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ROH parent company (Sinclair Broadcasting) has over $12 billion worth of debt

Ring Of Honor

Ring Of Honor

Sinclair Broadcasting, the parent company of Ring Of Honor, issued a press release with their third quarter financial results for 2021 and it's pretty clear why the decision was made for ROH to go on hiatus and why they released everyone from their contracts.

According to the financial results, they have 12.530 billion worth of debut and most of that (8.124 billion) is due to their streaming service (Diamond Sports Group LLC) that they have been working on launching.

The company has also been reeling from a ransomware attack that has disrupted its local programming across the country. The attack has reportedly been linked to a Russian crime group.

Here is the full financial statement from Sinclair:

Sinclair Reports Third Quarter 2021 Financial Results

November 03, 2021 07:30 AM Eastern Daylight Time

BALTIMORE--Sinclair Broadcast Group, Inc. (Nasdaq: SBGI), the "Company" or "Sinclair," today reported financial results for the three and nine months ended September 30, 2021.

Third Quarter Highlights

  • Consolidated total revenue of $1,535 million was flat to the third quarter of 2020.
  • Consolidated operating income of $73 million, including $27 million of non-recurring costs for transaction and transition services, COVID, legal, and regulatory costs ("Adjustments"), increased compared to an operating loss in the third quarter of 2020 of $4,216 million, which included a $4,264 million impairment taken on the Local Sports segment relating to goodwill and definite-lived intangible assets, and $13 million of Adjustments. Excluding the Adjustments and impairment, operating income of $100 million increased $39 million compared to the third quarter of 2020.
  • Net income attributable to the Company was $19 million versus a net loss of $3,256 million in the prior year period. Excluding the Adjustments, the Company had net income of $39 million.
  • Consolidated Adjusted EBITDA, which excludes the Adjustments, of $451 million, decreased 39% versus the third quarter of 2020.

CEO Comment:

"As the economy emerges from the pandemic, our advertising recovery continues to be strong, with our core advertising, excluding auto, growing versus 2019 across both our broadcast and sports segments," said Chris Ripley, Sinclair's President & Chief Executive Officer. "The continuing headwinds from auto component shortages, which in the near-term has reduced automotive advertising revenue, has been mostly offset by higher services and sports betting advertising demand, trends we expect to continue throughout the remainder of the year and into next year. 2022 should benefit from the recent moderation of subscriber declines, as well as further recovery from the pandemic and robust political advertising due to the mid-term election cycle, which should favorably affect overall advertising demand and rates."

Ripley continued, "Our focus remains on growth opportunities in the broadcast, news and sports areas. New programming, the implementation of gamification elements across our platforms, the ramping up of activities around a 'Direct to Consumer' product and the utilization of the ATSC 3.0 technology will all be key initiatives as we move into the next year."

Ripley concluded, "We are grateful for the patience and understanding of our customers, partners, and employees as we deal with the challenge of the recent cyber attack on our company. Our employees' quick response and creative workarounds have helped us restore a significant portion of our systems. As we work to complete our investigation, we will look for opportunities to enhance our existing security measures."

Recent Company Developments:

Cyber Event:

  • On October 17, 2021, the Company identified the following: (i) certain servers and workstations in its environment were encrypted with ransomware, (ii) disruption of certain office and operational networks as a result of the encryption, and (iii) indications that data was taken from the Company's network. Promptly upon detection of the security event, senior management was informed and the Company began to implement incident response measures to contain the incident, conduct an investigation, and to plan for restoring operations. Legal counsel, a cybersecurity forensic firm, and other incident response professionals were engaged, and law enforcement and other governmental agencies were notified. The investigation into the incident remains ongoing. While the Company has taken significant steps to contain the incident, the event has not yet been fully resolved, and certain disruptions to its business and operations remain. The Company is working diligently to restore operations quickly and securely. As the investigation is still on-going, the full extent of the impact on the Company's business, operations and financial results is not known at the present time.

Transactions:

  • In September, the Company completed the divestiture of its radio stations in the Seattle, Washington market to Lotus Communications.

Content and Distribution:

  • In August, Tennis Channel launched Tennis Channel International streaming service in the U.K. and an ad-supported streaming channel on Samsung TV Plus in India, bringing the total number of international markets to six, along with Austria, Germany, Greece and Switzerland.
  • In September, the Company expanded The National Desk news program to the late evening hours, providing viewers a late-day, comprehensive and commentary-free look at the most impactful national news and regional stories of the day.
  • In September, the Company renewed affiliation agreements with the CW Network for 24 owned and operated markets. At the same time, the CW renewed affiliation agreements in another eight markets for stations to which Sinclair provides sales and other services.
  • In September, the Company extended its programming agreement with MyNetworkTV through the 2022-2023 broadcast season.
  • In September, the Company entered into a new multi-year agreement with the Cleveland Cavaliers.
  • In October, the Company entered into a new multi-year agreement with the Detroit Red Wings.
  • In October, the Company entered into a new multi-year media rights agreement with the Detroit Tigers. The agreement includes direct to consumer and other digital rights.
  • In October, the Company entered into a multi-year renewal with Altice for the carriage of Sinclair's broadcast stations, Tennis Channel, the Bally Sports Regional Sports Networks and the YES Network on its Optimum and Suddenlink owned systems.

