Q4 2019 Earnings Call
[music].
Good day, ladies and gentlemen, and welcome to the Sinclair broadcast group fourth quarter 2019 earnings Conference call.
Lines have been placed out in listen only mode and the four will be open for your questions and comments following the presentation.
At this time it is my pleasure to turn the floor, but your host for today Executive Vice President and Chief Financial Officer, Lucy Rutishauser me on the floor is yours.
Thank you operator, [laughter] dissipating on the call with me today, or Chris Rep, Lee President and CEO, Rob Weisbord President of our local news and marketing services Division and Jeff Kralik President of our Sports Division.
Before we begin build your Mcintyre will make our forward looking statements disclaimer.
Certain matters discussed on this call 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 from those described in the forward looking statements as a result of various important factors such factors haven't set forth under the company's most recent reports as filed with the FCC and included in our fourth quarter earnings release.
The company undertakes no obligation to update these forward looking statement.
The company uses and web site at the keys worth of company information, which can be I thought that www dot SBG I dot net in accordance with regulation FD. This call is being made available to the public a webcast replay will be available on our website and will remain available until our next quarterly earnings release included on the call will be a discussion of non-GAAP financial measure.
[laughter], specifically adjusted EBITDA adjusted free cash flow and leverage these metrics are not meant to replace GAAP measurements, but are provided a supplemental detail to assist the public and their analysis and valuation of our company. A reconciliation of these non-GAAP financial measures to the GAAP measures in our financial statements is provided on our website.
<unk> under investors non-GAAP measures, Chris Ripley will now take you through our operating highlights.
Good morning, everyone and thank you for joining our fourth quarter earnings call. We've a lot of positive news to share with you today, starting with results that met or exceeded our guidance estimates Lucy will take you through those details shortly.
Sinclair ended 2019, as the largest provider of local sports and a leading provider of local news with 23 hours and brands that are 191 broadcast stations across our portfolio, we are leading provider of locally relevant content.
As we finish an incredible 2019, we lucky we're looking forward to executing on a myriad of opportunities to drive both our local news and sports segments.
We're intently focused on continuing recent successes.
In growing our share of political advertising dollars for our stations and now sports networks unique among our broadcast peers, we intend to rollout investigative reporting in over 20 markets. This year and effort that so far has been highly successful both in terms of the claim as well as tangible community impact.
Our sense will be rebranding in the coming mine, we are working on a new digital platform and there is a significant opportunity around legalized sports betting so more to come on those fronts.
We're now seeing.
When we are announcing when we announced the Arsone deal, we expect to legalize sports betting to lead to multiple beneficial impacts on the ourselves such as the new AD category enhanced viewer engagement and new ways monetizing harasses, we're already starting to see some of those benefits play out with advertising dollars flowing to our networks in states.
I don't need sports betting legal.
On the distribution fright, when we continue to enjoy productive relationships with our distribution with our distributors and we're making very good progress on renewals for the our sense and carriage at Marquis.
Approximately 70% of our total subscribers are locked in for multiple years significantly de risking the company and for our sports segment. It's over 70% just last week marquee announced that Mark that who live TV will carry the network. We now have agreements in place for market wide carriage.
Marquee with more than 40 distributors, including 18 T U verse, Directv Mediacom charter and over the top providers, who Lou and ATP TV now, which means that 100% at the Cubs geographic footprint are able to watch marquee.
Speaking of which marquee had a successful launch last week with the start of the Cubs spring training and with opening day on March 26, we are ready to go with a beautiful new studio.
[laughter] rumania negotiations with Comcast and ultimately given the value of these properties and demand local of yours, we're confident that we'll come to an agreement and they will allow their subscribers to watch enjoy their favorite home team.
We continue to have discussions with dish for the carriage of the our sense and remain confident that our two companies will eventually reach mutually acceptable carriage agreements granted.
On the subscriber fine with the exception of one NBP D that is experiencing above average subscriber losses, our subscriber churn for the fourth quarter was less than 1% on annualized basis, and we actually added subscriber sequentially when excluding this one and B P D.
We reached an agreement in principle with one team whose rights agreement recently expired well another team exercise is right to put their minority interest to US. In addition, we havent agreement in principle to renew 10 station affiliate agreements with Fox, while another seven stations to which we provide services also renewed their fox affiliations.
