The addition of a duopoly station in Orland and a 48% jump in digital media revenues gave Hearst-Argyle revenues of 193 million, down less than a million from a year ago, so essentially flat. CEO Dave Barrett told analysts that worked out to a same station decline of 5% – not bad considering the large drop-offs in political and auto advertising. Overall, a 3% decline in TV advertising was offset by a 48% increase in digital media revenues, and a 35% increase in retransmission consent fees. Hearst-Argyle doesn't give quarterly guidance, but it is sticking with the full year 2007 guidance it issued in February (2/26/07 TVBR #39).
"We are noting some stabilization and improvement in broad-based sales activity and we expect that several of our markets will benefit from meaningful political spending in third quarter and fourth quarter," said Barrett. The CEO said the Hearst-Argyle stations have been working diligently to take ad revenues away from other media to battle the weakness in auto and some other sectors. "I do believe our stations and the television industry overall is capturing revenue share from the newspapers in the marketplace," Barrett told analysts.
He also expressed hopes that new NBC programming boss Ben Silverman will succeed in boosting the network's ratings – "hopefully not at the expense of ABC," Barrett added, since Hearst-Argyle's stations are primarily in those two networks.
SmartMedia observation: Even though Hearst-Argyle's results look pretty good compared to what some other TV groups have reported, its stock got beaten up yesterday. Revenues were below what Wall Street had expected and while management is sticking with its full-year guidance, it is only promising to hit the low end of the range. At Wachovia, analyst Marci Ryvicker is particularly concerned about soft auto advertising. "Auto was down 13% in Q2 after having declined 19% in Q1. Management stated that such weakness is due to an overall reduction in ad budgets rather than a shift in the media mix. However, our sources tell us that auto ad dollars are moving to the internet from traditional media, specifically newspapers and television. While management believes auto may firm in the second half, their comments relating to full year revenue guidance do not support this view," she said in a note to clients.