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Sinclair Broadcast Group, Inc. (NASDAQ:SBGI)

July 30, 2013 9:00 am ET

Executives

Lucy A. Rutishauser - Vice President of Corporate Finance and Treasurer

David D. Smith - Chairman, Chief Executive Officer, President and Director of Sinclair Ventures Inc

Analysts

Marci Ryvicker - Wells Fargo Securities, LLC, Research Division

Nadia Lovell - JP Morgan Chase & Co, Research Division

Avi Steiner - JP Morgan Chase & Co, Research Division

Davis Hebert - Wells Fargo Securities, LLC, Research Division

Howard Rosencrans

Westcott Rochette - S&P Capital IQ Equity Research

Aaron Watts - Deutsche Bank AG, Research Division

Tracy B. Young - Evercore Partners Inc., Research Division

Michael McCaffery

Operator

Greetings, and welcome to the Sinclair Allbritton Call. [Operator Instructions] As a reminder, this conference is being recorded. It's now my pleasure to introduce your host, Lucy Rutishauser, Vice President, Corporate Finance and Treasurer. Please go ahead.

Lucy A. Rutishauser

Thank you, operator. On the call with me today is David Smith, President and CEO; and David Amy, Executive Vice President and Chief Financial Officer, who is on a much-earned vacation and dialing in from the road.

Before we get started, let me make the forward-looking statement disclaimer. Certain matters discussed on this call may include forward-looking statements regarding, among other things, future operating results, performance or achievements. 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 have been set forth in the press release issued yesterday, as well as the company's most recent reports on Forms 10-Q, 10-K and 8-K, as filed with the SEC.

Included on the call will be a discussion of non-GAAP financial measures, specifically, television broadcast cash flow, EBITDA, free cash flow and leverage. These metrics are not meant to replace GAAP measurements but are provided as supplemental detail to assist the public in their analysis and valuation of our company.

Yesterday, we announced that we entered into a definitive agreement to purchase the stock of Perpetual Corporation and Charleston Television, LLC, both of which are owned and controlled by the Allbritton family. The transaction includes the purchase of 7 television stations in 7 markets, reaching 4.9% of U.S. TV households. Also included in the purchase is NewsChannel 8, which is the local cable satellite news channel in our nation's capital. The purchase price is $985 million, with no assumption of debt, representing an 8.7x buyer's multiple on 2011, 2012 average EBITDA, which include synergies relating to the television stations of approximately $21.5 million for a 10.7x seller's multiple.

Free cash flow relating to the TV stations is expected to average approximately $35 million to $50 million per year, depending on the financing strategy which, at a 10x free cash flow multiple, equates to $3.50 to $5 of equity value per share. We expect to finance the purchase price through a bank loan and, thereby, accessing the capital market.

On a pro forma basis and including the synergies, the Allbritton transaction will result in approximately 0.7 turns of incremental leverage, which would bring our 2012, 2013 2-year blended total net leverage, including all previously announced transactions and synergies, to about 4.75x.

The transaction is subject to customary closing conditions, including approval by the Federal Communications Commission and antitrust clearance, as applicable. The transaction is expected to close in funds when the fourth quarter of 2013, subject to closing conditions.

On a pro forma basis for 2011, assuming consummation of all the acquisitions announced today, Sinclair's net broadcast revenues after synergies would have been $1,609,000,000 and EBITDA would've been $668 million. 2012 net broadcast revenues after synergies, and including such acquisitions, would have been $1,865,000,000 and EBITDA would've been $848 million. 2011's pro forma political revenues, assuming such acquisitions, would have been $27 million, and 2012 pro forma political, would've been $223 million. On a pro forma basis and all other previously announced transactions, Sinclair will be the largest broadcaster in the U.S., owning and operating, programming or providing sales services to 149 television stations in 76 markets.

