Housing Slump Hurts Hearst-Argyle in Q3
HTV Takes $3.6M Hit from Acquisition Attempt by Hearst
By Jon Hemingway -- Broadcasting & Cable, 11/8/2007 6:31:00 AM
Station operator Hearst-Argyle Television (HTV) cited the damping economic climate and absence of political advertising for its lower results in the third quarter.
HTV recorded income of $9.7 million in the third quarter, or $0.10 per share, versus $16.5 million ($0.18) in the same quarter a year ago. The company said it incurred an expense of $3.6 million in the quarter tied to Hearst’s attempt to acquire all of the outstanding shares of the company it doesn’t already own through a tender offer. Shareholders balked at the $23.50-per-share offer price and Hearst let the offer expire Oct. 12. HTV’s earnings per share in the quarter would have been $0.13 if the tender was not initiated.
Revenue in the quarter was down 3% to $176.8 million. The company saw a political-advertising shortfall of $16.5 million in the quarter, a 70% drop, while its core advertising sales rose 5.6% to $146.4 million, partly attributable to the acquisition of an additional station.
Economic factors are damping the advertising market, particularly in Florida, California and the Northeast on the downturn in the housing market. According to the company, the categories most affected include furniture, housewares and financial services. The company also cited the lagging performance of NBC primetime (HTV operates 10 NBC-affiliated stations).
The company collected $5.6 million in retransmission-consent revenue, representing an 18% increase from the same quarter last year. The majority of HTV’s retransmission agreements will come up for renewal at the end of 2008 and in 2009.
Revenue from its digital-media efforts was up 43% to $5.2 million.
HTV expects full-year revenue to be in the $748 million-$756 million range, a 3.7%-4.8% drop from 2006. The company had been looking for a 1%-4% decrease on the year. Ad revenue, including local, national and political, is expected to total $656 million-$661 million, down 5.8%-6.5%, while retransmission revenue will be $21 million-$22 million versus $17.9 million and digital $21 million-$22 million versus $15.5 million.
“The challenges to our near-term outlook continue to be the effects of the housing downturn in our largest markets, NBC primetime performance and the uncertainty of certain key advertising-sales categories,” HTV executive vice president and chief financial officer Harry Hawks said in a statement. “Although we are encouraged by an increase in automotive ad spending on our station group in the month of September, prospects for our largest category are difficult to forecast.”
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