Tribune Media Says ‘Outsiders’ And ‘Underground’ Weighed On Q1 Profits

WGN America’s new series Outsiders and Underground are ratings successes for Tribune Media — and big contributors to its far lower than expected Q1 profits — CEO Peter Liguori told analysts today in his quarterly conference call to discuss earnings.

The company decided to launch the dramas “away from the noise of the summer Olympics and the election campaign,” he said. That helped to boost programming expenses by $12 million and marketing expenses by $16 million vs last year when WGNA did not introduce original shows.

“We planned for this front loading,” Liguori says. Tribune sought to reassure investors by reaffirming its financial guidance for 2016, saying that programming expenses will be flat for the rest of this year with marketing costs down.

But the Q1 results still were lopsided: Net income fell 69.5% vs the period last year to $11.1 million on revenues of $520.5 million, were up 10.1%.

The top line far exceeded analyst expectations for about $501 million. But the bottom line figure, at 12 cents a share, fell way short of the 27 cents that the Street anticipated.

The new WGNA shows are “hits by any standard” and set the network up “nicely for this year’s upfront” ad sales market, Liguori says.

He’s also optimistic about political ad sales at Tribune’s local TV stations. They were up 169% vs the first three months of 2012, the last year with a presidential contest, helping the company to beat revenue expectations. And Tribune expects to end the year with $200 million in political, the CEO says.

The presidential race will help; Tribune has stations in “virtually all” of the battleground states including Pennsylvania, Missouri, and Ohio.

But the “vast majority” of the sales will come from Senate and gubernatorial races, as well as spending by political action and cause-based groups. Tribune has stations in 21 of 34 states with contested races, six more than it had in 2012.

Missouri will be especially important with competitive races for Senate and the Governor’s office. Liguori also expects multiple referenda in California, Florida, and Colorado.

Liguori had little to add about the company’s strategic review announced in February. “We’re making good progress with our financial advisors,” he says.

For now, the company is looking to sell a lot of its real estate. It has 18 properties on the block that are drawing “a ton of interest.” Last week Tribune made $24 million from the sale of its property in Deerfield Beach, FL, and signed agreements to sell the north block of its Los Angeles Times Square property and the Olympic Printing Plant facility in Los Angeles. A previous deal to sell the Los Angeles Times Square property, made in late December, was “terminated” in Q1, the company says.

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