LIN TV Corp. (“LIN Media”; NYSE: TVL), a local multimedia
company, today reported its second quarter 2011 results.
Summary of Results for the Second Quarter
Ended June 30, 2011
- Net revenues increased by 5% to $104.1
million, compared to $99.5 million for the second quarter of
2010.
- Digital revenues, which include
Internet advertising revenues and retransmission consent fees,
increased by 50% to $22.0 million, compared to $14.7 million for
the second quarter of 2010.
- Operating income was $23.5 million,
compared to operating income of $25.1 million for the second
quarter of 2010, which included a non-recurring gain of $2.1
million related to an exchange of broadcast equipment.
- Net income per diluted share was $0.02,
which includes a non-cash deferred income tax charge of $0.09 per
share related to a change in state tax law during the second
quarter of 2011, compared to net income per diluted share of $0.07
for the second quarter of 2010.
Commenting on second quarter 2011 results, the Company’s
President and Chief Executive Officer Vincent L. Sadusky said: “We
are pleased to report 5% revenue growth, which was driven by our
50% increase in digital revenues. Our growth in digital is a result
of our interactive strategy and ability to secure higher
retransmission fees from pay television service providers, which
offset the slow economic recovery and auto supply issues.”
Operating Highlights
TV Station Ratings and Revenue
- The Company was ranked number one or
number two for 77% of its ABC, CBS, FOX and NBC news stations in
their local markets based on viewership among key
demographics1.
- Core local and national advertising
sales combined, which excludes political advertising sales, was
flat at $89.1 million, compared to $89.3 million for the second
quarter of 2010. Sales in the automotive category, which
represented 22% of local and national advertising sales for the
three months ended June 30, 2011, decreased by 8% to $19.1 million,
compared to $20.8 million for the second quarter of 2010. The
decline in the automotive category was offset in part by recovery
in other categories, including restaurants, which increased
11%.
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1 Nielsen Media Research; Average of LIN Media’s May 2011
ratings based on key demographics: M-F, early morning, early
evening, late news. All Nielsen data included in this release
represents Nielsen’s estimates, and Nielsen has neither reviewed
nor approved the data included in this report.
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Digital and Interactive Initiatives
- The Company entered into a joint
venture with CultureMap, LLC and in July 2011 launched a new and
unique daily digital magazine in Austin, TX. CultureMap Austin
provides 24/7 local coverage of lifestyle and culturally relevant
news, information, events and features and is delivered digitally
through the web, mobile, tablet and social media platforms.
- During the second quarter of 2011, the
Company delivered 35 million total video impressions and engaged 44
million daily unique visitors on its stations’ web sites. Average
time on site during the quarter was more than 21 minutes.
- According to comScore’s June 2011
report, 87% of the Company’s measured station web sites ranked
number one or number two in their local market for unique visitors
and 93% ranked number one or number two in their local market for
time spent on site, versus the Company’s measured local broadcast
competitors. Further, 70% of the Company's measured station web
sites ranked number one or number two in their local markets for
time spent on site and page views versus all of its measured local
media competitors.2
- Mobile impressions, which include usage
of the Company’s mobile web sites and Smartphone and tablet
applications, were approximately 93 million impressions during the
second quarter of 2011, compared to 52 million during the second
quarter of 2010, an increase of 79% year over year.
- During the second quarter of 2011, the
Company delivered nearly 273 million user actions, an increase of
33% over the second quarter of 2010.
- The Company’s new photo gallery
offering accounted for nearly 17 million additional page views in
the second quarter of 2011, contributing to the company’s 37% page
view growth over the second quarter of 2010.
Key Balance Sheet and Cash Flow
Items
Total debt outstanding as of June 30, 2011 was $615.3 million,
as compared to $623.3 million as of December 31, 2010. Cash and
cash equivalent balances as of June 30, 2011 were $13.6 million, as
compared to $11.6 million as of December 31, 2010. During the
quarter ended June 30, 2011, the Company paid the remaining
principal of $5.6 million on its term loan. There were no amounts
outstanding on the Company’s revolving credit facility as of June
30, 2011 or December 31, 2010, with $48.7 million available
for borrowing under the facility as of June 30, 2011. Consolidated
leverage, as defined in the Company’s credit agreement was 4.3x as
of June 30, 2011 and December 31, 2010. Other components of cash
flow for the second quarter of 2011 included cash capital
expenditures of $5.4 million and cash payments for programming of
$6.9 million.
The Company’s senior secured credit facility matures on November
4, 2011. The Company is currently engaged in negotiations and
anticipates entering into a new credit facility prior to the
expiration of its existing facility. However, there can be no
assurance as to the timing or terms on which the Company may
complete such a transaction.
