Adelphia shares sinking
Adelphia Communications stock continued its free-fall with news that the Securities and Exchange Commission has launched a formal investigation into the controlling Rigas family’s $2.3 billion in loans guaranteed by the company to their partnerships. Adelphia stock closed at $7.06 a share April 18, and has lost 64 percent of its value since the Rigas family disclosed the debt in a March 27 analyst conference call. The formal probe gives the SEC power to subpoena documents and testimony. The company and SEC declined comment. Adelphia, which acknowledged the probe in a prepared statement, missed a second deadline filing on April 16 for its annual report with the agency due to the ongoing review of its accounting practices. Adelphia is working with several investment bankers to identify cable systems it can sell.
Earnings rise for Gannett
Gannett Co. said its first-quarter earnings rose on Olympics advertising and lower printing costs, offsetting lower overall ad revenues. Television revenues rose 7 percent to $167.2 million, aided by Gannett’s 13 NBC affiliates. Gannett said total first-quarter earnings increased to $243.6 million, or 61 cents a share, from $174.5 million, or 66 cents a share, a year earlier, even though operating revenues fell 3 percent to $1.52 billion. Management said it is “cautiously optimistic” about the rest of the year, although the company said it will likely match analysts’ consensus forecasts for the second quarter.
Ad forecast gloomy for 2002
The upfront will bring low single-digit increases in ad spending to the major networks, according to the latest forecast from the Zenith Optimedia Group. Overall 2002 advertising expenditures in the seven countries (United States, United Kingdom, Japan, Germany, France, Italy and Spain) that together account for 74 percent of the world’s advertising spending will shrink by 1.9 percent, after shrinking by an estimated 5.4 percent in 2001, according to Zenith Optimedia’s latest quarterly forecast. Advertising tends to fall more sharply than the general economy during a recession and takes longer than the general economy to come back. “This is the price ad markets pay for outperforming the economy during periods of confidence and growth,” the forecast noted.
Shell joins Gemstar-TV Guide
Fox Cable Network Group President and CEO Jeff Shell has relinquished his post to join Gemstar-TV Guide International as co-president and chief operating officer. He fills the vacancy created by the sudden resignation of Peter Boylan III on March 18. Fox parent News Corp. owns 42.6 percent of Gemstar-TV Guide, and the move is seen as News Corp. Chairman Rupert Murdoch’s attempt to exert more control over the company, which is headed by Gemstar-TV Guide Chairman and CEO Henry Yuen. Gemstar’s stock price has steeply declined in recent weeks. Mr. Shell will report to Mr Yuen. A replacement for Mr. Shell is not expected to be named immediately.
Short takes
RealNetworks reported its first quarterly net profit in more than two years of just over $1 million, or 1 cent a share on a slight decline in revenues to $47.3 million. … Media General said its first-quarter earnings rose 76 percent, boosted by a 5.5 percent gain in broadcast revenues. The Richmond, Va., company posted a $120.3 million loss after a one-time accounting charge, despite $6 million in earnings, or 26 cents a share, on a 2 percent decline in revenues to $194.5 million.