LIN TV Corp. (“LIN Media” or the “Company”; NYSE: TVL), a local
multimedia company, today reported results for its second quarter
ended June 30, 2012.
Summary of Results for the Second Quarter
Ended June 30, 2012
- Net revenues increased 20% to $121
million, compared to $101 million in the second quarter of
2011.
- Local revenues, which include net local
advertising revenues, retransmission consent fees and TV station
web site revenues, increased 14% to $74.3 million, compared to $65
million in the second quarter of 2011.
- Net political revenues were $7.6
million, compared to $1.8 million in the second quarter of
2011.
- Net national revenues increased 7% to
$25.4 million, compared to $23.8 million in the second quarter of
2011.
- Interactive revenues, which include
revenues from RMM and Nami Media1, increased 50% to $10.5 million,
compared to $7 million in the second quarter of 2011.
- Operating income increased 51% to $35
million, compared to $23.2 million in the second quarter of
2011.
- Net income per diluted share was $0.48,
including a gain of $0.21 on the sale of discontinued operations,
compared to $0.02 in the second quarter of 2011.
Commenting on second quarter 2012 results, the Company’s
President and Chief Executive Officer Vincent L. Sadusky said: “A
healthy rebound in automotive advertising, our unique
multiplatform advertising solutions and strong political
demand were the major drivers for our 20% increase in net
revenues, which exceeded the high-end of our revenue guidance. In
addition, interactive revenues increased 50% and continue to
be a significant source of growth and opportunity. The third
quarter is trending well as a result of strong automotive, Olympics
and political advertising, as well as our ability to generate
interactive sales."
Operating Highlights
TV Stations and Local Web Sites
- During the second quarter of 2012, 85%
of the Company’s ABC, CBS, FOX and NBC stations were either the
highest or second highest viewed television stations in their local
markets.2
- Core local and national time sales
combined, which excludes political times sales, increased 6% in the
second quarter of 2012, compared to the second quarter of
2011.
- The automotive category, which
represented 26% of local and national advertising sales in the
second quarter of 2012, increased 25% compared to the second
quarter of 2011, during which the automotive category represented
21%.
- The Company delivered approximately 325
more local programming hours in the second quarter of 2012,
compared to the second quarter of 2011.
- According to comScore’s June 2012
report, 100% of the Company’s web sites in our measured markets
ranked number one or number two in their local market for page
views and overall engagement, and 93% ranked number one or number
two for unique visitors, versus the Company’s measured local
broadcast competitors. In comparison to all local media competitors
measured by comScore, 86% of the Company’s web sites in our
measured markets ranked number one or number two in overall
engagement.3
- Mobile impressions, which include usage
of the Company’s mobile web sites, smartphone and tablet
applications, were approximately 125 million impressions during the
second quarter of 2012, an increase of 35% compared to the second
quarter of 2011.
- During the second quarter of 2012, the
Company delivered 40 million total video impressions, an increase
of 22% compared to the second quarter of 2011.
- The Company’s commitment to continuous
news coverage resulted in 8.4 million minutes of live streaming
during the second quarter of 2012.
Key Balance Sheet and Cash Flow
Items
Total debt outstanding as of June 30, 2012, net of cash, was
$582.5 million, compared to $595.5 million as of December 31, 2011.
Unrestricted cash and cash equivalent balances as of June 30, 2012
were $9 million, compared to $18.1 million as of December 31,
2011.
On May 4, 2012, LIN Television Corporation (“LIN Television”), a
wholly-owned subsidiary of the Company, entered into an asset
purchase agreement with affiliates and subsidiaries of New Vision
Television, LLC (“New Vision”) to acquire the assets of 13
network-affiliates in eight markets for $330.4 million and the
assumption of $12.2 million of finance lease obligations. Pursuant
to the terms of the purchase agreement, the Company deposited $33.5
million into an escrow account, which will be applied to the
payment of the purchase price at closing. The remaining purchase
price due at closing will be funded with a combination of a draw
against LIN Television’s revolving credit facility, newly incurred
debt and cash on hand. The Company also agreed to provide certain
services to five separately owned network-affiliates currently
served by New Vision pursuant to sharing arrangements with a
third-party licensee upon the closing of the transaction. The
closing of the acquisition, which is expected to occur in 2012, is
subject to regulatory approvals and other closing conditions,
including the approval of the FCC.