Business Outlook
The Company provides historical quarterly financial information
for its continuing operations on its web site. Interested parties
should go to the Investor Relations section of
www.linmedia.com.
The Company expects that third quarter 2011 net revenues will
decrease by mid single digits driven largely by a decline of
approximately $9 million in net political revenue, compared to net
revenues of $103.6 million for the third quarter of 2010.
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2 comScore media metrics data; June 2011. The Company’s Columbus
& Toledo sites were not measured by comScore.
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The Company expects that its direct operating and selling,
general and administrative expenses, which includes digital cost of
sales and other variable sales related expenses, will increase in
the range of 6% to 8% (or $3.6 million to $4.9 million) for the
third quarter of 2011, compared to reported expenses of $58.4
million for the third quarter of 2010.
The Company’s current outlook for revenues, expenses and cash
flow items for the third quarter of 2011, excluding special items,
are anticipated to be in the following ranges:
Third Quarter 2011 Net
advertising revenues $71.5 to $74.5
million Net digital revenues $21.5 to
$22.0 million Network comp/Barter/Other revenues
$4.0 to $4.5 million Total net revenues
$97.0 to $101.0 million Direct operating and selling,
general and administrative expenses(1)
$62.0 to $63.3 million Station non-cash stock-based compensation
expense $0.3 to $0.4 million
Amortization of program rights $5.3 to
$6.0 million Cash payments for programming
$6.3 to $7.0 million Corporate expense(1)
$5.4 to $6.0 million Corporate non-cash stock-based
compensation expense $1.0 to $1.1
million Depreciation and amortization of intangibles
$7.0 to $7.5 million Cash capital expenditures
$6.0 to $7.0 million Cash interest expense
$11.4 to $12.0 million Principal
amortization term loans $0.0 million
Cash taxes $0.0 to $0.1 million
Effective tax rate 38% to 40%
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(1) Includes non-cash stock-based compensation expense.
The Company advises that all of the information and factors set
forth above are subject to risks, uncertainties and assumptions
(see the “Forward-Looking Statements” heading below), which could
individually or collectively cause actual results to differ
materially from those projected above.
Conference Call
The Company will hold a conference call to discuss its second
quarter results today, July 27, 2011, at 9:00 AM Eastern Time. To
participate in the call, please dial 1-800-236-9788 for U.S.
callers and 1-913-312-1383 for international callers. The call-in
pass code is 4919381. Callers who intend to participate in the call
should dial in 10 minutes before the start of the call to ensure
access. The conference call will also be webcast simultaneously
from the Company’s web site, www.linmedia.com, and can be
accessed there through a link on the home page. For those
unavailable to participate in the live teleconference, a replay can
be accessed via the Investor Relations section of
www.linmedia.com or by dialing 1-888-203-1112 and entering
the same pass code as above. The telephone replay will be available
through August 10, 2011.
Access to Non-GAAP Financial Measures
and Other Supplemental Financial Data
The Company reports and discusses its operating results using
financial measures consistent with generally accepted accounting
principles (“GAAP”) and believes this should be the primary basis
for evaluating its performance. Non-GAAP financial measures such as
Broadcast Cash Flow (“BCF”), Adjusted Earnings Before Interest,
Taxes, Depreciation and Amortization (“EBITDA”) and Free Cash Flow
(“FCF”) should not be viewed as alternatives or substitutes for
GAAP reporting. However, BCF, Adjusted EBITDA and FCF are common
supplemental measures of performance used by investors, lenders,
rating agencies and financial analysts. As a result, these non-GAAP
measures can provide certain additional insight about the market
value of the Company and its stations; the Company’s ability to
fund acquisitions, investments and working capital needs; the
Company’s ability to service its debt; the Company’s performance
versus other peer companies in its industry; and other operating
performance trends for its business. The Company makes available
reconciliations of its operating income (loss), a GAAP reporting
measure, to BCF, Adjusted EBITDA and FCF on the Company’s web site.
In addition, the Company provides additional information on its web
site, at the same location, regarding historical revenue by source,
pro forma income statement information and certain other components
of cash flow. Interested parties should go to the Investor
Relations section of www.linmedia.com.
Forward-Looking
Statements
The information discussed in this press release, particularly in
the section with the heading Business Outlook, includes
forward-looking statements about the Company’s future operating
results within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of
1934. The Company based these forward-looking statements on its
current assumptions, knowledge, estimates and projections about
factors that could affect its future operations. Although the
Company believes that its assumptions made in connection with the
forward-looking statements are reasonable, no assurances can be
given that those assumptions and expectations will prove to be
correct. Statements in this press release that are forward-looking
include, but are not limited to, local, national and political
advertising growth; changes in digital, network compensation,
barter and other revenues; changes in direct operating, selling,
general and administrative, barter, amortization of program rights
and corporate expenses; and cash programming, cash capital
expenditures, cash interest expense and principal amortization,
cash tax payments and effective tax rates and distributions from
equity investments. These forward-looking statements are subject to
various risks, uncertainties and assumptions which may cause these
expectations and assumptions not to occur or to differ materially
from those outcomes projected in the forward-looking statements.
