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Tribune Media on Wednesday said it swung to a first-quarter loss as advertising revenue fell sharply, programming expenses rose and the company took a non-cash write-down on its investment in CareerBuilder.
The financial report came two days after the company said Sinclair Broadcast Group had agreed to acquire it for $3.9 billion.
Interim CEO Peter Kern on an analyst call talked about a new programming strategy already underway at WGN America. That includes a shift from high-cost originals to cheaper originals and re-runs.
He said the channel’s schedule was previously heavily dependent on expensively-produced shows to woo new viewers, “and we would like to reorient that and put capital towards more and more efficient shows and more shows that can carry our existing audience… through our originals and augment our audience base.”
The new scripted direction at WGN America follows the recent cancelation of the cable network’s highest-rated scripted original, Outsiders, after two seasons. Kern said shows like Outsiders got good ratings, but didn’t do enough to get viewers to sample and stay with the rest of the WGN America schedule.
Kern also told analysts that Tribune’s TV subscriber base was “moderately worse” after the most recent quarter, but would improve as the media group increasingly gets its content on video streamers and other new digital platforms. “We are not worried unduely, and the numbers were not particularly beyond our expectations, but we feel like we are playing every side of that game,” he said.
Chicago-based Tribune Media, which owns TV stations in addition to WGN America, recorded a first-quarter loss of $85.5 million, or 99 cents per share, compared with a profit of $11.1 million, or 12 cents per share, in the year-ago period.
The loss was due in part to an $80 million after-tax non-cash impairment charge recorded on its investment in CareerBuilder. Wall Street analysts had on average forecast a profit of 7 cents per share for Tribune Media in the latest quarter.
Revenue fell 6 percent to $444 million. Advertising revenue dropped 9 percent to $291.7 million from $321.4 million, while retransmission consent revenue rose 13 percent to $94.2 million from $83.5 million, and carriage fee revenue climbed 8 percent to $33.6 million from $31.0 million.
On the advertising side, Tribune brought in $17 million fewer core advertising dollars, compared to the year-ago volume, and had a $13.7 million decrease in political advertising. Tribune Media also had higher programming expenses during the latest quarter due to more original series hours airing on WGN America, and higher network affiliate fees.
Tribune Media also had $111.5 million in cash distributions from TV Food Network, in which it has a 31 percent stake.
“We expect the next three quarters will be strong as we cycle past core advertising displacement, realize significant acceleration of retransmission revenues and continue disciplined expense management across the company,” said Kern in a statement ahead of an analyst call.
After the departure of Peter Liguori, Kern took over as interim CEO.
May 10, 9:30 a.m. Updated with comments by interim CEO Peter Kern to analysts during a conference call.
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