AGM 2020

Jun 4, 2020

Greetings, and welcome to the Sinclair Broadcast Group shareholder meeting. At this time, all participants are in a listen only mode. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Chris Ripley, President and Chief Executive Officer. Thank you. You may begin. Good morning. I'm Chris Ripley, President and Chief Executive Officer of Sinclair Broadcast Group Inc. And as directed by the Board, I will be the Acting Chairman of this Annual Shareholders Meeting. It is my pleasure to welcome you, whether you're attending remotely or to the Annual Meeting of Shareholders. It is 10AM, 06/04/2020, and in accordance with the notice of the meeting, I call this Annual Meeting of Shareholders to order. With the restrictions occasioned by the COVID-nineteen pandemic, we have determined to proceed with the shareholders meeting, but with certain restrictions that should assist in preserving everyone's health and comply with Maryland Governor's and Baltimore County Executive's restrictions. On 04/22/2020, we issued our notice of this annual meeting and proxy statement in which all company shareholders of records were notified of the date and the time of the annual meeting of shareholders and all were invited to attend the annual meeting. In the notice and the proxy statement, we also recognize the risk to shareholders, employees and the community occasioned by COVID-nineteen pandemic and the health and safety of our shareholders, employees and community are of paramount concern to the Board and management. In an effort to minimize the risk to shareholders, employees and the community, the notice and proxy statement strongly encourage all shareholders to access the annual meeting via the live teleconference or webcast rather than attend the meeting in person, and we've supplied instructions to do so. We also issued a press release in this regard, which was filed with the SEC as proxy material and posted these details on our website. We also encourage all shareholders to vote their shares prior to the annual meeting. Today, no shareholder attending the meeting remotely will be able to vote or revoke a proxy through the teleconference or webcast nor participate actively. With this in mind, we strongly encourage each shareholder to vote their shares using one of the methods indicated in the proxy materials or through a broker, a bank or other nominee's voting instructions form. Subject to the limitations imposed by Maryland Governor Larry Hogan, only 10 persons total are permitted to attend the annual meeting, which number includes members of the Board of Directors and management. Once this capacity was reached, no additional persons, including any shareholders wishing to attend the meeting in person were permitted to physically enter the annual meeting. For those shareholders permitted to attend the meeting in person, when you registered this morning, each of you received a written copy of the rules of conduct for our annual meeting. Any shareholder introducing a proposal or making a presentation today has also received a written copy of the rules of conduct for our annual meeting. As indicated, shareholders attending the meeting via the live teleconference or webcast are not permitted to participate actively and therefore have not received a copy of the rules of conduct. This meeting shall be conducted in accordance with those rules. The Inspector of Elections has elected to attend this meeting remotely, making its presentation remotely. As such, if someone entitled to vote attempted admission to the meeting but was not admitted due to the restrictions occasioned by the COVID-nineteen pandemic, that person was, nevertheless, permitted to present a proxy card at the information desk outside the room designated for the meeting. And the company has or will send the proxy to the Inspector of Elections prior to the submission of the final voting report by the Inspector of Elections to ensure that votes were included. We appreciate your continued support and we hope you and yours will stay safe and healthy. We are closely monitoring events with the COVID-nineteen pandemic and we urge you all, including our shareholders, to follow recommendations provided by the World Health Organization and the U. S. Centers for Disease Control and Prevention. Attending today's annual meeting, either in person or remotely, are David D. Smith, Director and Executive Chairman, Frederick G. Smith, Director and Vice President, Jay Duncan Smith, Director, Vice President and Secretary, Robert E. Smith, Director Lawrence E. McKenna, Director Daniel C. Keith, Director Martin R. Leader, Director Howard E. Friedman, Director Benson E. Legg, Director Barry Faber, President Distribution and Network Relations Lucy A. Rudishauser, Executive Vice President, Chief Financial Officer David Bohanic, Senior Vice President, Chief Accounting Officer and Corporate Controller David B. Giver, Senior Vice President and General Counsel Steve Zanker, Vice President, Investor Relations and Billy Joe McIntyre, Director, Investor Relations. At this point in the meeting, I'd like to provide a brief state of the union on the company, highlighting our achievements of the past year and the impact of COVID-nineteen and what the future may hold. But first, Steve Zanker will give the Safe Harbor statement. As a reminder, certain matters discussed on this call may include forward looking statements, including future operating results, which are subject to a number of risks and uncertainties. I remind you that actual results in the future could differ materially as a result of various factors, which can be found in our SEC reports, including the risk factors in our annual report on Form 10 ks. The company undertakes no obligation to update these forward looking statements. Thank you, Steve. As we enter the new decade, we believe that Sinclair is well positioned to maintain its position in a dynamic and ever changing media industry. To be a leader in the new decade, we must strive for change and continue to evolve, adapt to consumer preferences on content and provide desirable and value added programming, especially in live news and sports. 