Hearst-Argyle TV Writes Off $940 million

Impairment drives $552 million 4Q loss
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(Feb. 25, 2009) NEW YORK: Hearst-Argyle TV posted a 4Q $552 million loss on revenues of $197 million after writing down $940 million. For the full year ending Dec. 31, 2008, Hearst-Argyle TV (NYSE: HTV) posted revenues of $720.5 million, down nearly 5 percent from 2007. The after-impairment loss totaled nearly $516.5 million for the year.

“Our operating results for 2008 are a reflection of the very challenging economic environment that grips our domestic and global economies,” HTV President and CEO David Barrett said. “Notwithstanding the strong local competitive position enjoyed by most of our stations, the severe downturn in ad spending, at both the local and national level, from a broad cross section of ad categories, resulted in a 4.7 percent decline in net revenues for the full year of 2008.”

There were a few beams of light in HTV’s year. Six of its stations posted record revenues. Overall political revenues were a record $93 million for 2008. Retrans generated $26.9 million, a 24 percent bump over ’07. The company had a $4.7 million gain associated with the Sprint Nextel equipment exchange; and got an $11.5 million Hurricane Katrina insurance payout.

None of the gains were enough to offset declines in the major ad categories, notably automotive, retail, telecom, movies, restaurant, health services and furniture.

“Depressed local economies in our largest markets and states such as California and Florida, and further significant declines in auto spending and other recession-sensitive categories, outweighed our political and retransmission gains. Digital revenues, which got off to a strong start earlier in the year, were also affected by recessionary conditions, and were flat to prior year due to fourth-quarter weakness,” Barrett said.

HTV took a $5.7 million severance charge in 4Q related to the elimination of 200 jobs. For the year, a pre-tax $926 million charge was taken on assets, and an additional $14.3 million in 4Q on investments and other items, including the severance charge.

Barrett said the company will continue its conserving cash for debt reduction, “including significant curtailment in capital spending and the suspension of our dividend,” Barrett said.

Hearst-Argyle Television owns and/or operates 29 television stations that reach about 21 million households, or about 18 percent of U.S. TV households. It comprises the largest group of ABC affiliates, with 12.

Shares of HTV slipped to a new low on news of its results, trading mid-day at $1.59. It opened the day at $1.85, and was trading at around $6 on Jan. 1.