Our station group will reach approximately 38% of U.S. TV households, or 22%, as computed under FCC rules, well below the 39% ownership cap. Our portfolio will include 33, FOX; 27, ABC; 25, CBS; 23, CW; 20, MyTV; 14, NBC; 5, Univision; 1, independent; and one Azteca station, making us the largest FOX, ABC, CBS, CW and MyTV affiliate groups and the fourth largest NBC group. Let me now turn it over to David Smith.

David D. Smith

Thank you, Liz. If there's one take away from our announcement regarding Allbritton, it should be the strategic significance of this transaction. We believe this is a once-in-a-lifetime opportunity to expand our footprint into our national capital, the heart of the American political system. WJLA in Washington, D.C. is a full-blown news operation with an infrastructure in place that connects them immediately to breaking news events of all branches of our federal government. Why is this important? This structure would allow us to transmit live events, committee hearings and other breaking news stories, live, to all of our stations, which means that we can be first on the air, giving us the competitive advantage, not to mention unlimited access to very important news content.

Another consideration is what it means for our Baltimore stations, by having a news powerhouse in the D.C. market, which is only 35 miles away. We believe that the expanded news coverage offered on our Baltimore Fox station will benefit our viewers in the Baltimore marketplace, many of whom have strong interest in the events taking place in Washington.

We also believe that the combination will create a more efficient buying opportunity for advertisers who wish to reach consumers in the adjoining Maryland suburbs of Washington, D.C. and Baltimore, which will lead to greater revenue opportunities for us, including an increase in political revenues in those overlapping counties. The most exciting take away from this transaction, and the reason we are paying a higher buyer's multiple than we have in other recent acquisitions, although, lower seller's multiples as compared to the Fisher transaction and Tribute recent purchase of local TV, is because of the unique asset we are acquiring in the NewsChannel 8, which is Allbritton's local cable/satellite news channel in D.C., which has been operating since approximately 1991.

While NewsChannel 8 currently reaches over 2 million subscribers in that market alone, because of Allbritton's limited reach, the channel has yet to be fully developed outside of the D.C. market. With about 38% coverage of the country, we believe we have a distinct opportunity to accomplish that. When you consider that our portfolio includes 101 news stations in 71 markets broadcasting almost 1,700 hours of local news per week, we are confident we can use NewsChannel 8 as a launching point for a local and national news cable channel that can be carried in all of our markets or even partnered with other broadcasters to possibly reach 100% of the country.

Although, obviously, other news channels exist, we believe that we combine the existing NewsChannel 8 infrastructure with our existing local news facilities to create a unique hybrid model that focuses not only on national and international news, which, traditionally, have lower ratings than the local TV station business, but also provides a unique, customized, local presence in our markets and the markets of other broadcasters with which we may partner in the future.

Although we cannot project, at this time, how much subscription revenue we will receive for the carriage of this news channel from the multi-video program the distributors across our entire footprint, we are very confident that given the quality of the product, we would create the importance of our existing platform to the MVPDs, we will be paid for carriage.

Consider that, if all we did was roll this concept out across our platform and receive the approximate $0.57 per sub that Kagan says CNN gets paid for household reach, if that would equate to approximately $300 million in incremental revenue, reducing our purchase price to a 2.5 multiple, and that does not include incremental advertising revenue the news channel could receive, or any subscription fees in markets outside the Sinclair station footprint. I'm not suggesting that we can get -- or maybe we can get more, but to the take away is, we believe, there is a significant value here that we can unlock by coupling the cable channel with the rest of our news stations and rolling it out to just more D.C. So with that, operator, we're happy to start taking questions.

Question-and-Answer Session

Operator

[Operator Instructions] Our first question comes from Marci Ryvicker with Wells Fargo.

Marci Ryvicker - Wells Fargo Securities, LLC, Research Division

I have a couple questions. The first is, can you just talk about the timing, or your expected timing, for when you can actually monetize NewsChannel 8? Is this is a very long-term timeframe? Or can you do this over the next couple of years?