On the T.S. Yoo 3.0 front now officially called Nexgen TV, we have several initiatives in process that are moving forward. We had a successful C S and will be demonstrating many the same technologies in any b, we launched cast Dot era, our joint venture with SK Telecom, we join pro TV a broadcast into.
History organization committed to advancing Nexgen TV and the industry is on track to deploy nexgen in many markets. This year, while the consumer electronics manufacturers have announced plans to bring 20 nexgen enable TV to the market this year.
2020 is off to a strong financial start with political spend spending running well ahead of the 2016 spending for the same period.
And as a reminder, we expect 2020 to be our highest political revenue on record.
For full year 2019 total company adjusted free cash flow was 607 million in on a pro forma basis, almost 1.1 billion that equates to $11.48 per share and $14. In 14 cents averaged 2018 2019 pro forma adjusted free cash flow per share.
Yeah.
I do want to mentioned that there has been some misinformation in the marketplace that has unfortunately depressed our stock valuation in fact, if you do as some of the parts on US you will find that our current stock prices right no value to our sports segment, despite having over 70% of the arsone subscribers locked in including multi year deals completed with charter 18 to direct TV.
Mediacom as well as 200 other completed deals with medium and small distributors.
Having very few team renewals on the horizon 1.6 billion of liquidity as of yearend 2019.
Exclusive rights on linear and digital and future sports betting and synergy opportunities.
Based on current trading levels, our stock it's hard to argue that there's a better return for us and repurchasing our own shares and while we repurchased over 4.5 million shares in 2019 at these trading levels, we will look to be more aggressive.
Now, let me hand, it over to Lucy to discuss our financial performance. Thank you, Chris We had very good fourth quarter results well before I get into the numbers I wanted to thank our investors and analyst for their patients as we evolve our public disclosures to reflect our transformation into a diversified media company and provide.
<unk> information to confidently value, our two financing silos and consolidated company. Our goal is to be as transparent as possible and reflecting the results in valuations of our businesses and we welcome any feedback you want to provide.
I also want to introduce our new Vice President of Investor Relations Steve's anchor, who recently joined to help increase our investor relations effort and outreach.
<unk> for work, we will be referring to the RF sands as well as other sports related assets. We report is part of this segment as our sports segment.
The remaining business will be referred to was our legacy business, which includes our local than local news and marketing services segment, and our corporate and other segment.
As we give you information related to the specific segment it will be inclusive of the management and incentive fees paid by the sports segment to the local news and marketing services segment. So that you can do you or some other parts and credit valuations on each silo.
So while reflected in the individual segments. Please note that these amounts eliminate in consolidation and therefore are not reflected in the total company consolidated results. So again management and incentive fees will be included in the segment, but eliminated poor consolidation resolved.
Turning to the results consolidated media revenues for the fourth quarter 1.581 billion, an increase of 86% and at the upper end of our guidance range. These results include the first full quarter the sports segment results, which contributed seven.
188 million of revenues for the corridor.
[noise], our legacy business media revenues, which exclude the sports segment were 820 million in the fourth quarter versus 849 million in fourth quarter, 2018, which was an election year.
The lower political revenue in Q4 of 19 was offset impart by higher distribution and core advertising revenues and Sac core advertising was up approximately 7% for our legacy business in the fourth quarter and inline with our expectation of mid to high single digit per se.
Yes.
For the year core advertising for the legacy business was up approximately 3%.
We booked 23 million a political AD revenue in the fourth quarter, which was above our guidance range of 15 to 20 million and almost double what we booked in Q4 2015 pro forma.
As Chris mentioned earlier, we expect record political advertising revenue for 2020.
Total distribution revenues were 1.1 billion in the quarter meeting expectations with the sports segment contributing 724 million of the total.
For the year consolidated triangle media revenues increased 39% to 4.046 billion due to the addition of the sports segment, which contributed a billion.
139 million of media revenues.
Excluding the sports segment media revenues are at or legacy business were up slightly as lower political revenues were offset by strong growth in distribution revenues and core advertising gains.
Our legacy business grew distribution revenues for the year by 13%.
On a pro forma basis 2019 consolidated media revenues.
Was 6 million 475 million, our sports segment pro forma media revenues were 3.586 billion and for the legacy business, including the management incentive fees pro forma media revenues were 2.967 billion.
[noise] consolidated media operating expenses in the fourth quarter defined as media production in media SGN <unk> expenses were 1.080 billion up from the fourth quarter 2018, and that's primarily due to the acquisition of the are a sense.
