Portfolio Highlights
The largest & one of the most diversified pure-play television broadcasters
74 TV stations
45 markets
20 FOX, 18 MNT, 14 CW, 11 ABC, 9 CBS, 1 NBC, 1 Azteca
26.3% U.S. coverage (30.1 million households)
24 two-station markets
34 markets airing news
82 Sub-channels
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4. Sinclair Portfolio Highlights
Dominant middle market broadcaster
Footprint brings buying power, negotiating leverage, syndicator
program clearance
Affiliation diversification insulates us from network downturns
Geographic diversification minimizes downturns in local
economies
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5. Sinclair Portfolio Highlights
The largest and one of the most diversified PF 2011 Revenues by Affiliation
CW
12% ABC
18%
MNT
13%
NBC/SP
2%
FOX
CBS 36%
19%
PF for Four Points and Freedom stations
6. Sinclair Operating Strategy
Offer high-quality programming and local news content
Grow market share and audience share
19.3% local revenue share for 2011 (ex-political)
Receive fair value in retransmission compensation
Maintain balance sheet flexibility
Opportunity to acquire TV stations
Free cash flow accretive
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7. Sinclair Operating Strategy
Grow free cash flow
Reinvestment in operations (capex, new acquisitions)
Debt repayment
Shareholder dividends
Monetize spectrum
Standard change
Mobile television
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8. Sinclair Investment Highlights
Highest free cash flow metrics (2011)
$144.8 million of FCF generated
16% FCF yield on equity value
54% of EBITDA converted into FCF
Among most credit worthy with strong balance sheet
4.18x net leverage through parent
No imminent maturities until 2016
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9. Sinclair Investment Highlights
Consistent dividend strategy
$0.48 annual dividend per share
26% dividend payout ratio
4.9% dividend yield
Hidden value of $2 per share
Approx. $190M cost basis in non-broadcast entities:
Enhance footprint and free cash flow through television acquisitions
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10. Acquisition Environment
Recovery has strengthened balance sheets and reduced leverage
M&A activity heating up with the announcements of Four Points,
Freedom and McGraw Hill
Valuations are inviting
Buyer synergies can be significant
Strategic operators, not private equity, are the primary buyers
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11. Acquisition Highlights
Acquired 15 stations at attractive purchase prices/multiples:
Four Points – 6.5x on $200M price (closed Jan 2012)
Freedom – 6.6x on $385M price (estimated April closing)
Result in minimal leverage and continued balance sheet strength
Free cash flow accretive
FCF contribution estimated at $59M, on average
($65M in the even years, $53M in the odd years)
40% FCF growth rate on 2010
11 Buyer’s multiples based on 2012/2013 estimated EBITDA, after synergies
12. Spectrum Auction
What if broadcasters bought the spectrum?
Assumptions:
120MHz of TV spectrum at auction
$25BN gross value from auction
125M U.S. TV households
$200/TVHH valuation ($25BN / 125M TVHH)
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13. Spectrum Auction - Example
Baltimore, MD – market 27
1.025M TVHH
$205M market’s auction value (1.025M TVHH x $200/TVHH)
6 broadcasters in the market and 120MHz of spectrum auctioned
$34M per 20MHz per broadcaster
20MHz is equivalent to 3+ broadcast channels or $11.3M per
channel
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15. 2011 Revenue Highlights
2011 core net broadcast revenues up 2.9% (-2.4 ex-political) (1)
$6.2M from Super Bowl in Q1 2011
Automotive up 9.7%
Retrans renewals with Time Warner, Comcast, COX, Mediacom
(Telecom renewed at year end 2011, Dish to renew in 2012)
Political of $8.3M (+18% over 2009) vs. $42M of political in 2010
(1) Excludes $7.7M of LMA reimbursement revenue
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16. 2011 Expense & Cash Flow Highlights
Program payments declined $22M
TV operating expenses up 4.8% (1)
Includes addition of FOX network programming license fee
Interest expense declined $10M
Capital expenditures of $35.8M (bonus depreciation benefit)
EBITDA of $269.5M, down only 2.5% in non-political year (35% margin)
Free cash flow of $145M ($1.80 per share)
16 (1) Excludes $7.7M of LMA expenses
17. 2011 Uses of Free Cash Flow
$59M in TV acquisition purchase price deposits:
$20M paid in third quarter for Four Points
$38.5M paid in fourth quarter for Freedom
$6M debt repayment
Next maturity is 2016
$38M dividend ($0.48 per share)
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18. 2011 Balance Sheet
12/31/11 Acquisitions PF 12/31/11
Cash 13 13
Revolver 12 16 28
Term Loans 337 530 867
2nd Lien Notes 500 500
Unsecured Notes 238 238
Other OpCo Debt 33 33
HoldCo Debt 21 21
VIE Debt 65 65
Debt on B/S, net of Cash 1,193 546 1,739
EBITDA 270 89 359
1st Lien Net Leverage 1.5x 2.7x
OpCo Net Leverage 4.2x 4.7x
HoldCo Net Leverage 4.2x 4.7x
Based on bank covenant calculations
18 Four Points/Freedom EBITDA is blended odd/even full year average, after synergies
19. Sinclair 2012 Operating Outlook
Political ad spend could be the highest in our history
NADA expects new car sales of 13.9M units or growth of 9.4%
Retrans revenues to continue to grow (DISH and telecom renewals)
Economy and industry still in recovery
Closing Four Points and Freedom acquisitions
Buyer’s multiples imply $89M of blended EBITDA
Super Bowl on NBC results in $6M less of Super Bowl revenues
Program payments expected to decline $5.5M on same station basis; reverse
retrans expected to increase
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20. Sinclair Q1-2012 Operating Outlook
Net broadcast revenues expected to be +20.3% to +22.2%
+5.2% to +7.1% on same station basis
Includes $4M of political and $0.1M from Super Bowl
Same station core expected to be +3.1% to +5.0%
+7.4% to +9.4% ex-Super Bowl
Auto growth of low single digit percents (absence of Super Bowl revenues)
EBITDA expected to be $70.8M to $73.8M
+4.2% to +9.1% same station basis growth ($63.8M to $66.8M)
2/8/12 public guidance (not updating or reconfirming estimates for purposes of this slide)
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21. Sinclair Investment Highlights
Largest pure-play television broadcaster
Among most credit worthy with strong balance sheet, including impact
of Four Points and Freedom acquisitions
Generating some of the best shareholder returns
Driving long-term revenues
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