David D. Smith

I think it's possible to do it over the next couple of years. We haven't spent a lot of time, frankly, almost no time, inside their structure, other than what we've kind of observed from the outside, just because of the nature of the auction process. So I think, we need to get in there as soon as possible, and start exploring what their physical capability is, and what their talent capability is, because we tend to think that, as we think about the larger picture, of rolling this out across the country, we'll probably going to be looking at different levels of talent. And just the whole notion of rolling out a cable news platform in every market where we have television stations, require us -- have required to create kind of a wheel -- a news wheel that we're going to have to be very thoughtful about, as it relates to local news content, how it's integrated into the daily schedule. It's going to require some logistical work to get done before we can roll this thing out. But as I think, I think we stay a couple of years, will be well up and running within that.[ph][ph]

Marci Ryvicker - Wells Fargo Securities, LLC, Research Division

And then in the terms of just the pipeline that you see ahead of you, how much capacity do you have to do more acquisitions and how much do you think is out there still?

David D. Smith

Well, I think there's clearly just an awful lot more to do out there. There's just billions of dollars, as in $10 billion, $5 billion, I can just name from off the top of my head, there's at least $2 billion without even thinking, let alone multiple hundreds of millions of dollar deals. So I think there's still probably 2 years, at least 2 years' worth of work to do between us and maybe 3 or 4 other people, who are going to be the primary buyers of these assets.

Lucy A. Rutishauser

And Marcy, from a capacity standpoint, yes, we are well within all of our covenants in all levels of the cap table, and we have plenty of cushion. We're well within the ownership cap. And again, some of the numbers we talked about today doesn't even include the incremental EBITDA that comes from the rollout of NewsChannel 8.

Marci Ryvicker - Wells Fargo Securities, LLC, Research Division

Okay. And then the last question I have is on the regulatory environment. Any concerns given what we heard from may be DirecTV and Time Warner Cable, in terms of their commentary with regards to the deal?

David D. Smith

No, I just think that it never ceases to amaze me that, as Time Warner, or anybody for that matter, the magnitude of which dwarfs typically most television companies, including ours, continues to seek regulatory relief for problems that they have competing in the marketplace. I just -- it never ceases to amaze me. You got to cry wolf so many times before people say, "Stop! You'll outrun your business." So I think that's all this really is.

Operator

Our next question comes from Alexia Quadrani with JPMorgan Chase.

Nadia Lovell - JP Morgan Chase & Co, Research Division

This is Nadia, in for Alexia. Just a couple of follow-up questions. Can you discuss a little bit where most of the $21.5 million in synergies are coming from? Can you give us a sense of how much of it is retrans and how much is attributed to the cable outfit?

Lucy A. Rutishauser

Yes, what we -- we typically don't break it down to that level of detail, Nadia, but as in -- with all of our other transactions and majority of the synergies do come from the step up in the retrans from the after-acquired clause.

Nadia Lovell - JP Morgan Chase & Co, Research Division

Is it fair for us to assume that the synergies are not as much as some of your past deals, as if the retrans got between you and Allbritton segment were not -- was not as light?

Lucy A. Rutishauser

No, I wouldn't assume that.

Nadia Lovell - JP Morgan Chase & Co, Research Division

Okay. And then, can you just discuss briefly any -- the cost, they accept their causes to see if it will worth [ph] with bulking up NewsChannel 8 for distribution across the U.S.

David D. Smith

Yes, I think it's really more just the human cost, if there's anything else, because every local television station who's doing news already has the structures in place. We don't know, specifically, in any great detail, precisely what NewsChannel 8 has, in terms of its capacity. But clearly, they're running a 24-hour news operation, so they're -- my first sense is, question for us is, will we expand that capacity? And the answer is, probably, yes. But in terms of the capital involved in doing that, it's essentially immaterial, as far as we're concerned.

Operator

Our next question comes from Avi Steiner from JPMorgan.

