Hearst-Argyle Television Q4 revenues declined 9% to $197.1 million from $216.6 million in the comparable quarter last year. The 26-station broadcaster reported record net political revenue of $51.2 million for the quarter, and $7 million in retransmission consent fees. However, the decrease in ad categories (particularly automotive) and digital media revenues (down in Q4; flat for the year) more than offset that growth when it came to the bottom line.
Said CEO David Barrett: “Certainly a difficult time for our overall economy, for the public, for our industry and for the company. The things we are witnessing—the severe disruption in credit markets, depressed housing and auto sectors, growing unemployment and job concerns, record low consumer confidence levels and the logical pullback in consumer spending—are all having an adverse impact on individuals large and small. We have not been immune to these conditions and circumstances. For the first time in my memory we did not achieve top- and bottom-line growth in an even-numbered political and Olympic year.”
Hearst-Argyle TV also showed a 4.7% decline in net revenues for the full year.
Total revenue of $720.5 million was down 4.7% compared to the year ended December 31, 2007. FY net political revenue was $93.0 million compared to $32.0 million in 2007; Retransmission consent fees were $26.9 million, an increase of 24.4% over 2007.
For the year, Barrett said the dynamic of ad sales has been higher than normal attrition; some customers are inactive; a small number of customers have failed. “While most other customers recognize the value and the imperative of local advertising, they still have their feet in the water. We are obviously negotiating hard to preserve and protect our pricing base. Demand has lessened, but there is without question still a market for our highest-rated programming, our blue-chip inventory, local news, strong prime, Oprah Winfrey, etc.”
While no guidance is being issued for 2009, Barrett says keeping expenses under control will continue to be the rule. “We’ve taken strong steps in terms of reducing employee contributions to the 401k program. We’ll significantly reduce capital spending in 2009. Each of our stations are committed to identifying additional operating efficiencies.”
Additionally, this week the board made the decision to suspend dividends to reserve cash to pay down debt.
In conclusion, Barrett said he was a “glass half-full guy. And I remind myself and you that we have some very strong station assets in 25 local markets. Last year these stations generated nearly $250 million in cash flows and our company generated $207 million in EBITDA…In 2008 we reduced debt by $136 million. In the past 24 months, we’ve reduced our debt balance by $210 million. We have met all of our financial obligations, even as our business has been shaken by macroeconomic conditions, the likes of which most of us have never seen. But let there be no doubt we are very much a going concern…”