LIN TV Incurs Giant Noncash Write-Off
Q2 earnings on normal accrual basis down only slightly.
By Robert Marich -- Broadcasting & Cable, 8/5/2008 9:15:00 AM
LIN TV took a whopping $297 million noncash write-off on the book value of its broadcast licenses and goodwill in second-quarter earnings Tuesday, although earnings on the normal accrual basis were down only slightly.
Its loss from continuing operations in the quarter ended June 30 was $215.8 million versus a profit of $4.1 million in the same quarter a year earlier due to the write-off on intangibles. The quarterly loss was not as large as the one-time write-off on intangibles because LIN also booked a $71.5 million benefit in the quarter related to taxation.
In the quarter, LIN’s diluted net loss per share was $4.26 compared with a net gain of $0.07 one year earlier.
Net revenue increased 2% to $103.7 million benefiting from political and digital-media revenue. But taking out nonrecurring business, ad revenue slipped 7%. In local advertising, housing, automobile and retail segments were poor. In national, automotive dragged down results.
“Based on U.S. economic forecasts, which currently anticipate continued weak market conditions going into 2009, media stocks have traded down to levels that reflect earnings and cash-flow multiples at or near historic lows,” LIN TV president and CEO Vincent L. Sadusky said in a statement. “As a result, we have recorded an intangible asset impairment charge [of $297 million] in the second quarter. However, we continue to see the fundamentals of the television-broadcasting business as very sound and the digital strategy for our market-leading television stations should position us for additional revenue growth and margin expansion once the economy rebounds.”
Regarding the write-off, accounting rules require periodic tests of company assets and LIN decided to take the charge because of the decline of the price of its class-A common stock, a decline in ad revenue at some of its TV stations and a decline in selling prices of television stations. TV-station companies are trading at historic lows in the stock market.
Recently, LIN’s chief financial officer and digital-media chief exited the company.
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