The Company’s outstanding revolving credit facility balance was
$10 million as of June 30, 2012, compared to $35 million
outstanding as of December 31, 2011. As of June 30, 2012, $65
million was available for borrowing under the revolving credit
facility. Consolidated net leverage, as defined in the Company’s
credit agreement governing its senior secured credit facility, was
4.1x as of June 30, 2012, compared to 4.9x as of December 31, 2011.
Other components of cash flow in the second quarter of 2012 include
cash capital expenditures of $8.3 million, cash payments for
programming of $5.7 million and net proceeds of $23.2 million on
the disposition of the assets of WUPW-TV in Toledo, OH.
Business Outlook
The Company has provided historical quarterly financial
information for its continuing operations on its web site.
Interested parties should go to the Investor Relations section at
www.linmedia.com.
The Company expects that net revenues for the third quarter of
2012 will increase in the range of 26% to 33% (or $25.2 million to
$32.2 million), as compared to net revenues of $97.8 million in the
third quarter of 2011.
The Company expects that its direct operating and selling,
general and administrative expenses, which include variable selling
related expenses, will increase in the range of 14% to 16% (or $8.3
million to $9.3 million) in the third quarter of 2012 as compared
to reported expenses of $58.7 million in the third quarter of
2011.
The Company’s current outlook for revenues, expenses and cash
flow items for the third quarter of 2012, excluding special items
and the pending acquisition described above, are anticipated to be
in the following ranges:
Third Quarter of 2012 Net
broadcast advertising revenues $110.5
to $116 million Interactive revenues
$10 to $11 million Network compensation/Barter/Other revenues
$2.5 to $3 million Total net revenues
$123 to $130 million Direct operating
and selling, general and administrative expenses(a)
$67 to $68 million Station non-cash stock-based
compensation expense $0.4 million
Amortization of program rights $5.5 to
$6 million Cash payments for programming
$5.5 to $6 million Corporate expense (a)
$7 to $7.5 million Corporate non-cash stock-based
compensation expense $1.2 million
Depreciation and amortization of intangibles
$7 to $7.5 million Cash capital expenditures
$7.5 to $9.5 million Cash interest expense
$8.1 to $8.6 million Principal amortization of
term loans $0.7 million Cash taxes
$0.1 to $0.2 million Effective tax rate
37% to 39% (a) Includes non-cash
stock-based compensation expense.
For the full year, the Company expects cash capital expenditures
to be within the range of $26 to $27 million, cash interest expense
of $34 to $35 million, cash taxes of $0.7 to $0.8 million and its
effective tax rate to range between 37% and 39%.
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 2012 results today, July 31, 2012, at 9:00 AM Eastern Time.
To participate in the call, please dial 1-877-718-5111 for U.S.
callers and 1-719-325-4760 for international callers. The call-in
pass code is 7845464. 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 14, 2012.
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 interactive, network compensation,
barter and other revenues; changes in direct operating, selling,
general and administrative, 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. 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, general 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; 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 acquisition of the New Vision stations, our ability to
obtain government approvals for the acquisition, our ability to
obtain financing to fund the acquisition and the integration of any
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 I, LP 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 is a local multimedia company that operates or
services 32 network-affiliates, more than 50 television and niche
web sites, and a growing suite of mobile products. The Company's
strategic investments focus on emerging media and
interactive technologies that deliver measurable results to
advertisers. LIN TV Corp. is traded on the NYSE under the symbol
"TVL".
1 The Company acquired a 57.6% interest (a 50.1% interest
calculated on a fully diluted basis) in Nami Media, Inc. in the
fourth quarter of 2011.
2 Nielsen Media Research; Average of LIN Media’s May
2012 Nielsen Ratings based on key demographics: Monday-Friday,
Early Morning, Early Evening, Evening and 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
release.
3 comScore media metrics data; June 2012. Overall engagement
references comScore’s average minutes per visitor. The basis for
comparison is calculated against the Company’s and local media
competitors’ self-defined classification from within the comScore
dictionary.