Including the management in incentive fees.
Our sports Didnt segment media expenses were 597 million.
Corporate overhead in the quarter, excluding 39 million, a nonrecurring transaction legal litigation and regulatory cost and 4 million a stock based compensation was 27 million.
EBITDA for our non media businesses was approximately 5 million in the quarter, which was 4 million better than our expectations on timing of one media expenses and higher repacked revenue activities.
Total company adjusted EBITDA was 450 million, an increase of 32% and at the high end of our guidance range, including the management fees to sports segment had adjusted EBITDA of 174 million and the legacy business had an adjusted EBITDA of 276 million.
[noise] pro forma company adjusted EBITDA for the year was 2.147 billion of which a billion 270 million was from the sports segment and 876 million from the legacy business.
Consolidated adjusted free cash flow for the quarter adjusted for non recurring items was 206 million exceeding the high end of our expectations.
For the full year pro forma consolidated adjusted free cash flow.
As 1.068 billion.
Diluted earnings per share on 93 million weighted average common shares was 47 cents in the corridor, where 94 cents of income per share when adjusted for the nonrecurring transaction fees legal litigation and regulatory.
We bought approximately 600000 shares in the fourth quarter and over four and a half million shares for the full year 2019, which represented approximately 7% of the class a shares outstanding at the beginning of 2019 as Chris stated a current trading levels, you should expect us to aggressively.
By the shares.
Turning to the balance sheet and cash flow highlights capital expenditures in the fourth quarter were 60 million, including 26 million for the repack and for the full year Capex was 156 million, including 66 million of repack.
For 2020, we expect Capex of between 130, and 150 million plus another 90 million for the Reimbursable repacked spend.
In the fourth quarter film payments were 22 million in sports rights payments were 460 million and for 2020, we expect film payments to be 90 million in sports rights payments of 1.9 billion.
At December 31st total debt was 12.438 billion.
Cash at December 31st was 1.333 billion of which 949 million was in the sports salesmen and 384 million in the legacy business.
During the fourth quarter, we redeemed 300 million of diamonds preferred shares and another 200 million in January bringing the outstanding balance down significantly the 525 million from the original billion 25.
This will generate approximately 50 million an annualized cash dividends savings.
Total net leverage through Sinclair Act at quarter end was five times S. T. G.'s first lien indebtedness ratio on a trailing eight quarters was two and a half times on a covenant of four and a half times.
And 4.4 times on a total net leverage basis.
Diamonds first lien indebtedness ratio on a trailing four quarters was 4.2 times on its helping in up six and a corridor and 5.6 times on a total net leverage basis.
Turning to our guidance for our first quarter and for the fiscal year 2020.
Consistent with our most recently provided guidance dish is excluded from the sports segment for all periods until carriage is reserved.
For first quarter, we are expecting consolidated total company media revenues to be between a billion six to 5 million and a billion 633 million as compared to pro forma first quarter 2019 media revenues, although billion Ssix hundred 17 million.
Which this that number last year includes three months of dish and sling distribution revenues, which are not in this year's guidance.
The guidance also includes 34 to 46 million a political revenues versus 2 million last year.
And it includes a billion 160 million to a billion 160 million in distribution fees.
Versus a billion 228 million a pro forma distribution revenues last year.
Media revenues are expected to be 838 million to 843 million for the sports segment, and 793 million to 870 million could the legacy business, which includes 27 million all management piece.
For the first quarter consolidated total company media expenses are expected to range from a billion Onesixty nine to a billion 179 compared to pro forma media expenses a billion 38 million in first quarter of 2019.
For the full year consolidated total company media expenses are expected to be approximately 4 billion 839 to 4.879 billion versus 2019 pro forma media expenses of 4 billion 314.
The increase over pro forma 2019 is primarily driven by higher network fees. The addition of stadium, which is now consolidated and more key which is a start up as well sports rights amortization, which are add it back for EBITDA purposes.
Consolidated total company adjusted EBITDA in the first quarter adjusted for 8 million a nonrecurring cost is expected to be 241 million to 259 million is compared to pro forma first quarter 200 in first quarter 2019, adjusted EBITDA of 414 million.
And that's adjusted for 2 million and nonrecurring costs.