2019 was a big year for us. In addition to setting records for revenue and adjusted EBITDA, we also made an acquisition that turned us into a diversified media company. I am, of course, referring to the acquisition of the Fox Regional Sports Networks, which made us the largest owner of RSNs in the country. With our stakes in Marquee, the Chicago Cubs RSN and the YES Network, the Yankees RSN, we have an unparalleled offering of major live sports content. Absent the effects of COVID-nineteen, our sports division anticipated the production of over 5,000 live games per year for approximately half of the major league baseball, basketball and hockey teams in The U. S. Content that we believe is among the most valuable to viewers and advertisers alike. The last few months have been challenging for Sinclair as well as the entire country. As COVID-nineteen has necessitated changes to the way we all conduct business, while many of our employees have been working remotely for safety reasons and to be compliant with stay at home orders issued by numerous states, we are pleased by how well Sinclair has continued to perform despite the disruptions of our normal work environment. We quickly identified approximately 130,000,000 of operating and capital cost savings and deferrals to help offset revenue declines suffered as a result of COVID-nineteen. We believe that our success in adapting to this new environment will make us a stronger company as we move forward, helping us to be a more efficient and cost effective organization. Maintaining core advertising revenue is expected to be challenging for 2020, in large part due to the effects of COVID-nineteen. Nevertheless, we expect record political advertising revenue in 2020, which should assist in mitigating the impact of the pandemic on our business. With live sports postponed for the last few months due to COVID-nineteen, it is important to note that our contracts with the major sports teams and our distributors anticipated situations where some or all the season is not played. Simply put, the contracts between us and the teams as well as us and many of the distributors provide for rebates in the case of under delivery of games. However, like most of the country, we look forward to the start of live sports very soon. As a leader, not just in broadcasting, but also within our communities, our news operations have continued to play a pivotal role in the pandemic, keeping viewers informed of critical information. The increase in our local news viewership validates the importance of local content and the need of people to be informed, especially in times of crisis. Our efforts though didn't stop there. We also act were active in helping many communities raising funds to aid those impacted by COVID. For example, through our partnership with the Salvation Army, we raised almost $1,000,000. We could not be prouder of our employees who have given themselves in order to help those in need in their communities. Turning to our future. Sinclair continues to make progress on several emerging technologies and platforms that we believe will position us for growth in the years ahead. In what we believe will be a historic event, the first live commercial deployment of the next generation of broadcast television referred to as Next Gen TV or ATSC three point zero launched in Las Vegas last week. This is an initiative that Sinclair has been promoting for over two decades. Next Gen TV is expected to provide an incredible viewing experience first offering personalization, mobility, a wider range of content, targeted advertising and programming and enhanced emergency alerting to viewers. We are also in the process of rebranding our RSNs and developing a new and improved app for viewers to watch the RSNs on mobile devices, which should enhance the viewing experience and offer new ways to enjoy the games. These capabilities are anticipated to eventually coordinate with legalized sports betting, which which is increasingly being implemented on a state by state basis throughout the country. Coordinate We believe that any coordination with sports and gaming represents anticipated a significant opportunity for the company to grow its sports business. Sinclair is well positioned and well capitalized to ride out this period of economic weakness and uncertainty. We have taken measures which we believe will help our liquidity and will reduce non critical capital and operating expenses without compromising the foundation of the business. By undertaking these measures, we should be well positioned should this current economic environment persist for a more protracted period of time. We also move to strengthen and optimize our capital structure, including the repurchase of issued and outstanding stock. These opportunistic moves are predicated on our belief that our securities are significantly undervalued by the financial markets. In conclusion, we believe our future is bright and we look forward to sharing our vision and progress with you in the years to come. Mr. Jay Duncan Smith, Corporate Secretary of the company, will you now report on the mailing of notice and other formalities? Thank you, Mr. Chairman. I wish to submit the following. A copy of the printed notice of this meeting dated 04/22/2020, stating the time, purpose, and place of meeting a copy of the press release dated 05/21/2020, confirming the meeting and how to attend remotely the complete list certified by the company's transfer agent of holders of shares of common stock of the company as of the close of business on 03/13/2020, which is also the record date fixed by the Board of Directors for the shareholders entitled to notice of and to vote at this meeting affidavit of the company's transfer agent showing that a copy of the notice of this annual meeting was mailed in accordance with the bylaws of the company to all shareholders of record. I now order that the materials submitted by the secretary