– financial tables follow –
LIN TV Corp. Consolidated Statements of Operations
(unaudited)
Three Months Ended
June 30, Six Months Ended June 30, 2012
2011 2012 2011 (in thousands, except per
share data) Net revenues $ 121,016 $ 100,963 $ 224,216 $
190,682 Operating expenses: Direct operating 37,245 32,137
72,402 62,070 Selling, general and administrative 28,043 26,165
56,426 51,699 Amortization of program rights 5,381 5,347 10,600
10,675 Corporate 8,219 7,339
14,965 13,822 General operating expenses
78,888 70,988 154,393 138,266 Depreciation, amortization and
other operating expenses: Depreciation 6,651 6,359 13,410 12,623
Amortization of intangible assets 478 287 955 548 Loss from asset
dispositions 4 103 3
358 Operating income 34,995 23,226 55,455 38,887
Other expense: Interest expense, net 9,266 12,717 19,636
25,649 Share of loss in equity investments 62 554 153 1,167 Gain on
derivative instruments - (583 ) - (1,203 ) Loss on extinguishment
of debt - 50 2,099 192 Other expense (income), net 101
(3 ) 88 (2 ) Total other
expense, net 9,429 12,735 21,976 25,803 Income before
provision for income taxes 25,566 10,491 33,479 13,084 Provision
for income taxes 10,109 9,589
12,907 10,571 Income from continuing
operations 15,457 902 20,572 2,513 Discontinued operations: (Loss)
income from discontinued operations, net of a provision for
(benefit from) income taxes of $34 and $93 for the three months
ended June 30, 2012 and 2011, respectively, and $(541) and $83 for
the six months ended June 30, 2012 and 2011, respectively (76 ) 169
(1,018 ) 144 Gain on the sale of discontinued operations, net of a
provision for income taxes of $6,306 and $6,223 for the three and
six months ended June 30, 2012, respectively 11,678
- 11,389 - Net income
27,059 1,071 30,943 2,657 Net loss attributable to noncontrolling
interests (59 ) - (441 ) -
Net income attributable to LIN TV Corp. $ 27,118 $
1,071 $ 31,384 $ 2,657
Basic income
per common share attributable to LIN TV Corp.: Income from
continuing operations attributable to LIN TV Corp. $ 0.28 $ 0.02 $
0.38 $ 0.05 Loss from discontinued operations, net of tax - - (0.02
) - Gain on the sale of discontinued operations, net of tax
0.21 - 0.20 - Net
income attributable to LIN TV Corp. $ 0.49 $ 0.02 $
0.56 $ 0.05
Weighted-average number of common shares
outstandingused in calculating basic income per common share
55,174 55,712 55,680 55,346
Diluted income per common
share attributable to LIN TV Corp.: Income from continuing
operations attributable to LIN TV Corp. $ 0.27 $ 0.02 $ 0.37 $ 0.05
Loss from discontinued operations, net of tax - - (0.02 ) - Gain on
the sale of discontinued operations, net of tax 0.21
- 0.20 - Net income
attributable to LIN TV Corp. $ 0.48 $ 0.02 $ 0.55
$ 0.05 Weighted-average number of common
shares outstandingused in calculating diluted income per common
share 56,300 57,187 56,959 56,865
LIN TV Corp.