Avi Steiner - JP Morgan Chase & Co, Research Division

A couple of quick ones here. One, just going back to the pipeline question and some of the comments you made, I just wanted to get a sense from Sinclair's perspective, do we look at the next kind of 6 months, a year, as the period of digestion, as you bring assets on board? Or should we expect you to remain active? And then, I have a couple of quick follow-ups.

David D. Smith

I think the absorption of these things is just kind of normal process stuff. It will happen in due course. We're pretty good at that. We don't time the market when these things become available so we have to kind of react when they come to the market. So if something were to come to the market tomorrow, if we think it's strategic to us then, we'll be compelled to be involved then. So it's really not our call. We just have to -- it would be nice if we have a little bit of time, but if we don't, then, we're prepared to go, if need be.

Avi Steiner - JP Morgan Chase & Co, Research Division

A fair enough. Second question, I think, is an easy one for you, Lucy. But can you just confirm Allbritton bonds on traveling and all is part of this transaction?

Lucy A. Rutishauser

That's correct. We negotiated for an all-cash debt-free transaction.

Avi Steiner - JP Morgan Chase & Co, Research Division

And then lastly, just you guys have been fairly good at balancing out kind of half of cash to shareholders, paying down debt, acquisitions, et cetera. Any change to that going forward? Or how should we think about that, as you build free cash flow here?

David D. Smith

I think, it's too early to think to contemplate that. And certainly, something will be done at the board level when the time comes. But obviously, we're generating more free cash flow. And the uses of the free cash flow are buy more business, pay down debt or do dividends or buy back stock. We'll contemplate that at the appropriate time.

Operator

Our next question comes from Davis Hebert with Wells Fargo.

Davis Hebert - Wells Fargo Securities, LLC, Research Division

I just wanted to walk through the sources and [ph] quickly, given the secondary offering, Fisher, Titan, and you're not assuming Allbritton bonds, can you walk through the total financing need we'd see over the next -- I guess, by the end of the year?

Lucy A. Rutishauser

Yes, so if I kind of breakdown through everything that we did in Q2, in terms of refinancings and debt and equity raises, and what we had is up in the pipeline that we've announced, we would -- if we used all the excess proceeds that we've raised and dedicated them solely to Allbritton, there would be about an $800 million need that we would need to tap the market for, now, whether we raise more than that, goes back to David's point about, there's so stew in the pipeline right now, so we would look at a minimum of $800 million to raise and I would think more than that.

Davis Hebert - Wells Fargo Securities, LLC, Research Division

Okay, that's helpful. And then, as far as the timing of the transaction, you said, Q4. Any idea if it would be early Q4 or, basically, towards the end of the year.

Lucy A. Rutishauser

Well, typically, it can figure any transaction about a 90-day window just to get through FCC approval, so that would put us, at the earliest, November 1.

Davis Hebert - Wells Fargo Securities, LLC, Research Division

Earliest, okay. And then, back to the NewsChannel 8. Do you have any renewals upcoming? I think, Comcast is the primary MSO in the D.C. area. So what's the timing of the renewals for that cable network?

David D. Smith

You mean, as it relates to Sinclair? Or as it relates to Allbritton?

Davis Hebert - Wells Fargo Securities, LLC, Research Division

I guess, as it relates to Allbritton.

David D. Smith

I think, that's way out there. I think they recently did a 10-year renewal.

Davis Hebert - Wells Fargo Securities, LLC, Research Division

Okay. I think you're right. Just want to make sure I was on the same page there. And then, as far as you build this cable network out, to your existing footprint, to potentially partner with new -- with other broadcasters. Would you conceivably renew your existing retrans contracts and then, bundle-in the cable network? Is that kind of how you're thinking about it? Or would you be proactive, ahead of that renewal cycle?

David D. Smith

I think, we're going to play it any way that kind of was -- I think, certainly, we'll be asking an advance. But as a minimum, it's worst-case as these things roll up in terms of the renewals of contracts. That will be on the table. If we can gat an advance, that's a wonderful thing. If we can't, then we'll wait.