Our sports segment is expected to generate 30 to 33 million of adjusted EBITDA on or legacy business is expected to generate 211 to 226 million <unk> adjusted EBITDA.
Now as highlighted last quarter.
The sports segment traditionally experiences its lowest EBIT jobs in the first and fourth quarters due to contractual timing of team payments.
With the baseball season, beginning in March team payments are at their highest for the year in the first quarter, which you can see in our guidance.
Furthermore, the one third of the full year payments, where the one third will occur in the first quarter alone and the gap between the payment and the amortization and the amortization is in media expense, that's driving some of the analyst models to be too high on EBIT job for the sports segment.
And first quarter.
So again wall Q1 guidance includes 487 million of sports rights amortization payments are expected to be 644 million, resulting in EBITDA being lower by the difference of bad hundred 57 million.
However, and this is important for the year payments are expected to be lower than the amortization by 153 million. So really any any differences that you're seeing in Q1 consensus is primarily going to be related to timing of the payments versus the amortization.
And in 2020.
And then finally consolidated total company adjusted free cash flow in the first quarter is expected to be approximately 50 to 73 million.
We are increasing our adjusted free cash flow per share range for 19, and 22, an average of between 11 75 in 12 40 from our prior guidance of 11 50 to 12 50.
So with that I'd like to open it up your question.
Thank you ladies and gentlemen, if you have a question or comment at a star one on your telephone keypad at this time, if you're using a speaker phone, we ask that wall posing a question you pick up your handset to provide the best sound quality.
Canada Star one for any questions or comments.
Well move first to Aaron Watts at Deutsche Bank.
Everyone. Thanks for having the on I have one on TV station side, and then a couple on the diamond side.
On the TV side, they see it sounds like a good strong corner for core ads in the fourth quarter can you talk about how that's trending in the first quarter and also how auto played into that and the fourth quarter and first quarter.
Yes, its trending as a carryover into first quarter, a we're off to a very good start on core.
And auto was slightly down in fourth quarter and expectation is to be flat in Q O Q1 of performing.
Okay got it thank you and.
Diamond.
Curious on the seasonality you were just talking about Lucy.
Clearly more impact on the cost side anything we should think about about the cadence of seasonality on the revenues as we think about the full year.
No there's no real sense seasonality on the revenue side for a pretty sports.
Okay.
And.
With the discussions you're having Chris.
No you talked about dish.
And Comcast or those specifically from our key or are they more full folsom discussions on potentially.
Dash kind of bringing back all the IRS ands or with Comcast extending all of the our sense.
You know it typically these are wide ranging negotiations that include all of our assets.
Okay got it and.
One clarifier on the subscriber because you're seeing on the de sports side can you just a cover again what were the that seems kind of in the fourth quarter on the declines you saw both on the VMT PD and and traditional M.D. PD side and maybe any color you have so far for for.
First quarter.
Yeah. So as we as we mentioned Aaron if if you exclude one envy Pee dee who's been churning a lot higher than what the averages had been a we only churn to cross the whole company Oh, My last a 1% on a year over year.
Annualized basis and in fact, if you look sequentially from Q3 to Q4, we actually added subscribers, which is something we talked about last call because of a lot of the blackouts that were occurring in the industry in Q3, and then the reporting like where the all virtual so we saw.
All that that catch up a in fourth quarter versus third quarter, but again outside of just the one a and B P. D were churning less and less than 1% across all the segments.
Okay. That's helpful. On one last one for me I appreciate the time Lucy. This I think is directed your way.
You redeem preferred stock and I heard you say a couple of times that you think your stock is attractive now in terms of being a target for buybacks, but your debt your debt securities that are trading on the de sports side at a discount to par value.
How attractive are those to you in terms of potentially buying them back and how open would you be to using cash towards that end.
So we really think about our cash and in two different buckets and like I because the other two different silos and you know the S.P.G.S.T. silo cash we're focusing in on our shares right now as far as one of the more attractive investments.
In a for the for de sports you know that de emphasis is de leveraging and of course work considering the preferred there and then a senior notes as well.
Okay. Thank you for the time.
Thank you.
Well move next to Dan Kurnos stuff the benchmark company.
Yeah.
Great. Thanks. Good morning can we just maybe start on TV or actually just think broader distribution I think our ascend distribution, a little bit higher and I guess I guess, you guys assume that goes or maybe even a little bit better if you get Comcast indoor indoor dish, but just on the TV side in particular.
