LIN Q1 Earnings Up on Political, Digital, Retrans Gains

TV-Station Owner Sealed Retransmission-Consent Deals with Cable One, Suddenlink Communications, Dish Network During First Quarter

By Robert Marich -- Broadcasting & Cable, 5/8/2008 10:02:00 AM

LIN TV posted improved first-quarter earnings Thursday, booking strong political advertising and sharp growth in its digital media, including cable retransmission-consent fees, although the company experienced weaker core advertising.

Its $875,000 in income from continuing operations for the three months ended March 31 compares to a $1.6 million loss in the same quarter a year ago.

Bottom-line net income fell to $1.5 million, or 3 cents per fully diluted share, compared with $20.7 million (42 cents). The year-ago net was inflated by a nonrecurring gain of $23.1 million, or 47 cents per share, from the sale of its Puerto Rico operations. Operating income -- a barometer of core profitability -- was flat at $15.6 million.

Revenue at the Providence, R.I.-based group TV broadcaster grew 1% to $93.1 million.

Looking at segments, core advertising from local and national on its TV stations fell 3% in the quarter due to a general “TV-advertising marketplace decline in LIN TV’s markets,” the company said. “Advertising categories that decreased for the first quarter of 2008 were automotive, retail, restaurants, services, medical, education and grocery. Advertising categories that increased for the first quarter of 2008 included political, media/telecommunications, insurance/financial services and health/beauty. The automotive category, which represents 23% of the company’s core advertising revenues for the first quarter of 2008, decreased 5%.”

Political advertising -- although accounting for just 3% of total company revenue -- soared to $3.2 million versus $600,000 and its digital-segment revenues, which included Internet-advertising revenues and retransmission-consent fees, doubled to $4.9 million from $2.5 million.

LIN said in its earnings announcement: “During the first quarter of 2008, the company reached new retransmission-consent agreements for both its analog and high-definition channels with five companies, including Cable One, Cequel III Programming (Suddenlink Communications) and Dish Network. The agreement with Dish Network contains an important marketing and promotional partnership that offers substantial incentives for consumers to switch to Dish if our local stations are removed from a local cable system in any of our 17 markets.”

“We are very pleased to report that our net revenues grew 1% despite the industrywide weakness in local advertising, and this included a 100% increase in our digital revenues versus the prior year,” LIN TV president and CEO Vincent Sadusky said in a statement. “In addition, we strengthened our balance sheet by paying off $22 million of debt during the quarter. Looking ahead, we continue to focus on the fundamentals of our business, including expense management and further maximizing our digital opportunities during a difficult economic environment.”

In earnings guidance, LIN expects that second quarter net revenues “will increase in the range of 1%-3% (or $1.4 million-$3.4 million) compared with reported net revenues of $101.8 million for the second quarter of 2007. All of this expected increase is attributable to projected political and digital revenue growth.”