Q3 revenues were flat at Hearst-Argyle Television, with heavy political spending filling the hole left by an 11.5% decrease in core advertising business. CEO David Barrett proudly noted that the company still managed to produce modest growth in EBITDA and earnings per share. The idea that TV is over, he said, “is really foolish.”
When all is said and done in next Tuesday’s election, Hearst-Argyle expects to have booked over $90 million in political ad spending this year, up from its previous record of $88 million set in 2004 and tied in ’06. $23.7 million of that political revenue came in Q3, a jump of $16.7 million from a year ago. Meanwhile, non-political business fell $16.9 million, or 11.5%, to $129.5 million.
"The significant credit market disruption and pervasive economic weakness, so evident domestically and globally, have had an adverse impact on our local television business, limiting growth opportunities that are typical in an election and Olympics year. Nevertheless, our third quarter results do reflect modest growth in net income and earnings per share over prior year, largely as a result of very strong political ad spending in numerous communities where we own and operate leading local news stations. However, like so many others, we have experienced cancellations and reductions in core ad spending in third quarter and for the full year, which are difficult to overcome,” said Barrett.
Some of Hearst-Argyle’s medium-market stations are performing quite well and will actually post gains this year. But the CEO noted that the company’s largest markets are those facing the greatest challenges, particularly in California, New England and Florida. Barrett said his team is fighting for every ad dollar and also reviewing every expenditure.
Retransmission consent revenues grew in Q3, up 22% from a year ago to $6.8 million.
Adjusted EBITDA increased to $44.9 million from $43.7 million and free cash flow ballooned to $48.7 million from $23.8 million. CFO Harry Hawks said the company remains committed to reducing debt while “continuing to prudently invest in our digital future.”
On the bottom line, earnings per share increased by two cents to 12 cents.