Yeah, I know loosely you called out kind of the sub churn issue just trying to understand sort of the step up or limited step up between one Q in Fourq you and then maybe an update just on kind of net retrans expectations, given sort of what's going on in the sub environment through both 2020.
Maybe even to 2021.
Yeah. So so really the step ups are really just gonna be a function of what what contracts come up for renewal and ER and really for this year or the big one is gonna be Oh, you know Comcast. All later this year for both the broadcast in New York send division So any step ups is.
Is really a just gonna be then outside of renewable is gonna be related to just annualized increases.
And then on the net so I'm I'm glad you asked that question Dan because the networks have moved primarily to fix programming fees that aren't tied to retrans and so looking at a net retrans number is really no longer a good indicator of.
The distribution margin. So we actually you know are going to just be reporting on gross distribution numbers because again I'm just it's really not a reverse payment or did the networks are charging it's more of just uptick programming a fee.
Okay got it thanks, and then maybe just on on political if there's any timing we've heard about some pull forward into Q1 and it didn't sound like Chris you're willing to sort of put your Ah you put the line in the sand anywhere, but just if there's any sort of thoughts on on order of magnitude over pro forma either 16 or 18.
To be helpful.
Well, we did we did say that you know we expect this to be the highest year on record.
And our previous high was a on a pro forma basis to 66.
Alright, and then I guess, just one last one I, Chris I, you know I, just not trying to read between the lines, but the press release talked a lot about more focus it seemed on organic I don't know if that means that you are less focused on on doing M&A, but just wanted some some clarity from you.
On that.
Well I think that that's really in reference to a number of initiatives that we have ongoing like the digital rebuild or the arsone digital footprint, a sports betting and a and then also.
Additional sports rights, which could be organically acquired and so they're just are a number of organic opportunities that we have in the hopper not to say that we are still active on the M&A front, but very disciplined on evaluation as always.
And Lucy just just so I'm clear just on a full year what is there a full year onetime transaction impact to I guess I'm trying to triangulate EBITDA or is there any noise in there that would impact that number.
For 2020.
Yeah.
Yeah, it'll it'll be all minimal.
Oh, we are looking at called Dol, maybe 25 to 30 million Oh, often onetime nonrecurring.
Got it Super helpful. Thanks, guys.
Okay.
Well move next is that silver at B. Riley FBR.
Okay, great. Thanks, Rina question. The first one just and in some of the recent return Joe that you've done a and getting carriage or the our son's as well can you talk about.
You know your willingness and upcoming deals to potentially subsidize the artists and carriage be a lower retrans stopped thoughts on the TV station side.
Oh, well, we really from a practical perspective can't do that we have a an arrangement between the two silos not to not discriminate between the two.
And ER and the way the.
The contract the contracts work and the history. There is really what you know drives the negotiation.
Okay Fair enough and then just given some of the recent.
<unk> renewals with some of the teams given that there will be a putting the end market streaming rights back to the teams have the talks with them changed at all and then a follow up on that a there has been to reporting that you guys entered into a deal technology partnership with Delta.
Trey sports streaming or tech platform or just curious to see how that are potentially impacts your your thoughts on a a deep history, a D.C. streaming service going forward.
HM So so yes. They did the talks have started to change. This is a new thing for MLP, we already have the direct consumer rights for NHL and MBJ and so you know that's a new area that were currently exploring with the teams and supports any new deal that we do will include.
Ladies and as it relates to a you know the that the delta tray rumor.
The you know the no decisions have been made there I'll know, but we are doing a lot of work around a digital reviewed.
Which.
Leaving is a fantastic opportunity to create something on the scale of U.S.P. and digital.
And and not only would that include various different content types.
No aside from just video, but would be the ideal launching point for any direct to consumer offering me that superfan up sell packages or you know straight up I'm you know the entirety of the Arsone hundred consumer basis, which is not being done today when they'll play.
He has to do that but certainly the new digital footprint that we're building out would be fully capable of doing that.
Got it thank you Chris.
Well move next to Kyle Evans at Stephens.
Hi, Thanks.
Two questions as a follow up.
Okay.
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Kind of.
The 2020.
It is.
On a continuous basis, Oh, well less reliant on auto Oh ourselves structure has been to focus on many different categories. So we're looking for the full year to be all flash slightly up a glut or services businesses from legal.
