LIN TV Q3 revenues up 5%; core revs down 8%


LIN TV Corp.’s Q3 net revenues increased 5% to $98.8 million, compared to $93.7 million for Q3, reflecting growth in political and digital revenues. Income from continuing operations for the quarter increased by $7.6 million, to $10.2 million, compared to $2.6 million in Q3 2007. Political ad sales in this election year were $11.4 million, compared to $1.3 million for the prior year period. Digital revenues, which include Internet ad revenues and retransmission consent fees, increased 88% to $8.1 million, compared to $4.3 million in the same period last year. These increases were partially offset by lower local and national ad sales, but exclude political advertising sales. LIN TV’s core ad sales declined 8% for Q3 due primarily to television advertising marketplace declines in LIN TV’s markets.

Said LIN TV President and CEO Vince Sadusky: “Despite our ability to deliver revenue increases in the third quarter, core advertising revenues…were down 8%. Quite simply, we’re saying that advertisers are reducing expenditures to alleviate pressure in their own businesses. Clearly, we are operating in a recessive US economy that is negatively impacting advertising budgets. As a result, our fourth quarter outlook has become increasingly negative.”

Sadusky said current plans are to accelerate plans to converge their traditional TV and new media business and create a more efficient infrastructure: “We are currently working on our 2009 plans, which will include a pessimistic view of 2009 advertising revenue. But we will have increased efficiencies and digital revenue growth to counter the decline.”

Local ad sales, which exclude political ad sales, decreased 3% for Q3 compared to the same period in 2007. The decrease is due to the television ad marketplace decline in LIN TV’s local markets. Local ad sales represented 60% of total advertising sales for Q3.

National ad sales, which exclude political advertising sales, decreased 15% for the third quarter of 2008 compared to the same period in 2007. The decrease is also due to the television advertising marketplace decline in LIN TV’s markets, which has impacted most national advertising categories, particularly automotive spending.
National ad sales represented 29% of total advertising sales for Q3.

Ad categories for which revenues increased for Q3 included political, medical and education. The automotive category, which represented 25% of the company’s core advertising sales for Q3 of 2008, decreased 20% compared to the same quarter last year.

LIN also announced it has finally come to terms with Time Warner Cable on retransmission consent, so LIN stations are back on TWC’s cable systems in 11 markets where they had been off for nearly a month. That will help revenues a bit going forward. “Bottom line, we received the compensation that we set out to receive from Time Warner,” Sadusky said in the Q3 call yesterday. “There’s not much more to say than that [because of] confidentiality provisions of retransmission-consent deals.” LIN had said previously it wanted a 30 cent monthly license fee for O&O stations.

For Q4, based on current pacings, LIN expects that Q4 2008 net revenues will decrease between 6% and 9.0% (or $6.5 million to $9.8 million), compared to reported net revenues of $108.6 million for Q4 2007. Core ad pacings are currently down in the high 20s and gross political advertising is expected to approximate $25 million for Q4 2008.

RBR/TVBR observation: A bit of light at the end of the tunnel for local broadcasters like LIN: With so many folks affected by the down economy across the board, the bottom line is they are going to be doing less—and spending more time at home with their main “free” entertainment source: television. This may drive a ratings increase for many stations, which may attract stronger ad dollars and potentially command higher rates. Keep an eye on your ratings and perhaps use published data that supports this theory in your local sales calls with clients.