12 Aug Tribune Media Company Reports Second Quarter 2014 Results
Tribune Media Company (the “Company”; OTC:TRBAA) today reported its results for the three and six months ended June 29, 2014. The consolidated financial statements along with management’s discussion and analysis of financial condition and results of operations are available on the Company’s corporate website, www.tribunemedia.com, and on the Company’s investor relations mobile app.
Q2 Highlights
- Consolidated revenues grew 23% to $894.5 million compared to the second quarter of 2013
- Consolidated Adjusted EBITDA grew 20% to $211.9 compared to the second quarter of 2013
- Cash flow was positively impacted by a cash distribution from Classified Ventures, LLC of approximately $160 million related to the sale of its Apartments.com business
- WGN America successfully launched and renewed its first original series, Salem
Company Results
Consolidated revenues for the three months ended June 29, 2014 were $894.5 million compared to $730.2 million in the three months ended June 30, 2013, representing an increase of $164.3 million, or 23%. Consolidated revenues for the six months ended June 29, 2014 were $1,746.7 million compared to $1,435.2 million in the six months ended June 30, 2013, representing an increase of $311.5 million, or 22%.
Consolidated operating profit for the three months ended June 29, 2014 was $61.3 million compared to $89.6 million in the three months ended June 30, 2013, representing a decrease of $28.3 million, or 32%. For the six months ended June 29, 2014, consolidated operating profit was $135.7 million, a decrease of $37.4 million, or 22%, as compared to $173.1 million in the six months ended June 30, 2013.
Consolidated Adjusted EBITDA increased to $211.9 million in the three months ended June 29, 2014 from $177.0 million in the three months ended June 30, 2013. Consolidated Adjusted EBITDA increased to $509.8 million in the six months ended June 29, 2014 from $393.9 million in the six months ended June 30, 2013.
Cash distributions from equity investments in the three months ended June 29, 2014 were $35.4 million compared to $34.2 million in the three months ended June 30, 2013. Cash distributions from equity investments in the six months ended June 29, 2014 were $155.7 million compared to $124.1 million in the six months ended June 30, 2013. In addition, the Company also received a cash distribution in the second quarter of $159.6 million from Classified Ventures, LLC in connection with the sale of its Apartments.com business.
Commenting on the second quarter results, Peter Liguori, Tribune Media president and chief executive officer stated, “I am very pleased with our accomplishments in the second quarter. The premiere of WGN America’s original series, Salem, exceeded our expectations and we have renewed it for a second season. While the core advertising market experienced headwinds in the first half of the year, we continue to be encouraged by the strength of our new broadcast scale, as evidenced in our year-over-year retransmission fee increases, and feel positive about the opportunities presented by the political advertising landscape in the second half of 2014.”
Broadcasting
Broadcasting segment revenues were $425.8 million in the three months ended June 29, 2014, an increase of $165.3 million, or 63%, as compared to $260.5 million in the three months ended June 30, 2013. For the six months ended June 29, 2014, Broadcasting segment revenues were $824.2 million, an increase of $324.5 million, or 65%, compared with $499.7 million in the six months ended June 30, 2013.
Broadcasting segment Adjusted EBITDA was $140.5 million in three months ended June 29, 2014, compared to $85.1 million in the three months ended June 30, 2013, an increase of $55.4 million, or 65%. For the six months ended June 29, 2014, Broadcasting segment Adjusted EBITDA was $279.6 million compared with $164.7 million in the six months ended June 30, 2013, an increase of $114.9 million, or 70%.
Pro forma for acquisition of Local TV (see attached quarterly pro forma financial disclosures)
The following discussion includes 2013 amounts that are pro forma for the acquisition of Local TV, which was completed on December 27, 2013, as if the acquisition had occurred as of the beginning of 2013, and are based on Local TV’s historical basis of presentation and do not reflect the impact of purchase accounting.
