LIN TV’s Q1 revenues increased 37% to $141 million, compared to $103.2 million in Q1 2012. Local revenues, which include net local ad revenues, retransmission consent fee revenues and television station website dollars, increased 47% to $99.4 million, compared to $67.7 million in Q1 2012. Net national revenues increased 28% to $29.5 million, compared to $23.1 million in Q1 2012.
LIN’s explosive Q1 growth can be largely attributed to its $342.4M Q4 2012 buy of New Vision that brought in these properties:
* WIAT-TV Birmingham AL
* KIMT-TV Mason City IA
* KOIN-TV Portland OR
* KHON-TV Honolulu HI; KHAW-TV Hilo HI; KAII-TV Wailuku HI
* KSNW-TV Wichita KS; KSNC-TV Great Bend KS; KSNG-TV Garden City KS
KSNK-TV McCook NE; KSNL-LD Salina KS
* KSNT-TV Topeka KS; KTMJ-CA Topeka KS; KETM-LP Emporia KS; KMJT-LP Ogden KS; plus SSA with Vaughan Media’s KTKA-TV Topeka KS
* WJCL-TV Savannah GA; plus SSA with Vaughan Media’s WTGS-TV Savannah GA
* WKBN-TV/ WYFX-LD Youngstown OH ; plus SSA with Vaughan Media’s WYTV Youngstown OH
Marci Ryvicker, Wells Fargo Securities Senior Analyst noted that revenues for the quarter beat their $139.7 million estimate, with the beat coming primarily from national spot ($29.5 million). “Although the company did not provide same station core growth, it appears that core local and national time sales (ex-political) was a bit lighter than expected, with local spot coming in below our estimate ($99.4 million v. our $101.0 million) – we do think, however, retrans may have come in better than expected (actuals not provided).”
Said CEO Vincent Sadusky: “After achieving record results last year, ad revenue is off to a slower start in 2013. However, retransmission revenues and the continued growth and contribution of our digital business more than offset declines. We are excited about our two recent acquisitions of HYFN and Dedicated Media and their ability to drive synergies and expand our unique portfolio of digital marketing services.”
Interactive revenues, which include revenues from LIN Digital (formerly RMM) and Nami Media, increased 29% to $9 million, compared to $7 million in Q1 2012.
Net political revenues were $0.5 million, compared to $2.9 million Q1 2012. Operating income was $11.8 million, compared to operating income of $20.5 million in Q1 2012. Net loss per share was ($0.02), compared to net income per diluted share of $0.08 in Q1 2012.
Core local and national time sales combined, which excludes political time sales, increased 30% in Q1, compared to Q1 2012. The automotive category, which represented 25% of local and national ad sales in Q1, decreased 2%, compared to Q1 2012, during which the automotive category represented 24% of local and national advertising sales.
On 4/4, LIN acquired a 50.1% interest in HYFN, a full service digital ad agency that develops and implements mobile, social and web experiences and, on 4/9, the company acquired a 60% interest in Dedicated Media, a leader in multi-channel digital marketing solutions. They spent $12.2 million total for both transactions.
LIN expects that net revenues for Q2 will increase in the range of 36% to 39% (or $43 million to $47 million), as compared to net revenues of $121 million in Q2 2012. On a same station basis, the company expects that net revenues will be flat to up 1% compared to Q2 2012.
Ryvicker says LIN’s Q2 guidance is in-line with their estimate, but EBITDA is below. “…revenue guidance is in-line with our estimate at $164-168 million (+36.0-39.0%) v. our $166.4 million – excluding New Vision, same station revenue is expected to be flat to +1.0%. Q2 expense guidance of +61.0-64.0% is above our +50.7% estimate, driven by higher direct opex and SG&A.”
On 2/12, LIN entered into deal whereby in exchange for a $100 million capital contribution to Station Venture Holdings (SVH), the company’s JV with NBCUniversal, LIN Texas sold its interest in SVH and the company was released from obligations including its guarantee of the $815.5 million note payable by SVH to General Electric Capital. To fund this contribution, LIN entered into a $60 million incremental term loan facility and utilized $40 million of cash on hand and borrowings under its revolving credit facility.
LIN also entered into a merger agreement with LIN Media LLC, a newly formed wholly owned subsidiary of LIN TV. Pursuant to the merger, LIN TV Corp. will be merged with and into LIN LLC with LIN LLC continuing as the surviving entity. The merger is expected to enable LIN LLC to be classified as a partnership for federal income tax purposes, and such change in classification would be treated as a liquidation of LIN TV Corp. for federal income tax purposes with the result that LIN TV Corp. would recognize a gain or loss, as applicable, in its 100% equity interest in LIN Television.
The merger is also expected to generate sufficient capital losses to fully offset the capital gains recognized in the JV Sale transaction if the price of the company’s class A common stock at the closing of the merger is at or below $10.30 per share (based on current aggregate outstanding shares of classes A, B and C of 54.3 million).
At closing prices greater than this amount up to $11.85 per share, LIN is expected to consume its remaining net operating losses to fully offset the capital gains.