be made part of the minutes of this meeting. American Stock Transfer and Trust Company LLC has been appointed as Inspector of Elections to tabulate the shares of common stock represented in person or proxy at this meeting, as well as to tabulate the votes cast for each proposal to come before the meeting. I would like to introduce Barbara Robbins, the representative of American Stock Transfer and Trust Company LLC. Ms. Robbins is attending the meeting remotely, but she has the ability to address all in attendance. Ms. Robbins, are you prepared to report on the number of shares of common stock that are present either in person or by proxy? Mr. Chairman, as of the record date of 03/13/2020, there were 65,477,303 shares of Class A common stock and 24,727,682 shares of Class B common stock entitled to vote on each of the proposals. Each of such Class A shares is entitled to one vote on each of the proposals, and each of the Class B shares is entitled to 10 votes on each of the proposals. There are 81,360,716 Class A shares and Class B shares present in person or represented by valid proxy at this meeting. As noted in the proxy statement, shareholders attending this meeting via the live teleconference or webcast are not deemed present at the meeting unless they are represented by a valid proxy. Based on the report of Ms. Robbins, I hereby declare that a quorum is present at this meeting. The four proposals submitted for shareholder action at this meeting are fully explained in the proxy statement dated 04/22/2020. As noted in the proxy statement, shareholders attending this meeting via the live teleconference or webcast are not able to vote via the live teleconference or webcast nor are they able to revoke their proxy. However, any previously submitted proxies are deemed voted and will be included in the tabulation of the balloting. The next order of business is the election of nine directors to serve for one year and until their successors are duly elected and qualified. The nine directors who receive the most votes will be elected. This is called a plurality. If you have withheld your vote on the proxy card, your vote will not count for or against the nominee. Broker non votes are not counted as votes cast for nominees and will not affect the outcome of the proposal. I will call upon Secretary Jay Duncan Smith, who will present the names of those persons nominated by management. Thank you, Mr. Chairman. Those nominated for election as directors of the company to serve for a term of one year and until their successors are duly elected and qualified are the following, David D. Smith, Frederick G. Smith, J. Duncan Smith, Robert E. Smith, Howard E. Friedman, Daniel C. Keith, Martin R. Leader, Lawrence E. McKenna, Benson E. Legg. You've heard the motion. Is there a second? I second. Are there any other nominations? Hearing none, I declare the nominations closed. Any ballots presented at the information desk for shareholders not permitted to attend the person due to the 10 person gathering rule will be scanned and sent to the transfer agent. The next proposal originally submitted to the shareholders for action is the ratification of the Audit Committee's appointment of PricewaterhouseCoopers LLP as the independent auditors of the company. The affirmative vote of a majority of the votes cast is required to ratify this proposal. If you abstain from voting, your abstention will not count as a vote for or against the proposal. Broker non votes are not counted as votes cast for this proposal and will not affect the outcome of the voting. The Audit Committee has previously recommended to the Board of Directors that it ratify the Audit Committee's appointment of PricewaterhouseCoopers LLP as the company's independent auditors for the year ending 12/31/2020 and the directors have unanimously done so. I now call upon Lawrence E. McKenna, the Chairman of the Audit Committee to further address the shareholders at this time. Thank you, Mr. Chairman. The Audit Committee was assigned the responsibility of appointing the independent auditor for the common. The audit committee discussed the proposal received from PricewaterhouseCoopers, LLP with members of the firm and was satisfied that they have the qualification and experience to handle the audit of the company and its various subsidiaries. Based on these discussions, the audit committee agreed that it was in the best interest of the company to engage PricewaterhouseCoopers LLP as its independent auditors and so notified the board of its decision. Based upon the recommendation of the audit committee, the board unanimously ratified the appointment and has recommended PricewaterhouseCoopers LLP as the independent auditors for the company and its subsidiaries for the year ended 12/31/2020. The audit committee will continue to work closely and regularly with the company's independent auditors and will periodically evaluate their work to assure its quality. I move for the ratification by the shareholders of the appointment of PricewaterhouseCoopers, LLP as the independent auditors of the company and its subsidiaries. You have heard the motion for ratification of the Audit Committee's recommendation. Is there a second? I second the motion. In accordance with the Dodd Frank Wall Street Reform Act and the Consumer Protection Act of 2010, the company has submitted an advisory say on pay resolution for shareholder consideration. This resolution is contained in proposal three of the proxy statement. The company believes that its executive compensation is tied to individual and company performance and is designed to support the company's long term success by attracting and retaining talented senior executives and aligning their interests with the interest of our shareholders. We have provided detailed information on our executive compensation policy and procedures as well as the actual compensation paid to our named executive officers in the compensation discussion and analysis and in the related tables and narrative in the proxy statement. All compensation