Young: Let’s Talk About Growth, Not KRON

Young Broadcasting chairman Vincent Young tries to stress positives, but questions about pending sale of KRON San Francisco continue.
Author:
Publish date:
Social count:
0

Young Broadcasting chairman Vincent Young wanted to talk about growth at the struggling station group on a conference call with the investment community Thursday, but it appeared that all the bankers wanted to talk about was the (presumably) pending sale of KRON San Francisco.

Vincent Young and chief financial officer James Morgan said Moelis & Co., which Young tapped in January to conduct the sale, “was engaged with several parties,” but the company was not willing to give out more information on the would-be sale.

Morgan did shed a little light on the $139 million write-down the company took on KRON in its earnings report Thursday morning, which set the station’s value at $227 million, down from $366 million. “The market conditions in San Francisco continue to be weak,” he said. “We thought there’d be stronger recovery in the core businesses.”

Young reported second-quarter net revenue of $37 million, down 6.7% from the same quarter a year ago. Young stock was trading at 20 cents per share at press time.

Operating expenses for the quarter declined 4.9% compared with last year’s second quarter, thanks to Young’s plan to shave $15 million from the overall budget.

Young owns 10 stations. MyNetworkTV outlet KRON was cited in its earnings report as a discontinued operation held for sale.

Vincent Young did mention some positive revenue trends at Young’s nine stations, not including KRON. He said spending from health-care providers continues to grow, so much so that he predicted that it would bypass automotive spending in 2012. He said home-improvement services are spending more on television, and small-business car dealers are increasingly finding local TV buys to their liking.

Five of Young’s nine stations are showing growth in local-car dealer-spending, Vincent Young said, adding, “People who grew up in the business, maybe their father started the dealership, would always be in newspapers. Not anymore.”

When the floor was opened up for questions, Vincent Young and Morgan shot down multiple requests for more information on KRON. “We’ll know something when we know something,” Morgan said, choosing his words carefully. “It’s a tricky environment for doing an M&A [merger-and-acquisition] deal.”

As for the company’s Q2 results, “The current weakness in the national economy, especially in the domestic automobile and housing sectors, has caused our revenues to decline this quarter,” Vincent Young said. “Unlike some on Wall Street who see trends continuing indefinitely on their current trajectories, I believe television-advertising revenues will recover in the near future and YBI is well-positioned to take advantage of this recovery. Historically, advertising expenditures are among the first to be cut at the start of a recession. They are also among the first to return when the economy begins its recovery.”

Vincent Young added that continued cost-trimming will boost Young’s value. “While enjoying dramatic growth, new media such as the Internet has not replicated the sheer household coverage of our industry’s delivery mechanisms,” he said. “Our company’s twin strategies of developing new customers and aggressively cutting operating costs should result in the creation of significant value.”

Related