TVL Lin TV Corp

LIN TV Corp. (“LIN Media”; NYSE: TVL), a local multimedia company, today reported its second quarter 2010 results.

Summary of Results for the Second Quarter Ended June 30, 2010

• Net revenues increased by 21% to $99.5 million, compared to $82.5 million for the second quarter of 2009.
• Digital revenues, which include Internet advertising revenues and retransmission consent fees, increased by 44% to $14.7 million, compared to $10.2 million for the second quarter of 2009.
• Political revenues increased by $3.9 million to $5.3 million, compared to $1.4 million for the same quarter in 2009.
• General operating expenses increased by 12% from $61.4 million in the second quarter of 2009, to $69.0 million in the second quarter of 2010, reflecting incremental operating expense associated with the acquisition of RMM in 2009, as well as increases in variable direct costs attributable to the growth in revenue.
• Operating income was $25.1 million, compared to an operating loss of $25.8 million in the second quarter of 2009, which included a non-cash impairment charge of $39.9 million.
• Net income per diluted share was $0.07, compared to net loss per diluted share of $0.50 in the second quarter of 2009, which included a loss of $0.56 per share attributable to non-cash impairment charges.

Commenting on second quarter 2010 results, the Company’s President and Chief Executive Officer Vincent L. Sadusky said: “Our results demonstrate continued, sustained improvement over 2009. Television advertising has experienced a strong recovery and our digital business, which now constitutes 15% of our total revenues, continues to grow and differentiate us as a local multimedia company.”

Operating Highlights

TV Station Ratings and Revenue

• The Company is number one or number two in late news, in all of its news markets, based on key demographics.1
• 94% of the Company’s news markets ranked number one or number two in early news, based on key demographics.1
• Core local and national advertising sales combined, which excludes political advertising sales, increased by 13% to $89.3 million, compared to $78.7 million for the second quarter of 2009. Advertising categories for which revenues increased for the second quarter of 2010, compared to the same quarter last year, include automotive, retail, restaurants, and services. The automotive category, which represented 23% of our core advertising sales for the quarter, increased by 51% to $20.6 million, compared to $13.7 million for the second quarter of 2009. The retail category, which represented 17% of the Company’s core advertising sales for the second quarter of 2010, increased 13% compared to the same quarter last year.

Digital and Interactive Initiatives

• Internet advertising and other interactive revenues increased 164% for the second quarter of 2010, including revenues from the October 2009 acquisition of RMM, compared to the second quarter of 2009.
• Retransmission consent fees increased 5% in the second quarter of 2010, compared to the same period in 2009, primarily due to contractual rate increases in per subscriber fees, and an increase in subscriber levels compared to the second quarter of 2009.
• During the quarter, average time on site was approximately 20 minutes. The Company delivered 6.5 million video views and engaged 38 million total daily unique visitors on its stations’ web sites.
• As a result of the Company’s multiplatform content syndication strategy, more than 8,000 stories were internally syndicated, and externally syndicated video delivered more than 27 million impressions.
• According to comScore’s June 2010 report, all of the Company’s measured station web sites ranked number one or number two in their local market for time spent on site and 94% ranked number one or number two in their local market for unique visitors. Both comScore rankings are in comparison to the Company’s local broadcast competitors.2
• The Company launched its Android application in all of its markets in June 2010. Mobile impressions, which include usage of the Company’s iPhone, Blackberry and Android applications, were 52 million for the second quarter of 2010.

Operating Expenses

• General operating expenses increased by $7.6 million, or 12%, due in part to direct operating, selling, general and administrative expenses associated with RMM, as well as increases in variable direct costs driven by revenue growth.

Key Balance Sheet and Cash Flow Items

Total debt outstanding at June 30, 2010 was $664.9 million, as compared to $683.0 million at December 31, 2009. Unrestricted cash and cash equivalent balances at June 30, 2010 were $8.5 million, as compared to $11.1 million at December 31, 2009. During the quarter ended June 30, 2010, LIN Television Corporation, the wholly owned subsidiary of the Company (“LIN Television”), completed the issuance and sale of $200.0 million in aggregate principal amount of 8⅜% Senior Notes due 2018 (the “Notes”). On the closing date, the Company applied net proceeds of $195.3 million to repay $148.9 million and $45.9 million, respectively, of outstanding principal on LIN Television’s revolving credit facility and term loan, plus accrued interest. After completion of the offering and repayments of borrowings under the senior secured credit facility, the commitment under LIN Television’s revolving credit facility was reduced to $76.1 million.

