Young CEO Blames ‘Perfect Storm’ for Q4 Declines

Mar 10, 2006  •  Post A Comment

Coming off a year that its chief executive described as “a perfect storm of negativity,” Young Broadcasting said Friday that it posted a wider fourth-quarter loss, hurt by a weak advertising market, a decline in network compensation and an absence of political spending.

Young, which owns 10 television stations, reported a fourth-quarter loss of $14.7 million, compared with a year-ago loss of $1.3 million. Revenue fell to $53.6 million from $64.3 million a year earlier.

For the year, Young’s red ink widened to $91.3 million, compared with a year-earlier loss of $44.3 million, while revenue fell to $197.5 million from $225.5 million the year before.

“2005 was perfect storm of negativity,” CEO Vincent Young said during a conference call Friday to discuss the quarterly results. “But the storm is over and the clouds have parted.”

Mr. Young said the company was hurt last year by a weak advertising market in San Francisco, where the company owns independent station KRON-TV; a soft national advertising market; declining network compensation and a lack of political campaign spending, all of which offset growth in local advertising.

However, Mr. Young said, the broadcaster has taken steps to help diversify its sources of revenue, including a companywide push for sales people to find advertisers that have not traditionally done business with television stations.

“Growing local is our primary job,” he said, adding that Young’s sales staff has been inculcated with the philosophy of going out and finding new business rather than waiting for advertisers to call them.

Young is also going to rely on retransmission consent payments to help offset the steady decline in network compensation. The company said it booked $2.5 million in retrans cash payments in 2005, and that number was expected to swell to $3.75 million in 2006.

Mr. Young said the pending shutdowns of The WB and UPN might create some opportunities for KRON in San Francisco, but he refused to say whether he was considering pursuing a MyNetworkTV affiliation for the station.

“Long-term you have to bet on the people at Fox, and long-term MyNetworkTV will probably turn out to be a good bet,” he said.