Tribune Media, the entertainment company that includes WGN America, on Wednesday reported improved fourth-quarter financials, but fell shy of Wall Street expectations.
The company, which in late January said that president and CEO Peter Liguori, who has been in place since January 2013, has decided to step down in early March, has been growing its retransmission consent fees and expanding original programming at WGN America.
TV station giant Sinclair Broadcast Group has approached Tribune Media about a possible takeover or combination in preliminary talks, Reuters reported ahead of the earnings update. Tribune Media shares rose more than 12 percent early in Wednesday’s trading session. A deal would create a sizable local broadcast station owner with a combined market capitalization of about $6.6 billion. The broadcast industry has been hoping that President Donald Trump could lift ownership caps.
If no outright combination is reached, Sinclair could also look at buying parts of Tribune Media, such as its CW stations, cable network WGN America or its stake in the Food Network, the report said. Tribune Media didn’t comment on the report in its earnings report.
“We find the purchase of WGN America the most likely as Tribune hasn’t wanted to part with the Food Network given the dividends, and we don’t see the upside in ‘just’ CW [stations] given lower retrans rates,” wrote Wells Fargo analyst Marci Ryvicker in a report.
Without mentioning specific possible buyers, she asked Liguori about the company’s interest in keeping its TV station group versus selling it. The outgoing Liguori didn’t say much beyond: “We are always looking at what we do with our portfolio to maximize shareholder value.”
Tribune Media’s fourth-quarter earnings reached $19 million, compared with a loss of $380.9 million in the year-ago period. Revenue rose 11 percent to $529.6 million.
Operating profit of $113.2 million compared with a year-ago operating loss of $396.9 million. Those figures included non-cash impairment charges of $3 million in the fourth quarter of 2016 and $385 million related to goodwill and other intangible assets in the fourth quarter of 2015. Operating profit before impairments reached $116.6 million, compared to an operating loss of $11.9 million in the fourth quarter of 2015. “The increase was primarily due to higher political revenues and the absence of a $73.8 million program impairment charge related to the writedown of the acquired syndicated programming Person of Interest and Elementary at WGN America” recorded in the year-ago period, the company said.
Tribune Media has said that Peter Kern will serve as interim CEO while the company looks for a permanent CEO. Sony Corp. has announced that Liguori will take on a role advising the Japanese company’s board.
“Bolstered by record fourth quarter revenues, Tribune Media’s financial results for 2016 were very strong,” said Liguori. “These results are a clear demonstration that our operational strategies continue delivering value for our shareholders. In addition, last year’s monetization of real estate assets for more than $500 million and the recent sale of Gracenote enables Tribune Media to be a more focused television company, uniquely positioned to take advantage of the opportunities presented by a rapidly changing media environment.”
Liguori on his last earnings call for the company lauded the successful refocusing of the company and transformation via asset sales and acquisitions of TV stations. He also lauded such original shows as The Outsiders and Underground launched on WGN America.
Introducing Kern, Liguori said he would run the company on a temporary basis. “Peter is not only a member of the board and very familiar with the company,” he said. “He has 25 years of experience as a media executive, investor and adviser and he was a smart, natural choice to lead Tribune Media during this important transition period.”
Kern didn’t take any questions Wednesday, but said in brief prepared remarks: “I did want to take this opportunity, on behalf of the board of directors, to thank again Peter Liguori for his leadership and tireless efforts in transforming Tribune over the last four years.”
He added: “I have been working with Peter and the senior management team over the last month to ensure a smooth transition. We will continue to focus the company on operational improvement and our ongoing strategic review,” which has led the company to some asset sales to create shareholder value.
