Hearst-Argyle Q2 Revenue, Earnings Fall
August 1, 2008 at 7:19 AM (PT)
HEARST-ARGYLE TELEVISION second quarter total revenue fell 5.6% to $182.1 million, reflecting a 10% drop in ad sales excluding political spots. Earnings per share fell from 18 to 15 cents. The company, primarily a television station owner, operates HEARST's Talk WBAL-A and Rock WIYY (98 ROCK)/BALTIMORE, for which financial information is not broken out.
Pres./CEO DAVID BARRETT said, "Notwithstanding the strength of our local market stations and local digital media operations, our second quarter financial results reflect the reality of a very weak advertising economy, and the challenges evident in the domestic macro-economy. The recessionary effect caused by the housing slump, escalating energy prices, credit crisis, and resultant low consumer confidence levels certainly impacts our local media businesses. While a number of our mid-sized stations in less volatile MIDWEST markets are performing well, our larger stations in NEW ENGLAND, FLORIDA, and CALIFORNIA are particularly challenged. We’ve expectedly benefited from political spending, both for the presidential race and for specific state races, but reduced budgets from key ad categories and negative pricing pressure have caused overall ad revenues to decline in the period, adversely impacting net income. We continue to be very pleased with the competitive performance of many of our stations, and with the excellence of our local news efforts.
"Our focus on cost containment and reductions in capital spending enable us to continue generating strong free cash flow. On a trailing 12-month basis, the Company has reduced debt by $114 million, further strengthening our already strong balance sheet, while still supporting strategic investment in sales development efforts, and digital media initiatives.
"We are very well positioned to achieve top-line growth and strong incremental bottom-line improvement as economic conditions eventually stabilize and improve. In the coming months, we’ll continue to benefit from accelerating political spending, but we foresee continued weakness from numerous key ad categories, which will limit our revenue upside.
"The local television medium, coupled with an aggressive local digital strategy, is far and away the most valuable advertising and marketing alternative for local businesses. Television’s superior reach and digital’s local targeting capabilities are an ideal solution for advertisers, who must continue to market their products and services in a competitive and challenging economic environment. Our Company believes in the value of the television medium, and in the valuable business model that we have for today and tomorrow."