Such risks and uncertainties include, but are not limited to,
ongoing economic uncertainty; restrictions on the Company’s
operations as a result of the Company’s indebtedness; our ability
to renegotiate our senior secured credit facility on terms
satisfactory to us; global or local events that could disrupt TV
broadcasting; softening of the domestic advertising market; further
consolidation of national and local advertisers, and the national
sales representation market; potential liabilities related to the
Company’s guarantee of the debt obligations of its joint venture
with NBCUniversal; risks associated with acquisitions, including
integration of acquired businesses; changes in TV viewing patterns,
ratings and commercial viewing measurement; increases in news and
syndicated programming costs, and capital expenditures; changes in
television network affiliation agreements and retransmission
consent agreements; changes in government regulation; competition;
seasonality; effects of complying with accounting standards;
potential influence of certain stockholders, including HM Capital
Partners LLC and its affiliates, and other risks discussed in the
Company’s Annual Report on Form 10-K and other filings made
with the Securities and Exchange Commission (which are available on
the Investor Relations section of www.linmedia.com, or at
www.sec.gov), which are incorporated in this release by
reference. The Company undertakes no obligation to publicly update
or revise any forward-looking statements, whether as a result of
new information, future events or otherwise, unless otherwise
required to by applicable law.
About LIN Media
LIN Media, along with its subsidiaries, is a local multimedia
company that owns, operates or services 32 network-affiliated
broadcast television stations, interactive television station and
niche web sites, and mobile platforms in 17 U.S. markets. LIN
Media’s online advertising business, RMM, leverages unique
technology, new product innovation and customized interactive and
mobile advertising solutions to deliver measurable results to
local, regional and national clients.
LIN TV Corp. is traded on the New York Stock Exchange under the
symbol “TVL”. Financial information about the company is available
at www.linmedia.com.
– financial tables follow –
LIN TV Corp. Consolidated Statements of Operations
(unaudited)
Three months ended June 30, Six months
ended June 30, 2011 2010 2011 2010
(in thousands, except per share data) Net revenues $
104,114 $ 99,460 $ 196,754 $ 191,305 Operating costs and
expenses: Direct operating 33,290 29,823 64,323 59,128 Selling,
general and administrative 27,439 26,652 54,322 52,076 Amortization
of program rights 5,547 5,840 11,136 12,046 Corporate 7,352
6,694 13,833 11,878
General operating expenses 73,628 69,009 143,614 135,128
Depreciation, amortization and other operating charges
(benefits): Depreciation 6,596 6,948 13,096 14,048 Amortization of
intangible assets 299 412 572 821 Restructuring charge - 63 - 2,181
Loss (gain) from asset dispositions 103 (2,030
) 358 (2,211 ) Operating income 23,488 25,058
39,114 41,338 Other expense: Interest expense, net 12,717
13,428 25,649 25,143 Share of loss in equity investments 554 94
1,167 94 (Gain) loss on derivative instruments (583 ) 3,056 (1,203
) 3,065 Loss on extinguishment of debt 50 2,749 192 2,749 Other
(income) expense, net (3 ) 28 (2 )
(682 ) Total other expense, net 12,735 19,355 25,803 30,369
Income before provision for income taxes 10,753 5,703 13,311
10,969 Provision for income taxes 9,682 2,059
10,654 3,824 Net income 1,071
3,644 2,657 7,145 Net income attributable to noncontrolling
interest - - - -
Net income attributable to LIN TV Corp. $ 1,071 $
3,644 $ 2,657 $ 7,145
Basic income
per common share attributable to LIN TV Corp.: Net income
attributable to LIN TV Corp. $ 0.02 $ 0.07 $ 0.05 $ 0.13
Weighted-average number of common shares
outstanding used in calculating basic income per common share
55,712 53,785 55,346 53,195
Diluted income per common
share attributable to LIN TV Corp.: Net income attributable to
LIN TV Corp. $ 0.02 $ 0.07 $ 0.05 $ 0.13
Weighted-average number of common shares
outstanding used in calculating diluted income per common share
57,187 55,624 56,865 54,862
LIN TV Corp.