The Company’s outstanding revolving credit facility balance was $36.1 million at June 30, 2010, as compared to $204.0 million at December 31, 2009, with $40.0 million available for borrowing under that facility. Consolidated leverage, as defined in the Company’s credit agreement, was 5.9x as of June 30, 2010 compared to 7.6x as of December 31, 2009. Other components of cash flow for the second quarter of 2010 include cash capital expenditures of $5.0 million, and cash payments for programming of $7.1 million.

Business Outlook

The Company has provided historical quarterly financial information for its continuing operations on its web site. Interested parties should go to www.linmedia.com and in the “Investor Relations” section, click on “Financial Reports & Releases,” then “Quarterly and Other Reports” and then “Supplemental Financial Data.”

Based on current sales order pacings, the Company expects that third quarter 2010 net revenues will increase in the range of 24% to 33% (or $19.7 million to $27.0 million), compared to net revenues of $81.4 million for the third quarter of 2009.

In addition, the Company expects that its direct operating and selling, general and administrative expenses, which include variable sales related expenses, will increase in the range of 8% to 15% (or $4.0 million to $7.5 million) for the third quarter of 2010 compared to reported expenses of $50.4 million for the third quarter of 2009. For the full year, the Company expects direct operating and selling, general and administrative expenses will increase in the range of 7% to 10% (or $14.9 million to $20.4 million) compared to reported expenses of $209.5 million for 2009.

The Company’s current outlook for revenues, expenses and cash flow items for the third quarter and full year 2010, excluding special items, are anticipated to be in the following ranges:

    Third Quarter 2010   Full Year 2010 Net advertising revenues   $83.0 to $88.0 million     Net digital revenues   $15.1 to $16.6 million     Network comp/Barter/Other revenues   $3.0 to $3.8 million     Total net revenues   $101.1 to $108.4 million    

Direct operating and selling, general andadministrative expenses(1)

  $54.4 to $57.9 million   $224.4 to $229.9 million Station non-cash stock-based compensation expense   $0.0 to $0.5 million   $0.7 to $1.7 million Amortization of program rights   $6.0 to $6.5 million   $23.5 to $24.5 million Cash payments for programming   $6.5 to $7.0 million   $26.6 to $28.1 million Corporate expense(1)   $5.7 to $6.2 million   $23.3 to $24.3 million Corporate non-cash stock-based compensation expense   $0.5 to $1.0 million   $2.8 to $3.8 million Depreciation and amortization of intangibles   $7.0 to $7.5 million   $28.9 to $30.4 million Cash capital expenditures   $3.5 to $4.5 million   $17.0 to $18.0 million Cash interest expense   $11.9 to $12.4 million   $46.2 to $46.8 million Principal amortization of the term loan   $0.8 million   $6.5 million Cash taxes   $0.1 to $0.2 million   $0.0 million Effective tax rate   36.5% to 37.5%   36.0% to 37.0% Distributions from equity investments   $0.0 million   $0.4 million (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 22, 2010, at 9:00 AM Eastern Time. To participate in the call, please dial 1-800-441-0022 for U.S. callers and 1-719-325-2106 for international callers. The call-in pass code is 9408712. 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 website, www.linmedia.com, and can be accessed there through a link on the home page (under Latest LIN Media News) or on the Investor Relations page (under Events). 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 5, 2010.

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 www.linmedia.com and in the “Investor Relations” section, click on “Financial Reports & Releases”, then “Quarterly and Other Reports” and then “Supplemental Financial Data”.

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, statements regarding quarter and full year station time sales order pacings; local, national and political advertising growth; digital, network compensation, barter and other revenue growth; direct operating, selling, general and administrative, barter, amortization of program rights and corporate expense growth; 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, the potential for ongoing economic uncertainty; restrictions on the Company’s operations as a result of the Company’s indebtedness; global or local events that could disrupt TV broadcasting; continuing 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 NBC Universal; 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; 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 Company’s web site, www.linmedia.com, in the Investor Relations section), or at www.sec.gov, which discussions 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.

