May 8, 2015 Last Updated 8:52 am

Tribune Media reports higher earnings on increase in digital

This site has gotten hammered a number of times for daring to say what one would think would be obvious: that when media companies are split in two, the side the gets the digital assets is probably destined to be the one to report better results.

The reason for that isn’t necessarily that the side of the business getting the digital properties – always the broadcast side – knows how to grow digital, it is that they will be able to report growth there as they assume sole control of the line item.

Gannett, with its recent take over of sole control of Cars.com and other digital nameplates, is a good example.

Today Tribune Media, the broadcast side of the Tribune Company split, reported its Q1 earnings. Not surprisingly, they are pointing to digital as the reason for higher earnings.

Television advertising revenue fell 2 percent in Q1, though retransmission fees rose. But it was digital that the company pointed to, which grew, not so much because of organic growth, but because of the acquisition of Gracenote.

Here is a portion of Tribune Media’s earnings announcement:


NEW YORK, NY – May 8, 2015 — Tribune Media Company today reported its results for the three months ended March 29, 2015. The Company achieved substantial growth in operating revenues as it executed successfully on its strategy of growing its Television and Entertainment business while also expanding its Digital and Data business worldwide.

“We generated top-line line growth in the first quarter and made progress against many of our key strategic objectives,” said Peter Liguori, Tribune Media’s President and Chief Executive Officer. “First, we grew revenue market share across our stations, including, most importantly, our four largest markets. WGN America successfully continued its conversion from a superstation to a cable network and the network is telecast as a cable entity to 60% of our subscriber base, while generating a 52% increase in carriage revenues this quarter. Finally, the on-going expansion of our Digital and Data business yielded increased revenue and Adjusted EBITDA growth.”

Liguori continued, “Our results in the first quarter and our outlook for the remainder of the year give us confidence that we are on track to achieve our revenue and Adjusted EBITDA guidance for the full year.”

First Quarter 2015 Highlights

  • Consolidated operating revenues grew 6.0% as compared to the first quarter of 2014, to $472.7 million, driven by acquisition-related growth in the Digital and Data segment and increases in the Television and Entertainment segment.
  • Consolidated operating profit grew 21% as compared to the first quarter of 2014, to $60.9 million.
  • Consolidated Adjusted EBITDA decreased 6.5% as compared to the first quarter of 2014, to $129.0 million, due to strategic investments in programming and the build-out of improved technology applications and shared service operations.
  • Basic and Diluted earnings per share from continuing operations of $0.37.
  • Cash distributions received from equity investments of $94.9 million.

First Quarter 2015 Results

Consolidated
Consolidated operating revenues for the first quarter of 2015 were $472.7 million compared to $446.1 million in the first quarter of 2014, representing an increase of $26.6 million, or 6.0%. Revenues increased primarily as a result of the impact of 2014 acquisitions in the Digital and Data segment, as well as increased retransmission consent revenues and carriage fees in the Television and Entertainment segment, partially offset by decreased advertising revenues associated with airing the Super Bowl on 14 Fox-affiliated stations in 2014 versus two NBC-affiliated stations in 2015.

Consolidated operating profit for the first quarter of 2015 increased by $10.6 million to $60.9 million from $50.3 million in the first quarter of 2014.

Basic and diluted earnings per common share from continuing operations for the first quarter of 2015 were $0.37 compared to $0.28 for the first quarter of 2014.

Consolidated Adjusted EBITDA decreased to $129.0 million from $138.0 million in the first quarter of 2014, representing a decrease of $9.0 million, or 6.5%. The decrease is primarily attributable to increased programming fees within the Television and Entertainment segment, implementation of improved technology applications and the establishment of new shared services operations within Corporate and Other, as well as operating expenses attributable to the acquisitions within the Digital and Data segment, partially offset by increased revenues as described above.

Cash distributions from equity investments in the first quarter of 2015 were $94.9 million compared to $120.3 million in the first quarter of 2014. Cash distributions were lower in the first quarter of 2015 due to a $12.4 million non-recurring cash payment from Television Food Network, G.P. received in the first quarter of 2014, as well as the impact of working capital changes which reduced cash available for distribution.

Television and Entertainment Segment
Television and Entertainment segment revenues were $410.3 million in the first quarter of 2015, compared to $400.2 million in the first quarter of 2014, an increase of $10.1 million, or 2.5%, and were comprised of:

  • Advertising revenues of $299.7 million as compared with $305.8 million in the first quarter of 2014, representing a decrease of $6.1 million, or 2.0%. Core advertising (local and national advertising revenues, excluding political revenues) declined by $6.0 million, or 2.1%, primarily as a result of an approximate $10 million decline in revenues associated with airing the Super Bowl on two NBC-affiliated stations in 2015 as compared to 14 FOX-affiliated stations in 2014. Excluding this impact, core advertising revenues increased 1.4%.
  • Local station retransmission consent fees of $68.8 million in the first quarter of 2015, compared to $55.6 million in the first quarter of 2014, an increase of $13.2 million, or 24%, as a result of contract renewals with distribution partners at higher rates.
  • Carriage fees of $21.5 million in the first quarter of 2015 compared to $14.1 million in the first quarter of 2014, an increase of $7.4 million, or 52%, as a result of obtaining higher rates for WGN America distribution.

Television and Entertainment Adjusted EBITDA for the first quarter of 2014 was $135.0 million, compared to $139.7 million in the first quarter of 2014. Television and Entertainment Adjusted EBITDA was unfavorably impacted primarily by an increase in programming expenses associated with new original and syndicated content at WGN America.

Digital and Data Segment
Digital and Data segment revenues in the first quarter of 2015 were $50.2 million, compared to $31.5 million in the first quarter of 2014, an increase of $18.7 million. This increase was primarily attributable to the impact of the acquisition of Gracenote, which was consummated January 31, 2014, and the acquisitions of HWW, Baseline and What’s ON, which were consummated in the second half of 2014.

Digital and Data Adjusted EBITDA was $12.5 million in the first quarter of 2015, compared to $5.0 million in the first quarter of 2014, an increase of $7.5 million. This increase was primarily attributable to the impact of the acquisitions noted above.

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