All to pharmaceutical to insurance, we're seeing big success in those categories. So in terms of the percentage of the whole it still running about a quarter.
They have the AD sales and nonpolitical AD sales, but as Rob points out you know, we see that declining overtime as we grow somebody's our segments.
Got it.
Thanks.
Good question the national piece.
<unk>.
Nevertheless.
Sounds like.
Thanks.
Is there any commentary on national.
Please.
Yeah National is off to a very robust star Oh ex political so just on our core and we expected to see this throughout the year.
So we're very bullish on what we're seeing coming out of all the national holding companies that agencies.
Great and that's probably a Chris.
Just an update.
Compose.
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29.
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Thanks.
Now I'll, let all that's a rafi to the growth, we're seeing and digital marketing services, which is no powered by can Paul.
And the we have.
Ill spend a lot of effort and time over last five years, making sure that we have best in class a digital marketing services. So we can offer all of our advertisers a full suite a one stop shop solution.
On an integrated campaign and that has.
In a very powerful offering to the to the marketplace and this has been a big part of our digital growth story that will continue into 2020 stir is a different you know strategy from that it is our AD supported you know direct to consumer Uh huh.
<unk> platform a it's a it's been growing very nicely in open for about a year and.
Usage continues to climb and we're adding more and more content were over 100 channels now it has mobile channels based on what market you're in which are soon going to be adding on the syndicated programming. Our various stations. So we're happy with the usage progress on on store and.
And what it does is it provides additional ono.
Oh, Teachey AD inventory that we are very successful and selling into local businesses.
As part of our Compulse offering so that's how it ties into Paul.
And it generates additional inventory for us to sell a into those sales channels. So we have a continuous a training program 52 weeks and the focus is not too just focus on selling though the course boss that's part of the Oh 360 solutions. So.
We do our needs analysis in the local markets for our clients. It's to include all the digital assets as for the solutions.
Oh TT is kind of the flavor of the day, but we have 80 assets and all the bucket and they all come into play at some point on based on the needs of declines.
Great maybe maybe just one.
Let's see what I heard you say is it.
The net retrans.
Less meaningful.
<unk>.
<unk>.
I understand exactly what you're saying there, but if you guys could you kind of step back and characterize relationships.
Versus say 2016.
[noise] two thirds <unk> dollar just kind of update us on.
The network.
Thank you.
Yeah, there's been no real trend change to to note up in terms of network relations.
We continue to have very productive relationships with them.
They of course want Maxim dollars for their programming and Oh, you know we use our you know scale and importance to try to minimize sad, but it really I wouldn't know and any specific change in the way they operate over the last several years.
Okay. Thank you.
Once again, ladies and gentlemen, if you had a question or comment at a star one on your Touchtone keypad.
Well, maybe next to Davis Hebert at Wells Fargo.
Hi, good morning, everyone. Thanks for taking the questions on your Q1 guidance Lucy you talked about difference between amortization and the cash payments do you think the right approach would be to get a more normalized EBITDA for the are a sense to adjust that higher by a 157 to give them more norm.
The last number.
When you say adjust it what it what is it in that case, Oh, sorry, that's the a the 30 to 33 million of EBITDA guidance for the first quarter and then adding the difference between the amortization and the cash payments.
Yeah, So too I think what you're saying is whether or not we should just use this a sports rights amortization as opposed to the sports rights payment <unk> when were when calculating EBITDA.
Correct exactly to get a more normal I look at it yeah, I mean look out I mean, you.
You know what I would say is as investors, let us know you know when we can do it either way I, just let us know, which one you would prefer I mean, certainly the amortization adds more.
Adds less volatility within the are a when trying to calculate EBITDA, but I mean, you know look we can take this offline and we can get feedback from people, it's all which way they would prefer us to calculate it.
Okay. That's helpful. And then as you think about attributable EBITDA on the ours insightics adjusting for things like the yes distributions.
How do you think about the leverage outlook for the Diamond sports side and not 2020.
Well I mean, you know so so far you know diamond is outside of the the dish blackout Diamond is on track for what we you know we've indicated a all along.
And so really all the way, we think they'd because we don't believe dish the arsons being dark one dishes to permanent state a you're really just looking at an elevated temporary elevated leverage until they come on but outside of that you know we really are on track for all of the.
Now all of the estimates that the we originally expected.
