Campaign Ads Boost Hearst-Argyle Profits

Oct 30, 2008  •  Post A Comment

Strong political advertising helped drive Hearst-Argyle Television’s profit for the third quarter up 20 percent.
The station group reported Thursday that its net income for the quarter that ended Sept. 30 increased to $11.6 million, or 12 cents per share, from third quarter 2007’s $9.7 million, or 10 cents per share.
With the ad market in a slump, revenue for the quarter was nearly flat at $176.2 million, down 0.3% year to year from $176.8 million.
“The significant credit market disruption and pervasive economic weakness, so evident domestically and globally, have had an adverse impact on our local television business, limiting growth opportunities that are typical in an election and Olympics year,” President and CEO David Barrett said in the announcement.
Among the year-to-year highlights reported to analysts were growth of political advertising to $23.7 million from $7 million in third quarter 2007, and a 22% increase in retransmission consent revenue to $6.8 million.
Mr. Barrett said Hearst-Argyle had $17 million in revenues from the Olympics on NBC, but that the stations already were beginning to see “some very bad economic news” from the slumping automotive market, which rendered the event’s effects on the bottom line “much less incremental than has been the case.”
“Those advertisers that were in the Olympics got a helluva buy,” he said.
On the downside: an 11.5% decrease in net ad revenue, excluding political, to $129.5 million; and a 6% decrease in net digital media revenue to $4.9 million.
“We are operating with a strong sense of discipline about cost management, implementing appropriate reductions and reorganizations at our stations, and carefully re-evaluating all investment spending decisions,” Mr. Barrett said. “And we are aggressively using our cash to reduce debt—with over $150 million in debt reduction accomplished on a trailing 12-month basis. Hearst-Argyle Television’s balance sheet remains quite strong, and differentiates us from most others in our space.”

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