Community:

  • In October, the Company partnered with the Disabled American Veterans (DAV) for the "Sinclair Cares: Supporting American Veterans" campaign, encouraging its employees and viewers to volunteer or donate to help support veterans in their communities.
  • Year-to-date, Sinclair's newsrooms have won a total of 249 journalism awards.

NEXTGEN Broadcasting (ATSC 3.0):

  • As of the end of October, the Company has launched NEXTGEN TV in 19 cities, including recent launches in Cincinnati, OH and St. Louis, MO.

Three Months Ended September 30, 2021 Consolidated Financial Results:

  • Total revenues decreased 0.3% to $1,535 million versus $1,539 million in the prior year period. Media revenues increased 0.5% to $1,526 million versus $1,519 million in the same period a year ago.
  • Total advertising revenues of $446 million decreased 11% versus $500 million in the prior year period, due to the absence of political revenues, as 2021 is a non-political year. Core advertising revenues, which excludes political revenues, in the third quarter of $434 million were up 11% versus $391 million in the third quarter of 2020, due to a recovery from depressed levels in the same period a year ago caused by the pandemic.
  • Distribution revenues of $1,053 million increased versus $1,003 million in the same period a year ago, due primarily to a significant decrease of distributor rebates tied to minimum game guarantees that were in the prior period's results. The gains were partially offset by dropped carriage of the Company's RSNs and subscriber churn.
  • Operating income of $73 million, included Adjustments of $27 million, versus an operating loss of $4,216 million in the prior year period, which included a $4,264 million impairment taken on the Local Sports segment relating to goodwill and definite-lived intangible assets, and $13 million of Adjustments. Operating income, when excluding Adjustments increased to $100 million compared to operating income of $61 million for the same prior-year period when excluding the Adjustments and impairment.
  • Net income attributable to the Company was $19 million versus net loss of $3,256 million in the prior year period. Excluding Adjustments, the Company had net income of $39 million. Adjusted EBITDA, which excludes Adjustments and the impairment in the prior year period, decreased 39% to $451 million from $736 million in the prior year period.
  • Diluted earnings per common share was $0.25 as compared to diluted loss per common share of $43.53 in the prior year period. On a diluted share basis, the impact of Adjustments in the three months ending September 30, 2021 was $(0.27) and the impact of Adjustments and impairment in the three months ending September 30, 2020 was $(45.66).
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Nine Months Ended September 30, 2021 Consolidated Financial Results:

  • Total revenues increased 5% to $4,658 million versus $4,431 million in the prior year period. Media revenues increased 6% to $4,623 million versus $4,353 million in the same period a year ago.
  • Total advertising revenues of $1,308 million increased 15% versus $1,135 million in the prior year period, due to the general recovery of local advertising and more professional sports games in 2021, offset by a drop in political revenues, as 2021 is a non-political year. Core advertising revenues, which excludes political revenues, of $1,287 million, were up 33% versus $966 million in the same period a year ago, benefiting from the general recovery and more local sports games taking place in the period compared to the same period a year ago.
  • Distribution revenues were $3,240 million versus $3,168 million in the same period a year ago, with the increase the result of a significant decrease of distributor rebates that were in the prior year period.
  • Operating loss of $70 million, included Adjustments of $94 million, versus operating loss of $3,397 million in the prior year period, which included $42 million of Adjustments and an impairment of $4,264 million. Operating income when excluding the Adjustments and impairment decreased to $24 million from operating income of $909 million for the same prior year period.
  • Net loss attributable to the Company was $325 million versus net loss of $2,881 million in the prior year period. Excluding Adjustments, the Company had net loss of $251 million. Adjusted EBITDA, which excludes Adjustments, decreased 16% to $1,066 million from $1,271 million in the prior year period.
  • Diluted loss per common share was $4.33 as compared to diluted loss per common share of $35.17 in the prior year period. On a diluted-per-share basis, the impact of Adjustments in the nine months ending September 30, 2021 was $(0.99) and the impact of Adjustments and impairment in the nine months ending September 30, 2020 was $(41.24).

Consolidated and Segment Highlights

The highlights below include the launch of Marquee Sports Network (February 22, 2020), the divestiture of the non-license assets in Harlingen, TX (January 27, 2020), the divestiture of WDKY in Lexington, KY (September 17, 2020), the divestiture of WDKA and KBSI in the Cape Girardeau MO/Paducah KY market (February 1, 2021), the acquisition of ZypMedia (February 5, 2021), the divestiture of the license assets in Harlingen, TX (May 24, 2021), the divestiture of Triangle Sign and Service (June 2, 2021), and the divestiture of Sinclair's radio stations in the Seattle WA market (September 27, 2021).