Okay and on the balance sheet for Diamond Sports I think you have 949 million of cash there should we adjust that for the race put and then the preferred redemption or.
Are those the only two adjustments we should make for the first quarter.
So you know so we did have one team that exercise their third place so on and that happened in the first quarter. We did take out the 200 million of the craft. So those would be the two large items to adjust for.
Okay got it.
And then.
Lastly for handed over.
You have you had a dispute I guess with Tsubo, TV, where you're no longer on that platform I know that's relatively small but the did that have any impact on your guidance for this year and then are there any other virtual contracts virtual MPPD contracts, we should be aware of what you tube or you truly whereas anything anything near term.
So yeah, we did take Google out of our guidance.
And but it was immaterial as you noted and Ah we we just recently added Hello.
You know marquee onto who Lou and Ah you too is an active negotiation that's that's near term.
Great. Thank you so much.
Well move Nexus, even K Hall with Wells Fargo.
Thank you maybe first just a question on the guidance you raised a train I keep 20 free cash flow because just help us maybe think about where that raised come from did it come in 19 is it your expectation for 20, and if we look at it at that kind of divisional level did the increase or outperform.
Its come from legacy Sinclair or or or the regional sports networks.
Yeah. So HM.
Look odd and legacy business had you know phenomenal fourth quarter, and so you're seeing on the free or free cash flow increase upright primarily coming from that but again the ER. The sports segment is done exactly what we thought it would.
Oh, it would do impacted all it also be its revenue and EBITDA, our internal guidance there and so it's so that's a driver but look our political numbers are coming in a lot higher them, even what we budgeted for internally and the first quarter.
Oh, so we're seeing a that driver is well flow through.
Great and then I'm you are a sense could you maybe just take a longer term view would you look at this business how should we think about the revenue growth rate over the medium term and I think you've talked in the past about low single digit cost growth you've had some recent renewals are you still confident.
Yeah, the low single digit cost growth and kind of how does that compare to your long term revenue expectations to give us a bit of like an algorithm around run rate EBITDA or free cash flow growth.
Sure. So yeah, we are still.
Confident in our ability to keep a expense growth.
In a low single digit area and you know despite even you know renewals flowing through there obviously, 90% of the revenue its distribution. So then it near to medium term that's gonna be highly influenced by.
Subscriber trends, but that'll be offset by.
A mid single digit no escalators.
And and then you know the the things that we're working on top of that I'm like sports betting.
We think we'll have a a large new revenue pool associated with that we think ultimately we viewed bigger than advertising that not as made us a script as a as this as subscription though it does help viewership, which helps advertising and it and viewership which helps you with your.
And the PD negotiations those are tangential, we see a new revenue stream, forming around sports betting, which ultimately we think will be a bigger opportunity then advertising.
And now we've got our digital reboot, which there really isn't much revenue right now digitally for any of these assets.
And we think that's a very significant opportunity to there in order of magnitude of what U.S.P. on digital is.
And on the AD side, although ads are only 10% so moving up their yield a would be more of a you know what an incremental process. We're already seeing a progress there in terms of just doing better basics around local selling and yield management political obviously is going to be it.
Growth areas, we already seeing that come through.
With a with the stations being in the flow and sharing that flow with the with the our sense and then bringing our top tier suite of digital marketing services to the local sellers. The our sense will also add to the yield.
And then on top of that you've got a D. P C opportunities, which could include add on subscriptions to the to the arsons, our cost synergies, which are well underway.
And and then that are non game programming as well and a you know as as we as we go through renewals I think we're gonna have you know an opportunity to actually be fairly aggressive with our rights or cost management.
Given how given how much of a pair that we are to the teams in the leagues.
And so really that's sort of the how we look at that at a de sport, but you know I as I pointed out there really in the near term there really you know.
A large part of the revenue will be driven by subscriber trends.
Great and then lastly, I know that you've got the businesses silo from a a leverage standpoint that debt standpoint is the is the cash between them Fungible beat should we think about overall company free cash flow is being available for both debt repaid out of both silos and for share repurchases over the next.
Sure. Thanks.
The cash really a style out as well and as I mentioned earlier, we think about it that way as well in terms of what the point other priorities for de sports, which is focused on de leveraging right now and then there's different priorities for STG.
Thank you, ladies and gentlemen that will conclude today's conference. We thank you for your participation you may disconnect at this time and have a great day.
Thank you everyone.
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