Hearst-Argyle Revenue Down 9%

Record political haul can't offset "severe" ad slump
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Hearst-Argyle Television reported fourth quarter revenue of $197.1 million, a 9% drop from the previous year's fourth quarter. The broadcaster reported record net political revenue of $51.2 million for the quarter, and another $7 million in retransmission consent fees. But those could not offset a decrease in several major advertising categories and another in digital media revenue.

President/CEO David Barrett said the company did about as well as one might hope for in a brutal business climate. "Our operating results for 2008 are a reflection of the very challenging economic environment that grips our domestic and global economies," he said. "Notwithstanding the strong local competitive position enjoyed by most of our stations, the severe downturn in ad spending-at both the local and national level, from a broad cross section of ad categories-resulted in a 4.7% decline in net revenues for the full year of 2008."

He continued: "Throughout the year, we've been focused on stringent cost management initiatives, and we've taken numerous steps to restructure and right-size our operations appropriate to a lowered revenue base. Included in our operating results is a $5.7 million severance charge that reflects steps taken in the fourth quarter to reduce employment by approximately 200 positions."

The broadcaster announced fourth quarter and year ended December 31, 2008 loss per diluted share of $5.90 and $5.52, respectively, after giving effect to a non-cash impairment charge of $926 million pre-tax, $570 million after-tax, or about $6.09 per share.

Barrett said a mix of cost reduction and aggressive product rollout will help Hearst-Argyle weather some of the "economic pressures" the company is facing. "It is evident that recessionary conditions will continue to challenge us, resulting in further declines in ad spending," he said. "We've taken aggressive steps to introduce new revenue and programming initiatives on multi-platforms, and our 2008 cost management actions, along with further steps we are undertaking in 2009, will help mitigate some, but not all, of the economic pressures we are facing. We are taking proactive steps to conserve cash for further debt reduction, including significant curtailment in capital spending and the suspension of our dividend.

Hearst-Argyle owns 26 stations.

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