Broadcasting segment revenues were $425.8 million in the three months ended June 29, 2014, compared to $406.0 million in the three months ended June 30, 2013. This represents an increase of $19.8 million, or 4.9%. Retransmission consent revenues in the three months ended June 29, 2014 were $57.1 million, compared to $32.0 million in the three months ended June 30, 2013, an increase of $25.1 million, or 78%. Advertising revenues decreased to $329.1 million in the second quarter of 2014 as compared with $336.6 million in the second quarter of 2013, representing a decrease of $7.5 million, or 2.2%. Increases in political advertising revenues of approximately $6.5 million in the quarter were offset by declines in core advertising of $15.6 million, or 4.9%. For the six months ended June 29, 2014, Broadcasting segment revenues increased $48.9 million, or 6.3%, to $824.2 million compared to $775.3 million in the six month period ended June 30, 2013. Retransmission consent revenues in the six months ended June 29, 2014 increased $51.1 million, or 83%, to $112.7 million, compared to $61.6 million in the six months ended June 30, 2013. Advertising revenues decreased to $633.4 million in the six months ended June 29, 2014 as compared with $637.2 million in the six months ended June 30, 2013, representing a decrease of $3.8 million, or 0.6%. Increases in political advertising revenues of approximately $7.9 million in the first half of 2014 were offset by declines in core advertising of $14.8 million, or 2.4%.
Broadcasting Adjusted EBITDA was $140.5 million in the three months ended June 29, 2014, compared to $149.2 million in the three months ended June 30, 2013. Adjusted EBITDA in the quarter ended June 29, 2014 included $24.5 million of additional costs associated with new original programming at WGN America. For the six months ended June 29, 2014, Broadcasting Adjusted EBITDA was $279.6 million, compared to $279.3 million in the six months ended June 30, 2013. Adjusted EBITDA in the six months ended June 29, 2014 included $31.0 million of additional costs associated with new original programming at WGN America.
Publishing
Publishing segment revenues in the three months ended June 29, 2014 were $468.7 million, compared to $469.6 million in the three months ended June 30, 2013, a decline of $0.9 million, or 0.2%. This decline was primarily attributable to declines in advertising revenue of $19.0 million, offset by increases in other revenues largely resulting from the acquisition of Gracenote in the first quarter of 2014. For the six months ended June 29, 2014, Publishing segment revenues were $922.5 million, compared to $935.5 million in the six months ended June 30, 2013. The decline of $13.0 million, or 1.4%, was primarily attributable to a decline in advertising and commercial printing revenues, partially offset by an increase in other revenues due to the acquisition of Gracenote in the first quarter of 2014.
Publishing segment Adjusted EBITDA was $56.1 million in the three months ended June 29, 2014, compared to $69.7 million in the three months ended June 30, 2013, a decline of $13.6 million, or 20%. The change was primarily due to revenue declines in the newspaper business as well as added expenses from the acquisition of Gracenote. For the six months ended June 29, 2014, Publishing segment Adjusted EBITDA was $111.9 million, compared to $127.7 million in the six months ended June 30, 2013, a decline of $15.8 million, or 12%. The change was primarily due to revenue declines in the newspaper business as well as added expenses from the acquisition of Gracenote.
Corporate
Corporate expenses reduced Adjusted EBITDA in the three months ended June 29, 2014 by $18.2 million, compared to $11.7 million in the three months ended June 30, 2013. The $6.5 million increase in expenses was primarily attributable to increased compensation expense and costs associated with the implementation of a technology application.
For the six months ended June 29, 2014, Corporate expenses reduced Adjusted EBITDA by $33.8 million compared to $21.9 million in the six months ended June 30, 2013. The $11.9 million increase in expense was primarily attributable to increased compensation expense and costs associated with the implementation of a technology application.
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For a copy of this press release, complete with tables, please visit Investor Relations.
Tribune Media Company (OTC:TRBAA) is home to a diverse portfolio of television and digital properties driven by quality news, entertainment and sports programming. Tribune Media is comprised of Tribune Broadcasting’s 42 owned or operated local television stations reaching 50 million households, national entertainment network WGN America, available in 72 million households, Tribune Studios, and Tribune Digital Ventures, including the websites Zap2it and TVByTheNumbers, and Gracenote, one of the world’s leading sources of TV and music metadata powering electronic program guides in televisions, automobiles and mobile devices. Tribune Media also includes Chicago’s WGN-AM, the national multicast networks Antenna TV and THIS TV. Additionally, the company owns and manages a significant number of real estate properties across the U.S. and holds other strategic investments in media. For more information please visit www.tribunemedia.com.
