Real Estate Deals Push Tribune Net Income Higher

Political advertising revenues lower than expected
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Tribune reported higher third-quarter net income, getting a boost from real estate sales as political ad revenue came in lighter than expected.

Net income was $145.7 million, or $1.61 a share, up from $27.8 million, or 29 cents a share a year ago.

Revenues rose 6% to $518.1 million. Total television and entertainment net advertising revenues—including political revenues—increased 3% to $329 million.

During the quarter, Tribune sold real estate, including the Tribune Tower in Chicago and the Los Angeles Times Square property, generating $473 million in pre-tax proceeds. Excluding the real estate deal and a programming write-off at WGN America, Tribune says income per common share would have been 48 cents.

The earnings and revenue were lower than Wall Street forecasts.

"Our financial results in the third quarter demonstrate the strength and resiliency of our media operations," said Peter Liguori, Tribune Media's president and chief executive officer.

“Our results would have been even better but for the Trump campaign's substantially lower than expected spend on television advertising and the fact that our station portfolio does not benefit from Olympic advertising because we have only two relatively small NBC affiliates,” Liguori added.

Tribune estimated that its core advertising was flat in the quarter, after adjusting for the impact of ad dollars shifting to the Olympics. Its full-year gross political advertising will be about $161 million, down 3% from a record total in 2012.

Because of the lower than expected political advertising revenue and a decline in core advertising revenue, the company revised its full-year guidance, saying it expects consolidated revenues to be between $2.148 billion and $2.179 billion and for consolidated adjusted EBITDA to be between $565 million and $585 million. It also expects TV and entertainment segment revenues to be between $1.885 billion and $1.905 billion, with adjusted EBITDA for the segment to be between $600 million and $610 million.

The company also said it continues to work with financial advisors on a strategic review of the company’s assets.

Tribune’s television and entertainment unit reported a $46 million operating profit in the third quarter, down 28% from a year ago. Tribune said the drop was mainly because of higher programming expenses resulting from a $37 million write-off of the syndicated show Elementary at WGN America, plus expenses related to eliminating jobs as part of a cost reduction program.

Television and entertainment revenues were $459.1 million, up 7% from a year ago.

In the third quarter, Tribune’s retransmission consent revenue increased 13% to $78.7 million. Carriage fee revenue for the WGN America cable network increased 48% to $29 million.

Digital ad revenues rose 16% to $15.8 million.

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