Davis Hebert - Wells Fargo Securities, LLC, Research Division

Okay. And on the ABC affiliation deal, I know Allbritton had signed a longer-term deal with ABC. Is there any change to that agreement with the acquisition?

David D. Smith

Not that we're aware of, no. Should be...

Davis Hebert - Wells Fargo Securities, LLC, Research Division

Okay, fair enough. I think, for modeling purposes, I think Allbritton's CapEx is around $4 million to $6 million. Is that probably a good run rate to layer into our model?

Lucy A. Rutishauser

Yes, that should be fine.

Operator

Our next question comes from Howard Rosencrans with Value Advisory.

Howard Rosencrans

Couple of -- just reviewing a map that you threw out, in terms of that free cash flow generation. So there's about $110 million of EBITDA and then off of that, we're looking it's a 5% quest on the incremental debt assumed, then just $5 million of CapEx, so it takes it down to like $50 million or $55 million of free cash flow. Or should we be thinking about taxes? I'm just curious how your -- I mean, that would sort of jive with creating, say, $0.50, $0.60 of free cash flow and maybe $5 and a $10 multiple.

Lucy A. Rutishauser

Yes, I threw out, Howard, the numbers of $30 about million -- $35 million to $50 million, sir. You're in that range.

Howard Rosencrans

I'm sorry, $35 million?

Lucy A. Rutishauser

$35 million to $50 million in free cash flow for a year, so you're in the range.

Howard Rosencrans

Okay. It seems to me like it should be meaningfully higher. Unless I'm missing -- once you're assuming a -- what sort of debt of quest are you assuming?

Lucy A. Rutishauser

Well, that's where you get the range. Because it depends whether or not we hit the bond market or the bank market, or a combination of both.

Howard Rosencrans

And the lineup question will concern David's assessment, and I'm reading between the lines of -- David, you suggested that the $0.57 that CNN gets is, you sort of implied that you were hopeful that, at some point in time, I'm just playing devil's advocate here, that, that $0.57 would -- would that do and be able to achieve a higher number. I mean, CNN has been a brand that's been around for a long time, et cetera. And then, they may have fallen far from grace, but I'm just curious as to what you are thinking, is this to why your payout from the video companies would be better or worse than that.

David D. Smith

It's kind of an interesting question, so let me kind of address it by suggesting that, we think, that the market should pay for value, not for brand. In other words, if a brand is not delivering an audience, why should they get paid? So I'll give you some comparisons because when we've done stand-up in the past and show some things, we always kind of get to the things that most people find just absolutely unbelievable. And I'm just going to pick a few cities here, just did randomly picked these last night. And we pulled some [indiscernible] books. and the purpose of this is the point out the difference between a local television station and the relevance and value of it versus any cable news channel. And I think, everybody knows what the kind of cable news channels get, and even the cable sports channels get. So in this case, since it's news, let's just talk about news. But in Columbus, Ohio, as an example, this is from the February '13 ready book, and this is for adults 25 to 54, this is going to shock you, but it is what it is. From 5:30 to 6:00 a.m., in the morning, we run paid programming. And our paid programming, on a FOX affiliate in Columbus, Ohio, does 3x the rating that Bill O'Reilly does in prime time. When you think about that same show at 5:30 in the morning, up against CNN, that is reportedly getting by, as reported by Kagan, getting $0.57 a subscriber from 7:00 p.m. until 10:00 p.m., and that paid programming has 9x the audience at 5:30 in the morning than CNN does in prime time. I can give you a list, I'm sure we've all heard of Wolf Blitzer, 4:00 to 7:00 in the afternoon on CNN, right? It is not measurable, so I'm not sure what's going on in his situation room, but he's got a real situation there. Just as a further perspective, the [indiscernible] in Columbus, Ohio does 3,000 adults from 4:00 to 7:00 p.m. with talk shows. Wolf Blitzer has no measurable ratings. And this isn't something that's unique to us. This is specific to every -- literally every television market in the country. Local -- people really underestimate the relevance of local television and the value it brings to the marketplace versus what cable news channels bring. Here's Salt Lake City. Our 5:30 in the morning newscast delivers 9,000 adults, 25 to 54 versus CNN in prime time that is 0, it is not measurable, according to Nielsen. And relative to the #1 cable news channel in the country, Fox News channel, all 3 prime time shows, whether it's John Hannity, Bill O'Reilly or Greta Van Susteren, our 5:30 in the morning newscast has 9x their audience, against prime time. Now if you've just stepped, [ph] the numbers are even bigger. But again, there's nothing unique to us about this. This is the broadcast industry against the cable industry, and cable news content. So when one thinks about should we get $0.57, the first question you have to answer is, do I really think that my local television station can get one thousand subscribers in prime time? 1,000 people that watch me? If the answer to that isn't yes, then the world is upside down and backwards. Because Fox News Channel does 1,000 and nobody's watching it, relative to our local news at 5:30 in the morning. So I hate to tell you what the numbers are in prime time, in news. They're just staggering. I mean, the numbers are so staggering, people look at us and say, "You can't be serious." So we're very confident that, over time, we're going to build a local/national news audience that's going to compete directly with every other cable news channel, and I don't have any doubt that were not going to get paid for it.

