Tribune Media execs this morning talked up their cost-cutting efforts, and $3.9 billion sale agreement with Sinclair Broadcast Group, after reporting a surprising Q1 loss attributed to lower TV ad revenues with rising programming costs — plus a $122 million impairment charge on its investment in CareerBuilder.
Interim CEO Peter Kern told analysts in a conference call that he’s converting Tribune from “a big broad media company” into “a much more streamlined [and] focused broadcaster with a cable network.”
“Shareholders can be confident that our focus is on cost management, [that] will drive enhanced margins and profitability across the business,” he says.
He said that predecessor Peter Liguori’s ambitious effort to develop “a couple of quite expensive” original series for WGN America failed because they were “kind of islands. They attracted a large audience. We marketed them heavily. And the audience wouldn’t stay for the rest of our day.”
Liguori championed WGNA’s original drama series initiatives which included Underground, Outsiders, Salem, and Manhattan.
Now Kern says he is “trying to put an original slate together that’s somewhat more efficient and also carries audience from the rest of our day parts and back to the rest of our day parts.”
He’s making the change after a quarter when he says Tribune saw “moderately worse sub counts than we expected” at the cable channel.
Kern expects to “pick up the vast majority” of the lost subs by making deals to add WGNA to new live streaming services — a group that includes DirecTV Now, Sling TV, and YouTube TV.
He adds, though, that he doesn’t worry about cord cutting because “local broadcasting is a beneficiary as it remains the only place to kind of catch everybody from an advertising standpoint….We feel like we are playing every side of that game.”
As for the Sinclair deal, Kern says it’s a “a big win for our shareholders.” The transaction, plus other efforts to improve Tribune’s books, boosted its value to shareholders by 50% since early 2016 when it began a strategic review that led to the sale.
The price Sinclair is paying is also 26% higher than the stock value on February 28, which Kern says was “the day before the media began speculating about a potential transaction.”
As events have now shown, the stories about Sinclair’s approach to Tribune were accurately reported news — not mere speculation.
In this morning’s earnings report Tribune reported an $85.6 million loss in Q1, down from an $11.1 million profit in the period last year, on revenues of $439.9 million, down 6.1%. The sales number fell short of analysts’ expectations for $447,8 million.
The company also delivered an adjusted loss of 7 cents a share vs. expectations for a 7 cent profit.