Core local and national TV ad sales, excluding political, were flat in Q2 for LIN Media. So how did the company still manage to grow net revenues by 5% to $104.1 million? Digital revenues shot up 50%.
The digital category at LIN includes both Internet advertising revenues and retransmission consent fees. Those combined digital revenues grew 50% in Q2 to $22 million.
LIN had reported $5.3 million in political revenues for Q2 of 2010, so the increase of $7.3 million for digital more than filled the gap. Political sales for Q2 this year were $2.1 million.
While LIN did beat Wall Street expectations for the quarter based on the strong digital sales, the slight decline in core ad sales (off $200K) was below the Street view that spot revenues would be up a bit. CEO Vince Sadusky told analysts that a big factor was an 8% drop in the automotive category, the company’s biggest ad category, to $19.1 million – “and that was primarily related to disruption in Japan’s auto supply chain.” Looking ahead, LIN officials are optimistic about the supply of parts and vehicles from Japan returning to normal, along with increased auto ad demand related to the NFL football season, now that the lockout has been settled.
The bright spot for TV advertising was the restaurants category, which rose 11%. “Restaurants are clearly an indicator of people’s willingness to part with disposable income,” Sadusky noted in his Q&A with analysts. “That category has been in bad shape for a long, long time,” he noted, so it’s now an indicator of the recovery.
“Looking ahead to the 3rd quarter, core pacing is down 4% compared to TV revenue booked last year at this time, due to declines at three of our top five categories, including automotive,” Sadusky reported. In its official outlook, LIN said it expects Q3 net revenues to be down by the mid-single digits “driven largely by a decline of approximately $9 million in net political revenue, compared to net revenues of $103.6 million for the third quarter of 2010.”
Q2 broadcast cash flow increased 2% to $36.9 million. Adjusted EBITDA was up 5% to $32.2 million.