Segment financial information is included in the following tables for the periods presented. The Broadcast segment consists primarily of broadcast television stations, which the Company owns, operates or to which the Company provides services. The Local Sports segment consists primarily of the RSNs. Other includes corporate, original networks and content, including Tennis Channel, non-broadcast digital and internet solutions, technical services, and other non-media investments.

Consolidated Balance Sheet and Cash Flow Highlights:

  • Total Company debt as of September 30, 2021 was $12,530 million, which includes Diamond Sports Group LLC (DSG) debt of $8,124 million.
  • Cash and cash equivalents for the Company as of September 30, 2021 was $1,051 million, which includes $476 million held at DSG.
  • As of September 30, 2021, 51.7 million Class A common shares and 23.8 million Class B common shares were outstanding, for a total of 75.5 million common shares.
  • In September, the Company paid a $0.20 per share quarterly cash dividend to its shareholders.
  • Routine capital expenditures in the third quarter of 2021 were $22 million with another $1 million related to the spectrum repack.
  • The Local Sports segment's media production expense included $531 million of sports rights amortization, while sports rights payments in the quarter were $328 million.

Notes:

Certain reclassifications have been made to prior years' financial information to conform to the presentation in the current year.

Outlook:

The Company currently expects to achieve the following results for the three months ending December 31, 2021 and the twelve months ending December 31, 2021.

The following expectations exclude any costs and lost revenues as a result of the recent cyber ransomware attack on the Company. The Company cannot determine at this time whether or not such event will have a material impact on its business, operations or financial results. While the Company maintains insurance to cover losses related to cybersecurity risks and business interruption, such policies may not be sufficient to cover all losses.

The Company is closely monitoring the impact of the COVID-19 pandemic on all aspects of its business, including how it has and will continue to impact its advertisers, distributors, and professional sports leagues. The Company is currently unable to predict the extent of the impact that the COVID-19 pandemic will have on its financial condition, results of operations and cash flows in future periods due to numerous uncertainties. For additional discussion of how the COVID-19 pandemic has impacted the Company’s business, please see the section titled The Impact of COVID-19 on our Results of Operations in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, which will be updated in the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2021.

Sinclair Conference Call:

The senior management of Sinclair will hold a conference call to discuss its third quarter 2021 results on Wednesday, November 3, 2021, at 9:00 a.m. ET. The call will be webcast live and can be accessed at www.sbgi.net under "Investors/ Webcasts." After the call, an audio replay will remain available at www.sbgi.net. The press and the public will be welcome on the call in a listen-only mode. The dial-in number is (888) 506-0062, with entry code 714886.

About Sinclair:

Sinclair is a diversified media company and leading provider of local sports and news. The Company owns and/or operates 21 regional sports network brands; owns, operates and/or provides services to 185 television stations in 86 markets; is a leading local news provider in the country; owns multiple national networks; and has TV stations affiliated with all the major broadcast networks. Sinclair’s content is delivered via multiple platforms, including over-the-air, multi-channel video program distributors, and digital platforms. The Company regularly uses its website as a key source of Company information which can be accessed at www.sbgi.net.

The Company considers Adjusted EBITDA to be an indicator of the operating performance of its assets. The Company also believes that Adjusted EBITDA is frequently used by industry analysts, investors and lenders as a measure of valuation.

Non-GAAP measures are not formulated in accordance with GAAP, are not meant to replace GAAP financial measures and may differ from other companies’ uses or formulations. The Company does not provide reconciliations on a forward-looking basis. Further discussions and reconciliations of the Company's non-GAAP financial measures to comparable GAAP financial measures can be found on its website www.SBGI.net.

Forward-Looking Statements:

The matters discussed in this news release, particularly those in the section labeled "Outlook," include forward-looking statements regarding, among other things, future operating results. When used in this news release, the words "outlook," "intends to," "believes," "anticipates," "expects," "achieves," "estimates," 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 set forth therein, but not limited to, the potential impacts of the COVID-19 pandemic on the Company's business operations, financial results and financial position and on the world economy, the impact of changes in national and regional economies, the significant disruption to the operations of the professional sports leagues and the macroeconomy caused by COVID-19 may result in the recognition of further impairment charges on the Company's goodwill and definite-lived intangible assets, the Company's ability to generate cash to service its substantial indebtedness, the completion of the FCC spectrum repack, 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 successful execution of retransmission consent agreements, the successful execution of network and MVPD affiliation agreements, the successful execution of media rights agreements with professional sports teams, the impact of OTT and other emerging technologies and their potential impact on cord-cutting, the impact of MVPDs, vMVPDs, and OTT distributors offering "skinny" programming bundles that may not include all programming of the Company's networks, the Company's ability to identify and consummate acquisitions and investments and to achieve anticipated returns on those investments once consummated, the impact of pending and future litigation claims against the Company, the ongoing assessment of the October cybersecurity event, material legal, financial and reputational risks resulting from a breach of the Company's information systems, and operational disruptions due to the cybersecurity event, the impact of FCC and other regulatory proceedings against the Company, uncertainties associated with potential changes in the regulatory environment affecting the Company's business and growth strategy, and any risk factors set forth in the Company's recent reports on Form 10-Q and/or 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.