United States securities and exchange commission logo
April 24, 2024
Lucy Rutishauser
Chief Financial Officer
Sinclair, Inc.
10706 Beaver Dam Road
Hunt Valley , MD 21030
Re: Sinclair, Inc.
Form 10-K for the
Fiscal Year Ended December 31, 2023
Form 8-K filed
February 28, 2024
File No. 333-271072
Dear Lucy Rutishauser:
We have reviewed your
filing and have the following comments.
Please respond to this letter within ten business days by
providing the requested
information or advise us as soon as possible when you will respond. If
you do not believe a
comment applies to your facts and circumstances, please tell us why in
your response.
After reviewing your
response to this letter, we may have additional comments.
Form 10-K for the Fiscal Year Ended December 31, 2023
Management's Discussion and Analysis of Financial Conditions and Results
of Operations
Sinclair, Inc. Results of Operations
Local Media Segment
Revenues, page 57
1. You disclose that
"Distributors for our broadcast signals, decreased $40 million in 2023,
when compared to the
same period in 2022, primarily due to a decrease in subscribers,
partially offset by an
increase in contractual rates." Since subscribers and contractual rates
are the drivers of your
revenue, please disclose those key statistical measures in your
MD&A for all periods
presented. We refer to guidance in Item 303 of Regulation S-K.
2. We note you discuss
local advertising revenue by categories such as political, automotive,
retail, home products,
pharma, food, etc. in your earnings presentation. To help investors
understand the drivers
of your local advertising revenue, please consider
disclosing revenue by
these different categories in future filings for all periods presented.
Provide us with your
proposed future disclosure.
Lucy Rutishauser
FirstName LastNameLucy Rutishauser
Sinclair, Inc.
Comapany
April NameSinclair, Inc.
24, 2024
April 224, 2024 Page 2
Page
FirstName LastName
Notes to the Consolidated Financial Statements
5. Goodwill, Indefinite-lived intangible assets, and other intangible assets,
page F-23
3. We note the value of your goodwill significantly exceeds your market
capitalization. Please provide us with a reconciliation of the
aggregate fair value of your
reporting units to your market capitalization as of or around the
goodwill impairment test
date. Refer to ASC 350-20-35-22 to 35-24. In future filings if
goodwill continues to
exceed your market capitalization, provide a discussion of how you
considered market
capitalization when performing your goodwill impairment analysis.
12. Income Taxes, page F-34
4. We note that in 2022 you increased your valuation allowance by $56
million and then in
2023 you decreased it by $212 million. Both the increase and decrease
in the valuation
allowance were associated with the federal interest expense
carryforwards under IRC
Section 163(j). With a view towards expanded disclosure, please tell
us specifically what
occurred in relation to the federal interest expense carryforward
under IRC Section
163(j) between 2022 and 2023 that caused the significant change in the
valuation
allowance.
Form 8-K filed February 28, 2024
Exhibit 99.1, page 1
5. We note your statement that "As of December 31, 2023, the Company
estimated the fair
market value of Ventures' minority investment portfolio, which
includes Ventures' cash of
$343 million, and investments in real estate, private equity, and
venture capital funds, as
well as direct investments in companies, at approximately $1.2
billion, or approximately
$18 per share." Please tell us specific information about Ventures'
minority investment
portfolio and how it is reflected in your Form 10-K for the fiscal
year ended December 31,
2023. Disclose how these balances were calculated and why you believe
it is appropriate
to present them in your Form 8-K. As applicable, refer to your basis
in accounting
literature.
6. We note that you have disclosed a number of measures labeled as
"excluding
Adjustments" or as "excluding DSG." As these amounts appear to be
non-GAAP
measures, please revise to identify them as such and to provide the
disclosures required by
Item 10(e)(1)(i) of Regulation S-K.
7. You present the non-GAAP measures Adjusted EBITDA and Adjusted Free
Cash Flow
within a tabular disclosure of segment financial information. Please
explain your basis for
the manner in which Adjusted EBITDA and Adjusted Cash Flow are
calculated as part of
this table (including the consolidated amounts). In addition, tell us
how you considered
disclosing Operating income (loss), which is used to measure segment
performance, with
equal or greater prominence to the non-GAAP segment measures. Refer to
Item
Lucy Rutishauser
FirstName LastNameLucy Rutishauser
Sinclair, Inc.
Comapany
April NameSinclair, Inc.
24, 2024
April 324, 2024 Page 3
Page
FirstName LastName
10(e)(1)(i)(A) of Regulation S-K and question 102.10(a) of the
non-GAAP C&DIs.
8. You state that the "Company considers Adjusted EBITDA to be an
indicator of the
Company's operating performance and the ability to service its debt.
The Company also
believes that Adjusted EBITDA is frequently used by industry analysts,
investors and
lenders as a measure of valuation and ability to service its debt."
Please clarify whether
Adjusted EBITDA is a performance measure or a liquidity measure. If it
is a performance
measure, explain why there appear to be cash-based adjustments.
Alternatively, if
Adjusted EBITDA is a liquidity measure, revise to reconcile it to cash
provided by
operating activities as the most directly comparable GAAP-basis
measure. Please provide
us with the proposed revised disclosures you intend to include in
future filings. Refer to
Item 10(e)(1)(i) of Regulation S-K. In addition, provide us with
additional detail regarding
the adjustment for non-recurring transaction, implementation, legal,
regulatory and other
costs.
9. You state that Adjusted Free Cash Flow is used as an indicator of
the Company s
operating performance, but it has a label that suggests it is a
liquidity measure. Please
revise to clarify the nature of this measure and, if it is a liquidity
measure, better explain
how it provides useful information to investors and provide a
reconciliation to cash
provided by operating activities. Alternatively, if it is a
performance measure, tell us how
you determined it is appropriate to call it Adjusted Free Cash Flow
and explain why there
appear to be cash-based adjustments. Please provide us with the
proposed revised
disclosures you intend to include in future filings. Refer to Item
10(e)(1)(i) of Regulation
S-K and Question 100.05 of the non-GAAP C&DIs. With your response,
please also
address your presentation of Adjusted Free Cash Flow on a segment
basis.
10. We note your disclosure of Adjusted EBITDA and Adjusted Free Cash Flow
based on the
results you expect to achieve for the three months ending March 31,
2024. We also note
the statement that you do not provide reconciliations on a
forward-looking basis. Tell us
how you determined that the calculations provided are appropriate and
explain how your
presentation is consistent with Item 10(e)(1)(i)(B) of Regulation S-K.
If your are relying
on the exception provided by Item 10(e)(1)(i)(B) of Regulation S-K,
provide the reason
such reconciliation has not been provided, the information that is not
available, and the
significance of that information. Refer to Question 102.10(b) of the
non-GAAP C&DIs.
11. Please tell us how your reconciliation of GAAP Operating Income to
Adjusted EBITDA
on a consolidated basis is consistent with the requirement per Item
10(e)(1)(i)(B) of
Regulation S-K to reconcile non-GAAP measures to the most directly
comparable GAAP-
basis measure.
We remind you that the company and its management are responsible for
the accuracy
and adequacy of their disclosures, notwithstanding any review, comments, action
or absence of
action by the staff.
Lucy Rutishauser
Sinclair, Inc.
April 24, 2024
Page 4
Please contact Inessa Kessman at 202-551-3371 or Robert Littlepage at
202-551-3361 if
you have questions regarding comments on the financial statements and related
matters.
FirstName LastNameLucy Rutishauser Sincerely,
Comapany NameSinclair, Inc.
Division of
Corporation Finance
April 24, 2024 Page 4 Office of Technology
FirstName LastName