Tribune Media Cuts 2016 Outlook Citing Political Ads as Quarterly Earnings Come in Below Estimates
CEO Peter Liguori said Donald Trump's "unique candidacy," including unprecedented use of free media, depressed political ad spending.
Tribune Media, the TV and entertainment division of Tribune Co. that was spun off from the group's publishing assets in 2014, on Wednesday reported reduced third-quarter earnings, due in large part to Donald Trump's "unique candidacy" and "unpredictability" delivering lower than expected political ad revenue.
"The level of acrimony, by both candidates, really did have an impact on advertising. The conversation had a lot of fear in it," Tribune Media president and CEO Peter Ligouri said on an analyst call of the just-concluded U.S. election cycle and its impact on political and core advertising trends.
The exec said reduced political ad revenue for Tribune Media was due mostly to Trump using "unprecedented" amounts of free media to drive his presidential campaign. Republican Super PACs in turn were hesitant to back Trump, reducing their own political ad expenditures, and Hilary Clinton and her rival Democratic Party bid in turn could capture a larger "share of voice" with less ad spending of their own.
Ligouri said the election of Trump as president will inevitably impact the media sector. "We certainly do believe that there will be a changing landscape, with a changing of the guard. It will have many implications," he told analysts, including industry regulation, taxation and financial markets.
He added the Tribune Media management team met into early Wednesday morning to discuss the impact of the surprise U.S. election. "This company is in strong financial shape. We have tremendous financial flexibility. That will help us if the waters get choppy in the next few months," he told analysts during the morning conference call.
Liguori elsewhere said that a carriage dispute with Dish Network, which was recently resolved, would in the third quarter mean lower retransmission consent revenue, but also lower reverse compensation payments.
The company said its third-quarter earnings reached $145.8 million, or $1.61 per share, or 48 cents when adjusted for special items, compared with $27.9 million, or 29 cents per share, or 38 cents on an adjusted basis, in the year-ago period. The 48 cents profit came in 3 cents shy of Wall Street expectations.
Operating profit jumped 473 percent to $222.4 million, including a $213 million gain on the sale of real estate and a $37 million program impairment charge. Revenue increased 6 percent to $518.1 million.
The company recently completed the sale of three real estate properties for $430 million. Scripps Networks Interactive and the company recently also unveiled a four-year extension of their Food Network partnership. Financial terms of the agreement were not disclosed.
"During the year, we took aggressive steps to identify additional efficiencies in our cost structure, including recent initiatives that we expect to generate $18 million to $20 million in expense savings on an annualized basis going forward, and we expect to continue our cost reduction initiatives into 2017," said Liguori. "However, given the unique market dynamics which have impacted the second half of the year, we are revising our full-year financial guidance for 2016."
The company cited "lower than expected political advertising revenues from the 2016 presidential campaign and a decline in core advertising revenues."