1 Nielsen Media Research; May 2010 Ratings. Columbus, OH not measured by Nielsen. All Nielsen data included in this release represents Nielsen’s estimates, and Nielsen has neither reviewed nor approved the data included in this release.

2 comScore media metrics data; June 2010. The Company’s Columbus site is not measured by comScore.

  LIN TV Corp. Consolidated Statements of Operations (unaudited)       Three months ended June 30, Six months ended June 30, 2010 2009 2010 2009 (in thousands)   Net revenues $ 99,460 $ 82,517 $ 191,305 $ 156,992   Operating costs and expenses: Direct operating 29,823 26,533 59,128 53,448 Selling, general and administrative 26,652 24,746 52,076 50,362 Amortization of program rights 5,840 5,572 12,046 11,904 Corporate   6,694     4,569     11,878     8,987   General operating expenses 69,009 61,420 135,128 124,701   Depreciation, amortization and other operating charges (benefits): Depreciation 6,948 7,448 14,048 15,574 Amortization of intangible assets 412 20 821 40 Impairment of goodwill and broadcast licenses - 39,894 - 39,894 Restructuring charge 63 498 2,181 498 Gain from asset dispositions   (2,030 )   (949 )   (2,211 )   (2,658 ) Operating income (loss) 25,058 (25,814 ) 41,338 (21,057 )   Other expense (income): Interest expense, net 13,428 10,133 25,143 21,055 Share of loss in equity investments 94 - 94 - Loss (gain) on derivative instruments 3,056 (225 ) 3,065 (5 ) Loss (gain) on extinguishment of debt 2,749 - 2,749 (50,149 ) Other, net   28     (208 )   (682 )   61   Total other expense (income), net 19,355 9,700 30,369 (29,038 )  

Income (loss) from continuing operations before provision for(benefit from) income taxes

5,703 (35,514 ) 10,969 7,981 Provision for (benefit from) income taxes   2,059     (10,180 )   3,824     8,309     Income (loss) from continuing operations 3,644 (25,334 ) 7,145 (328 ) Discontinued operations:

Loss from discontinued operations, net of a gain from the sale of discontinuedoperations of $11 for both the three and six months ended June 30, 2009, and abenefit from income taxes of $18 and $677 for the three and six months endedJune 30, 2009, respectively

  -     (162 )   -     (446 ) Net income (loss) $ 3,644   $ (25,496 ) $ 7,145   $ (774 )   Basic income (loss) per common share: Income (loss) from continuing operations $ 0.07 $ (0.50 ) $ 0.13 $ (0.01 ) Loss from discontinued operations, net of tax   -     -     -     (0.01 ) Net income (loss) $ 0.07   $ (0.50 ) $ 0.13   $ (0.02 ) Weighted-average number of common shares outstanding used in calculating basic income (loss) per common share 53,785 51,128 53,195 51,121   Diluted loss per common share: Income (loss) from continuing operations $ 0.07 $ (0.50 ) $ 0.13 $ (0.01 ) Loss from discontinued operations, net of tax   -     -     -     (0.01 ) Net income (loss) $ 0.07   $ (0.50 ) $ 0.13   $ (0.02 )   Weighted-average number of common shares outstanding used in calculating diluted income (loss) per common share 55,624 51,128 54,862 51,121     LIN TV Corp. Consolidated Balance Sheets (unaudited)   June 30, December 31, 2010 2009 (in thousands, except share data) ASSETS Current assets: Cash and cash equivalents $ 8,464 $ 11,105 Restricted cash - 2,000 Accounts receivable, less allowance for doubtful accounts (2010 - $2,061; 2009 - $2,272) 77,467 73,948 Program rights 1,452 2,126 Other current assets   5,929     6,402   Total current assets 93,312 95,581 Property and equipment, net 160,094 165,061 Deferred financing costs 8,813 8,389 Program rights 985 1,400 Goodwill 117,259 117,259 Broadcast licenses and other intangible assets, net 398,056 398,877 Other assets   4,988     3,936   Total assets $ 783,507   $ 790,503     LIABILITIES AND STOCKHOLDERS' DEFICIT Current liabilities: Current portion of long-term debt $ 6,990 $ 16,372 Accounts payable 8,335 6,556 Accrued expenses 41,330 41,916 Program obligations   7,914     10,319   Total current liabilities 64,569 75,163 Long-term debt, excluding current portion 657,893 666,582 Deferred income taxes, net 167,292 162,025 Program obligations 1,539 2,092 Other liabilities   48,708     53,795   Total liabilities   940,001     959,657     Stockholders' deficit: Class A common stock, $0.01 par value, 100,000,000 shares authorized, Issued: 32,289,036 and 30,270,167 shares as of June 30, 2010 and December 31, 2009, respectively Outstanding: 31,416,218 and 29,397,349 shares as of June 30, 2010 and December 31, 2009, respectively 294 294