programs for named executive officers are reviewed by the Compensation Committee. The Board of Directors and the Compensation Committee both value the opinions of our shareholders and will consider any shareholder concern and whether any actions are necessary to address those concerns. With this in mind, we currently conduct an advisory vote on executive compensation every three years and following today's Annual Meeting of Shareholders, we expect to conduct the next advisory vote at our twenty twenty three Annual Meeting of Shareholders. This say on pay vote is advisory only and is not binding on the company. For all the reasons stated in the proxy statement, the Board unanimously recommends that the shareholders vote for the resolution contained in Proposal three of the proxy statement and approve on an advisory basis the compensation of the named executive officers as disclosed in the proxy statement. You have heard the resolution for a nonbinding advisory vote on executive compensation. Is there a second? I second the motion. The next proposal submitted to the shareholders for action is the shareholder proposal from the California Public Employees Retirement System, the beneficial owner of at least $2,000 in market value of the company's common stock. This proposal requests the Board to initiate an appropriate process to amend the company's articles of incorporation and or bylaws to provide that the directors be elected by an affirmative vote of the majority of votes cast at the annual meeting of shareholders in uncontested elections. With a plurality vote in any director election when the number of director nominees exceeds the number of board seats. Due to the COVID-nineteen pandemic and in the interest of shareholder participation, the company has agreed to allow the California Public Employees Retirement System to present this proposal remotely via teleconference. I now call on the designated representative of the California Public Employees Retirement System, Todd Matley, to present proposal four on its behalf. Mr. Matley now will address the meeting remotely. Good morning. My name is Todd Matley with the California Public Employees Retirement System. And, I want to ensure that proposal number four, requesting majority vote in uncontested director elections is properly entered into business. And and CalPERS, with that, CalPERS hopes that the company will take steps to implement a accountable director election standard that recognizes against votes. And in contest elections, we stand ready to engage constructively with the company to help this process. And we believe that this can be done in a manner that is not disruptive and in best interest of both shareowners and the company. Thank you very much. And we look forward to speaking in the future. Thank you, Todd. The supporting statement from the California Public Employees Retirement System as well as the board statement and recommendation regarding proposal four is contained in the proxy statement. The California Public Employees Retirement System has recommended a vote for this shareholder proposal. For the reasons stated in the proxy statement, the Board unanimously recommends a vote against this shareholder proposal. The affirmative vote of the majority of votes cast is required to ratify this proposal. If you abstain from voting, your abstention will not count as a vote for or against the proposal. Broker non votes are not counted as votes for this proposal and will not affect the outcome of the voting. You have heard the shareholder proposal. Are there any questions or further discussion needed? Hearing none, we shall move forward with the vote. Will the representative of the inspectors election please report the results of the balloting? Thank you, Mr. Chairman. Each nominee for director nominated by the Board of Directors has received a plurality of the votes of the shares present in person or represented by proxy and entitled to vote on the election of directors and are elected. A majority of the shares present in person or represented by proxy and entitled to vote have been voted to ratify the appointment of PricewaterhouseCoopers LLP as the company independent auditors for the fiscal year ending 12/31/2020. A majority of the shares present in person or represented by proxy and entitled to vote have been voted for approval of the company's executive compensation. A majority of the shares present in person or represented by proxy and entitled to vote have been voted against proposal for relating to the voting basis used in the election of the Board of Directors. As such, this proposal is rejected. I now declare that one, the nominees for directors have been duly elected two, the appointment of PricewaterhouseCoopers LLP to audit the financial statements of the company and its subsidiaries for the year ending 12/31/2020 has been ratified. Three, the non binding advisory vote on the company's executive compensation was approved. And four, the shareholder proposal related to voting basis used in the election of the Board of Directors was not ratified. I direct that the results certified by the inspectors of elections be attached to the minutes of this meeting and be made part thereof. We generally now come to that part of the agenda for general questions and discussions. Unfortunately, given the pandemic and the restructuring of the meeting, we are unable to do so at this time. However, if anyone has questions, please feel free to reach out to our Investor Relations department. If there are no other business, the chair will entertain a motion to adjourn. Is there a second? I second the motion. All in favor? Aye. Before the adjournment, I would like to express my sincere appreciation to our shareholders who attended in person or remotely as well as those who have submitted their proxies and were unable to be present in person or remotely. We appreciate your support. Please be safe and stay healthy. The meeting is adjourned. Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation and have a wonderful day.