Non-GAAP Financial Measures
This press release includes a discussion of Adjusted EBITDA for the Company and our operating segments (Publishing, Broadcasting and Corporate). Adjusted EBITDA is a financial measure that is not recognized under accounting principles generally accepted in the U.S. (“GAAP”). Adjusted EBITDA is defined as earnings before income taxes, interest income, interest expense, pension expense, equity income and losses, depreciation and amortization, stock-based compensation, certain special items (including severance), non-operating items and reorganization items plus cash distributions from equity investments less cash pension contributions. Adjusted EBITDA for the Company’s operating segments is calculated as segment operating profit plus depreciation, amortization, pension expense, stock-based compensation and certain special items (including severance). We believe that Adjusted EBITDA is a measure commonly used by investors to evaluate our performance and that of our competitors. We also present Adjusted EBITDA because we believe investors, analysts and rating agencies consider it useful in measuring our ability to meet our debt service obligations. We further believe that the disclosure of Adjusted EBITDA is useful to investors, as this non-GAAP measure is used, among other measures, by our management to evaluate our performance. By disclosing Adjusted EBITDA, we believe that we create for investors a greater understanding of, and an enhanced level of transparency into, the means by which our management operates our company. Adjusted EBITDA is not a measure presented in accordance with GAAP, and our use of the term Adjusted EBITDA may vary from that of others in our industry. Adjusted EBITDA should not be considered as an alternative to net income (loss), operating profit, revenues or any other performance measures derived in accordance with GAAP as measures of operating performance or liquidity.
Cautionary Statement Regarding Forward-Looking Statements
Certain disclosures in this press release include certain forward-looking statements that are based largely on our current expectations and reflect various estimates and assumptions by the Company. Forward-looking statements are subject to certain risks, trends and uncertainties that could cause actual results and achievements to differ materially from those expressed in such forward-looking statements, and are in some instances beyond our control. Such risks, trends and uncertainties include: the Company’s adoption of fresh-start reporting which caused its consolidated financial statements for periods subsequent to the date we and our subsidiaries (the “Debtors”) emerged from chapter 11 bankruptcy to not be comparable to prior periods; the Company’s ability to satisfy future capital and liquidity requirements; our ability to access the credit and capital markets at the times and in the amounts needed and on acceptable terms; our ability to retire outstanding debt and satisfy other contractual commitments; increased interest rate risk due to variable rate indebtedness; changes in advertising demand; changes in the overall market for television advertising, regulatory and judicial rulings; availability and cost of broadcast rights; competition and other economic conditions including fragmentation of the media landscape and competition from other media alternatives; our ability to develop and grow its on-line businesses; changes in accounting standards; adverse results from litigation, governmental investigations or tax-related proceedings or audits; our ability to settle unresolved claims filed in connection with the Debtors’ chapter 11 cases and resolve the appeals seeking to overturn the confirmation order issued by the U.S. Bankruptcy Court for the District of Delaware on July 23, 2012; our ability to satisfy its pension and other postretirement employee benefit obligations; our ability to attract and retain employees; the effect of labor strikes, lock-outs and labor negotiations; our ability to realize benefits or synergies from acquisitions or divestitures or to operate our businesses effectively following acquisitions or divestitures; our ability to successfully integrate the acquisition of Local TV Holdings, LLC (“Local TV”), including our ability to program the acquired stations to successfully generate improved ratings and increased advertising revenue and to maintain relationships with cable operators, satellite providers and other key commercial partners of Local TV, retain key Local TV employees, and realize the expected benefits and synergies including the expected accretion in earnings; our reliance on third-party vendors and Tribune Publishing Company for various services and transitional services, respectively; our ability to adapt to technological changes; and other events beyond our control that may result in unexpected adverse operating results.
The words “believe,” “expect,” “anticipate,” “estimate,” “could,” “should,” “intend,” “may,” “plan,” “seek,” “will,” “designed,” “assume,” “implied” and similar expressions generally identify forward-looking statements. Whether or not any such forward-looking statements are in fact achieved will depend on future events, some of which are beyond the control of the Company. Readers are cautioned not to place undue reliance on such forward-looking statements, which are being made as of the date of this press release. We undertake no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.