Operator

[Operator Instructions] Our next question comes from Westcott Rochette with S&P.

Westcott Rochette - S&P Capital IQ Equity Research

I was just wanted to ask, since you're now getting a station in D.C., whether that changes the political outlook, the ability to maintain somebody on the ground there full-time, whether that translates to better coverage to place political ads in some of your local stations or whether being in Baltimore, you're already close enough that it's not going to make a meaningful difference?

David D. Smith

I think, in a macro sense, it's going to have a material effect because one of the things that we're going to do that literally nobody else can do, I'll just -- give you one example of it. In the state of Iowa, as an example, we're in Cedar Rapids, we're in Des Moines, we're in -- we're essentially going to be -- just assume for the sake of the argument, every material city in the state of Iowa, when it comes time and our mechanical structure is in place, we're going to be able to go sit down with any senator from the state of Iowa and say, we're doing live town halls in every city in the state of Iowa's hypothetical, right now, 8:00, whatever it happens to be, it's good to be broadcast live, it's going to be on the Internet, it's going to be everywhere, and we like you to participate in the town hall, so you can talk to your constituents and let them know, face-to-face, in this case, it will be monitor-to-monitor, what their views of the world are. When you think about what that brand is, in terms of the ability of the consumer to become involved in the political process, at all levels, never been done. We think there's value in that. And we think the idea that we can offer those kinds of tools and capabilities to politicians is just a huge value creator for us in the grand scheme of things and a huge service to the community. So the broad answer to your question is, yes. Being in Washington, D.C. and having 24-hour access to all politicians, at all levels, all government employees, at all levels, is a huge opportunity for us to capitalize on. What's the execution risk? Very, very, very low.

Operator

Our next question comes from Aaron Watts with Deutsche Bank.

Aaron Watts - Deutsche Bank AG, Research Division

Everyone, since when does Dave take vacations? I think you're getting a little soft.

David D. Smith

He's out there, he's on the phone. He's not on his bike right now, but he's on the phone.

Aaron Watts - Deutsche Bank AG, Research Division

Most of my questions have been answered. I really said 2 quick follow-up. Lucy, maybe one just for you, on synergies. Do you see achieving those in kind of a 1 year timeframe? Is it going to take a look bit longer, just maybe some framework around that?

Lucy A. Rutishauser

Yes. So the way we've always done is, with all of our acquisitions, the synergy number that we provide you publicly and for the buyer's multiple is what we believe we can achieve in the first 12 months of operating those stations. So we usually point out that beyond that, there are a lot of other synergies that come with our acquisitions that aren't included in the buyer's multiple, whether it be content or programming-related or revenue-related or, as David talked about here, with the NewsChannel 8, the fact that we pick up basically through WJLA, a Washington news bureau, and the competitive advantage it gives us, doesn't include the bottom, were Washington synergies in there. So the 21 is what we know we can do in the first 12 months, for sure.