Consolidated Balance
Sheets (unaudited) June 30, December
31, 2012 2011 (in thousands, except share
data) ASSETS Current assets: Cash and cash equivalents $
9,038 $ 18,057 Restricted cash - 255,159 Accounts receivable, less
allowance for doubtful accounts (2012 - $2,626; 2011 - $2,310)
94,685 91,093 Deferred income tax assets 6,435 4,249 Assets held
for sale - 3,253 Other current assets 7,408
6,090 Total current assets 117,566 377,901 Property and
equipment, net 146,075 145,429 Deferred financing costs 10,700
12,472 Goodwill 122,312 122,069 Broadcast licenses and other
intangible assets, net 399,011 400,081 Assets held for sale -
12,505 Other assets 43,505 11,487 Total
assets $ 839,169 $ 1,081,944
LIABILITIES,
REDEEMABLE NONCONTROLLING INTEREST AND STOCKHOLDERS' DEFICIT
Current liabilities: Current portion of long-term debt $ 5,989 $
253,856 Accounts payable 9,415 10,972 Accrued expenses 39,915
38,578 Program obligations 9,514 9,892 Liabilities held for sale
- 3,719 Total current liabilities
64,833 317,017 Long-term debt, excluding current portion 585,535
614,861 Deferred income tax liabilities 187,803 167,371 Program
obligations 1,781 3,874 Liabilities held for sale - 1,308 Other
liabilities 51,059 58,642 Total
liabilities 891,011 1,163,073
Redeemable noncontrolling interest 3,293 3,503 Stockholders'
deficit: Class A common stock, $0.01 par value, 100,000,000 shares
authorized, Issued: 34,708,083 and 34,650,169 shares as of June 30,
2012 and December 31, 2011, respectively Outstanding: 31,188,834
and 33,012,351 shares as of June 30, 2012 and December 31, 2011,
respectively 310 309
Class B common stock, $0.01 par value,
50,000,000 shares authorized, 23,401,726 shares as of
June 30, 2012 and December 31, 2011, issued and
outstanding; convertible into an equal number of shares
of class A or class C common stock
235 235
Class C common stock, $0.01 par value,
50,000,000 shares authorized, 2 shares as of June 30,
2012 and December 31, 2011, issued and
outstanding; convertible into an equal number of shares
of class A common stock
- -
Treasury stock, 3,519,249 and 1,637,818
shares of class A common stock as of June 30, 2012 and
December 31, 2011, respectively, at cost
(17,098 ) (10,598 ) Additional paid-in capital 1,125,679 1,121,589
Accumulated deficit (1,126,006 ) (1,157,390 ) Accumulated other
comprehensive loss (38,255 ) (38,777 ) Total
stockholders' deficit (55,135 ) (84,632 ) Total
liabilities, redeemable noncontrolling interest and stockholders'
deficit $ 839,169 $ 1,081,944
LIN TV
Corp. Consolidated Statements of Cash Flows
(unaudited) Six
Months Ended June 30, 2012 2011 (in
thousands) OPERATING ACTIVITIES: Net income $ 30,943 $
2,657 Loss (income) from discontinued operations 1,018 (144 ) Gain
on the sale of discontinued operations (11,389 ) - Adjustment to
reconcile net income to net cash provided by operating activities:
Depreciation 13,410 12,623 Amortization of intangible assets 955
548 Amortization of financing costs and note discounts 1,153 1,951
Amortization of program rights 10,600 10,675 Cash payments for
programming (11,296 ) (12,551 ) Loss on extinguishment of debt 871
192 Gain on derivative instruments - (1,203 ) Share of loss in
equity investments 153 1,167 Deferred income taxes, net 12,391
10,423 Stock-based compensation 3,738 3,381 Loss from asset
dispositions 3 358 Other, net 862 395 Changes in operating assets
and liabilities, net of acquisitions: Accounts receivable (3,592 )
1,217 Other assets (2,155 ) (1,879 ) Accounts payable (1,557 )
(1,008 ) Accrued interest expense (2,434 ) 81 Other liabilities and
accrued expenses (1,979 ) (2,024 )
Net cash
provided by operating activities, continuing operations 41,695
26,859
Net cash used in operating activities, discontinued
operations (2,736 ) (967 )
Net cash provided
by operating activities 38,959 25,892
INVESTING ACTIVITIES: Capital expenditures
(13,716 ) (7,915 ) Change in restricted cash 255,159 - Payments for
business combinations, net of cash acquired (33,500 ) (5,244 )
Proceeds from the sale of assets 1 48 Payments on derivative
instruments - (1,254 ) Shortfall loans to joint venture with
NBCUniversal (1,680 ) (1,019 ) Other investments, net -
(150 )
Net cash provided by (used in) investing
activities, continuing operations 206,264 (15,534 )
Net cash
provided by (used in) investing activities, discontinued
operations 29,520 (81 )
Net cash
provided by (used in) investing activities 235,784
(15,615 )
FINANCING ACTIVITIES: Net
proceeds on exercises of employee and director stock-based
compensation 352 481 Proceeds from borrowings on long-term debt
20,000 920 Principal payments on long-term debt (297,415 ) (9,619 )
Payment of long-term debt issue costs (199 ) (74 ) Treasury stock
purchased (6,500 ) -
Net cash used in
financing activities (283,762 ) (8,292 )
Net (decrease) increase in cash and cash equivalents (9,019 ) 1,985
Cash and cash equivalents at the beginning of the period
18,057 11,648 Cash and cash equivalents at the
end of the period $ 9,038 $ 13,633
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