Sinclair, Inc. recently reported its fourth quarter financial results for the three and 12 months ended Dec. 31, 2023, revealing performances and insights about several key facets to its business. The diversified media conglomerate is the parent company of Diamond Sports Group, which is currently in Ch. 11 bankruptcy hearings and trying to enact a resolution to emerge. Earlier in the week, the regional sports network operator received approval for $450 million in debt financing and an amended management services agreement (MSA) with Sinclair. Diamond had sued Sinclair earlier last year alleging that the company had attained funds through misconduct, but plans to drop the litigation in exchange for a cash payment of $495 million.
Company-wide revenue for the quarter finished at $826 million, down 14% to last year’s period when it garnered $960 million in this category. Media revenue specifically also fell 14% to $821 million, $54 million of which comes from the Tennis Channel. Adjusted EBITDA for the company equated to $181 million, attributing the 41% decline from last year’s fourth quarter to lower political advertising revenues. The adjusted free cash flow for the company, which includes several factors deducted from adjusted EBITDA such as distributions to non-controlling interest holders and capital expenditures, totaled $91 million.
During the quarter, Sinclair reached an agreement with Verizon to renew and extend carriage agreements for its television stations in addition to Tennis Channel and YES Network. Last month, the company achieved a multi-year renewal of all its FOX affiliations in Sinclair marketplaces and those where Sinclair provides sales and other services as per the terms of a joint sales agreement or master service agreement. In the fourth quarter for the three months ending Dec. 31, 2022, Sinclair earned $12 million in management and incentive fees from Diamond Sports Group and Marquee Sports Network.
“Sinclair delivered a solid finish to 2023 with our local media segment meeting guidance and Tennis Channel exceeding expectations,” Chris Ripley, Sinclair president and chief executive officer, said in a statement. “During the year and through early January, we continued our commitment to deleveraging, repurchasing over $91 million in debt principal across all tranches, at an average discount to par of 19%.”
On the year, Sinclair earned $3.1 billion in media revenues but operated at a $279 million loss overall in its net income. At the conclusion of 2022, the company had income of $2.7 billion, representing an 89.6% drop-off in this area. The company noted that it considers adjusted EBITDA to indicate its operating performance and ability to service its debt, implementing several factors within the calculation to finish at $549 million on the year. This figure is also down year-over-year from the $944 million it posted at the end of 2022, paying $325 million in cash sports programming rights during that year. Adjusted free cash flow declined by 72% to $234 million, which includes Sinclair, Inc. and its subsidiaries.
As of Dec. 31, 2023, Sinclair has $4.175 billion in debt and has 63.5 million outstanding common shares, which are composed of Class A and Class B varieties. The company paid a quarterly cash dividend of $0.25 per share last December. Cash and cash equivalents for Sinclair total $662 million – $319 million from Sinclair and $343 million from Ventures. At the conclusion of the fiscal first quarter of 2024, the company projects to achieve between $787 million and $800 million in media revenue with an adjusted EBITDA of $128 million to $139 million.
Sinclair continues to roll out NextGen Broadcasting technology, which has been launched in 43 markets thus far, and projects that Diamond Sports Group’s reorganization plan improves the positioning of regional sports networks. Ripley referred to RSNs as “an important asset for pay-TV bundles” in his statement accompanying the earnings report.