Aaron Watts - Deutsche Bank AG, Research Division

Got it, okay, perfect. And secondly, David, just for you, on the ABC kind of affiliation agreement. I just wanted to clarify as you were in the auction process for this station, was this something that ABC kind of gave their blessing to, with you buying these stations? And I recognize that this is maybe not even a concern for a few more years, but just as we think about working with ABC going forward and what their interests are, is this a situation where they were okay with somebody else buying this station other than themselves?

David D. Smith

Obviously, the question never even came up. I don't think -- my sense is, ABC had no interest in the business at all.

Operator

Our next question comes from Shander Berlinski [ph] with Goldman Sachs.

Unknown Analyst

I was just wondering if you could shed some light on the stations that you expect to sell and sort of what you plan to see there. I know I read that you possibly, to comply with SEC rules, you're going to have to sell a station in Birmingham, Harrisburg and Charleston. And I was wondering if you plan to provide sales or other support services to sort of stay involved? Will there be a joint sales agreement? Or something of that nature?

David D. Smith

I think the answer to that is, yes. That's the plan.

Operator

Our next question comes from Tracy Young with Evercore.

Tracy B. Young - Evercore Partners Inc., Research Division

Most of my questions have been answered. Lucy, if you could just run through for us the timing still of Fisher, Titan?

Lucy A. Rutishauser

So Fisher, they have their shareholders' meeting next Tuesday, the sixth. So we're waiting on that and FCC approval. When we report on the seventh, we'll actually have them in there for later in the quarter, maybe even just to make models clean, maybe even October 1 for just modeling purposes. But everything there is on track. There shouldn't be any holdups. Titan is, for modeling purposes, I will just put in for October 1. We just announced that, I think about 1 month ago, do they still have to get through the normal FCC approval process? And Barrington is still working through their government regulation -- regulatory approval processes, so I would just throw then, again, just to there that I can just to keep models clean, I just put them all in for October 1.

Operator

Our next question comes from Michael McCaffery with Shenkman Capital.

Michael McCaffery

I apologize if you addressed this at the beginning of the call, but I'm curious, given Allbritton's, specifically their cable news network seem to have a lot of cross over with, at least some staff, in an operation there, the POLITICO newspaper, even though, obviously, that's separate from the credit, I know just from walking around that newsroom, a lot of the staff seems to be -- they all sit together and a lot of the facilities overlap. So I was curious what the plan was, as far as are the moving out of the building? Or they leasing? Are they going to continue to lease space there? Is there some cooperative agreement where they'll continue to provide content to the NewsChannel 8?

David D. Smith

There's nothing on paper other than just a complete separation between the 2 businesses. My sense is, while they all sit in the same general space, which I haven't seen, by the way, my sense is, they sit in the same general space but, my further sense is, is that they really have nothing to do with each other. And yet there may be some sharing of on-air presence from time to time, but they're just really 2 separate businesses. As it relates to, will they be there when we're done? Again, I haven't seen the physical space yet. My sense is that they'll probably move or they'll be cordoned off in some manner that suits the larger purpose of just separation. Whether or not we continue to work together, it's something that we have to explore with the Allbritton family. They have a lot of content that I suspect they would love a much broader distribution on. So that's just an opportunity for us to sit down and kind of chat about that. They do a lot of news in Washington and it's certainly good content. So we'll have discussions as we get closer to the close on the transaction.

Operator

There are no further questions at this time. I'll turn the conference back over to management. Thank you.

David D. Smith

The operator. I appreciate everybody tuning in and just keep in touch.

Operator

Thank you. This concludes today's conference. All parties may disconnect. Have a great day. Thank you.

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Source: Charleston Television, LLC, Perpetual Corporation, Sinclair Broadcast Group Inc. - M&A Call
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