Consolidated Balance Sheets (unaudited)
June 30, December 31, 2011
2010 (in thousands, except share data) ASSETS
Current assets: Cash and cash equivalents $ 13,633 $ 11,648
Accounts receivable, less allowance for doubtful accounts (2011 -
$2,843; 2010 - $2,233) 81,256 82,486 Other current assets
7,635 5,921 Total current assets 102,524
100,055 Property and equipment, net 149,479 154,127 Deferred
financing costs 6,542 7,759 Goodwill 117,421 117,259 Broadcast
licenses and other intangible assets, net 406,700 397,280 Other
assets 14,866 13,989 Total assets $
797,532 $ 790,469
LIABILITIES AND
DEFICIT Current liabilities: Current portion of long-term debt
$ 184 $ 9,573 Accounts payable 6,141 8,003 Accrued expenses 37,361
42,353 Program obligations 11,445 9,528
Total current liabilities 55,131 69,457 Long-term debt, excluding
current portion 615,109 613,687 Deferred income taxes, net 196,465
185,997 Program obligations 7,370 7,240 Other liabilities
43,385 45,520 Total liabilities 917,460
921,901 LIN TV Corp. stockholders'
deficit: Class A common stock, $0.01 par value, 100,000,000 shares
authorized, Issued: 33,776,662 and 32,509,759 shares as of June 30,
2011 and December 31, 2010, respectively Outstanding: 32,903,844
and 31,636,941 shares as of June 30, 2011 and December 31, 2010,
respectively 307 294
Class B common stock, $0.01 par value,
50,000,000 shares authorized,
235 235
23,502,059 shares as of June 30, 2011 and
December 31, 2010, issued and outstanding;
convertible into an equal number of shares
of Class A or Class C common stock
Class C common stock, $0.01 par value,
50,000,000 shares authorized, 2 shares as of
- -
June 30, 2011 and December 31, 2010,
issued and outstanding;
convertible into an equal number of shares
of Class A common stock
Treasury stock, 872,818 shares of Class A common stock as of June
30, 2011 and December 31, 2010, at cost (7,869 ) (7,869 )
Additional paid-in capital 1,118,436 1,109,814 Accumulated deficit
(1,203,310 ) (1,205,967 ) Accumulated other comprehensive loss
(27,727 ) (27,939 ) Total LIN TV Corp. stockholders'
deficit: (119,928 ) (131,432 ) Noncontrolling interest -
- Total deficit (119,928 )
(131,432 ) Total liabilities and deficit $ 797,532 $ 790,469
LIN TV Corp. Consolidated Statements of
Cash Flows (unaudited)
Six months ended June 30, 2011 2010 (in
thousands) OPERATING ACTIVITIES: Net income $ 2,657 $
7,145 Adjustment to reconcile net income to net cash provided by
operating activities: Depreciation 13,096 14,048 Amortization of
intangible assets 572 821 Amortization of financing costs and note
discounts 1,951 2,422 Amortization of program rights 11,136 12,046
Program payments (13,604 ) (14,128 ) Loss on extinguishment of debt
192 2,749 (Gain) loss on derivative instruments (1,203 ) 3,065
Share of loss in equity investments 1,167 94 Deferred income taxes,
net 10,606 3,820 Stock-based compensation 3,381 2,498 Loss (gain)
from asset dispositions 358 (2,211 ) Other, net 212 (186 ) Changes
in operating assets and liabilities, net of acquisitions: Accounts
receivable 1,230 (3,519 ) Other assets (1,870 ) 1,092 Accounts
payable (1,862 ) 1,779 Accrued interest expense 81 3,710 Other
liabilities and accrued expenses (2,207 ) (1,368 )
Net cash provided by operating activities 25,893
33,877
INVESTING ACTIVITIES:
Capital expenditures (7,997 ) (9,010 ) Change in restricted cash -
2,000 Payments for business combinations (5,244 ) - Proceeds from
the sale of assets 48 181 Payments on derivative instruments (1,254
) (805 ) Shortfall loan to joint venture with NBCUniversal (1,019 )
(3,875 ) Other investments, net (150 ) (1,980 )
Net cash used in investing activities, continuing operations
(15,616 ) (13,489 )
Net cash provided by investing activities,
discontinued operations - 660
Net cash used in investing activities (15,616 )
(12,829 )
FINANCING ACTIVITIES: Net proceeds
on exercises of employee and director stock-based compensation 481
387 Proceeds from borrowings on long-term debt 920 213,000
Principal payments on long-term debt (9,619 ) (231,899 ) Payment of
long-term debt issue costs (74 ) (4,732 )
Net cash
used in financing activities, continuing operations (8,292 )
(23,244 )
Net cash used in financing activities, discontinued
operations - (445 )
Net cash used in
financing activities (8,292 ) (23,689 )
Net increase (decrease) in cash and cash equivalents 1,985 (2,641 )
Cash and cash equivalents at the beginning of the period
11,648 11,105 Cash and cash equivalents at the
end of the period $ 13,633 $ 8,464
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