Class B common stock, $0.01 par value, 50,000,000 shares authorized, 23,502,059 shares as of June 30, 2010and December 31, 2009, issued and outstanding; convertible into an equal number of shares of Class A orClass C common stock

235 235

Class C common stock, $0.01 par value, 50,000,000 shares authorized, 2 shares as of June 30, 2010 andDecember 31, 2009, issued and outstanding; convertible into an equal number of shares of Class A commonstock

- -   Treasury stock, 872,818 shares of Class A common stock as of June 30, 2010 and December 31, 2009, at cost (7,869 ) (7,869 ) Additional paid-in capital 1,107,046 1,104,161 Accumulated deficit (1,230,913 ) (1,238,058 ) Accumulated other comprehensive loss   (25,287 )   (27,917 ) Total stockholders' deficit   (156,494 )   (169,154 ) Total liabilities and stockholders' deficit $ 783,507   $ 790,503     LIN TV Corp. Consolidated Statements of Cash Flows (unaudited)   Six months ended June 30, 2010   2009 (in thousands) OPERATING ACTIVITIES: Net income (loss) $ 7,145 $ (774 ) Loss from discontinued operations - 446 Adjustment to reconcile net income (loss) to net cash provided by operating activities: Depreciation 14,048 15,574 Amortization of intangible assets 821 40 Impairment of goodwill, broadcast licenses and broadcast equipment - 39,894 Amortization of financing costs and note discounts 2,422 1,832 Amortization of program rights 12,046 11,904 Program payments (14,128 ) (11,752 ) Loss (gain) on extinguishment of debt 2,749 (50,149 ) Loss (gain) on derivative instruments 3,065 (5 ) Share of loss in equity investments 94 - Deferred income taxes, net 3,820 8,699 Stock-based compensation 2,498 1,338 Gain from asset dispositions (2,211 ) (2,658 ) Other, net (186 ) 2,109 Changes in operating assets and liabilities, net of acquisitions and disposals: Accounts receivable (3,519 ) 7,019 Other assets 1,092 (1,168 ) Accounts payable 1,779 (1,889 ) Accrued interest expense 3,710 (994 ) Other liabilities and accrued expenses   (1,368 )   (18,854 ) Net cash provided by operating activities, continuing operations 33,877 612 Net cash used in operating activities, discontinued operations   -     (101 ) Net cash provided by operating activities   33,877     511     INVESTING ACTIVITIES: Capital expenditures (9,010 ) (3,493 ) Change in restricted cash 2,000 - Proceeds from the sale of assets 181 - Payments on derivative instruments (805 ) - Shortfall loan to joint venture with NBC Universal (3,875 )

 

- Other investments, net   (1,980 )   -   Net cash used in investing activities, continuing operations (13,489 ) (3,493 ) Net cash provided by investing activities, discontinued operations   660     5,875   Net cash (used in) provided by investing activities   (12,829 )   2,382     FINANCING ACTIVITIES: Net proceeds on exercises of employee and director stock based compensation 387 - Proceeds from borrowings on long-term debt 213,000 78,000 Principal payments on long-term debt (231,899 ) (79,305 ) Payment of long-term debt issue costs   (4,732 )   -   Net cash used in financing activities, continuing operations   (23,244 )   (1,305 ) Net cash used in financing activities, discontinued operations   (445 )   (2,644 ) Net cash used in financing activities   (23,689 )   (3,949 )   Net decrease in cash and cash equivalents (2,641 ) (1,056 ) Cash and cash equivalents at the beginning of the period   11,105     20,106   Cash and cash equivalents at the end of the period $ 8,464   $ 19,050