01 Mar Tribune Media Company Reports Fourth Quarter and Full-Year 2016 Results
March 1, 2017 — Tribune Media Company (the “Company”) (NYSE: TRCO) today reported its results for the three months and year ended December 31, 2016.
FOURTH QUARTER AND FULL-YEAR 2016 FINANCIAL HIGHLIGHTS (compared to the prior year period)
In January 2017, the Company completed the sale of substantially all of its Digital and Data business to Nielsen. The historical results of operations for the businesses included in the sale are reported as discontinued operations for all periods presented. All references made to financial data in this release are to Tribune Media Company’s continuing operations.
- Consolidated operating revenues increased 11% to $529.6 million for the fourth quarter and increased 8% to $1,947.9 million for the full year
- Consolidated operating profit increased 129% to $113.2 million for the fourth quarter and increased 261% to $433.6 million for the full year
- Consolidated Adjusted EBITDA increased 38% to $181.5 million for the fourth quarter and increased 21% to $531.1 million for the full year
- Total Television and Entertainment net advertising revenues (which includes political and digital revenues) increased 10% to $384.6 million for the fourth quarter and increased 5% to $1,374.6 million for the full year
- Retransmission revenue increased 20% to $89.2 million for the fourth quarter and increased 18% to $334.7 million for the full year
- Carriage fee revenue increased 35% to $30.7 million for the fourth quarter and increased 42% to $121.0 million for the full year
- Digital ad revenue increased 7% to $18.9 million for the fourth quarter and increased 12% to $66.6 million for the full year
“Bolstered by record fourth quarter revenues, Tribune Media’s financial results for 2016 were very strong,” said Peter Liguori, Tribune Media’s President and Chief Executive Officer. “Consolidated revenues grew 8% and consolidated Adjusted EBITDA was up 21% over last year, driven by strong political advertising revenue and solid growth in retransmission and carriage fee revenues. These results are a clear demonstration that our operational strategies continue delivering value for our shareholders. In addition, last year’s monetization of real estate assets for more than $500 million and the recent sale of Gracenote enables Tribune Media to be a more focused television company, uniquely positioned to take advantage of the opportunities presented by a rapidly changing media environment.”
FOURTH QUARTER AND FULL-YEAR 2016 RESULTS
Discontinued Operations
On December 19, 2016, the Company entered into an agreement with Nielsen to sell equity interests in substantially all of the Digital and Data business for $560 million in cash, subject to certain purchase price adjustments. The Company completed the sale on January 31, 2017 and received gross proceeds of $581 million. The historical results of operations for the businesses included in the sale are reported as discontinued operations for all periods presented. Accordingly, all references made to financial data in this release are to Tribune Media Company’s continuing operations.
Consolidated
Consolidated operating revenues for the fourth quarter of 2016 were $529.6 million compared to $478.0 million in the fourth quarter of 2015, representing an increase of $51.6 million, or 11%. The increase was primarily driven by higher political advertising, retransmission, carriage fee and digital advertising revenues, partially offset by a decrease in core advertising revenues and real estate revenues as a result of the sales of certain properties in 2016.
For the full year 2016, consolidated operating revenues were $1,947.9 million compared to $1,802.0 million for the full year 2015, representing an increase of $146.0 million, or 8%.
Consolidated operating profit was $113.2 million for the fourth quarter of 2016 compared to a consolidated operating loss of $396.9 million for the fourth quarter of 2015. The Company recorded non-cash impairment charges of $3 million related to other intangible assets in the fourth quarter of 2016 and $385 million related to goodwill and other intangible assets in the fourth quarter of 2015. Consolidated operating profit before impairments of goodwill and other intangible assets in the fourth quarter of 2016 was $116.6 million compared to an operating loss of $11.9 million in the fourth quarter of 2015, representing an increase of $128.5 million. The increase was primarily due to higher political revenues and the absence of a $73.8 million program impairment charge related to the write down of the acquired syndicated programming Person of Interest and Elementary at WGN America recorded in the fourth quarter of 2015.
For the full year 2016, consolidated operating profit was $433.6 million compared to a consolidated operating loss of $269.3 million in the full year 2015. Consolidated operating profit before impairments of goodwill and other intangible assets was $437.0 million in 2016 compared to $115.7 million in 2015, representing an increase of $321.3 million primarily due to $213.1 million of gains recorded on the sales of real estate and higher Television and Entertainment operating profit primarily as a result of an increase in advertising revenues driven by higher political spending and a $37.0 million decrease in program impairment charges. In the third quarter of 2016, the Company recorded a $36.8 million impairment charge for the syndicated program Elementary at WGN America compared to a $73.8 million impairment charge in the fourth quarter of 2015, as noted above.
For the full year 2016, the Company recognized net pretax gains on the sales of real estate, including Tribune Tower, the north block of the Los Angeles Times Square property and the Olympic printing plant located in Los Angeles, of $213.1 million ($129.6 million after tax), or $1.43 per common share. Also in 2016, the Company reached an agreement with the IRS administrative appeals division to resolve the income tax dispute regarding the 2008 formation of the Newsday partnership. For the full year 2016, the Company recorded net income tax charges of $191.0 million related to this matter, or $2.10 per common share.
Net income was $19.0 million in the fourth quarter of 2016 compared to a net loss of $380.9 million in the fourth quarter of 2015. Net income was $14.2 million for the full year 2016 compared to a net loss of $319.9 million in 2015.
Consolidated income from continuing operations was $70.7 million in the fourth quarter of 2016 compared to a loss from continuing operations of $388.6 million in the fourth quarter of 2015. Diluted earnings per common share from continuing operations for the fourth quarter of 2016 was $0.81 compared to diluted loss per common share from continuing operations of $4.15 for the fourth quarter of 2015. Adjusted diluted earnings per share (“Adjusted EPS”) from continuing operations for the fourth quarter of 2016 was $0.85 compared to $0.56 for the fourth quarter of 2015. Both diluted earnings per common share from continuing operations and Adjusted EPS from continuing operations include an income tax benefit of $2 million, or $0.02 per common share, in the fourth quarter of 2016 and an income tax benefit of $4 million, or $0.04 per common share, in the fourth quarter of 2015 related to certain tax adjustments.
Consolidated income from continuing operations was $87.0 million for the full year 2016 compared to a loss from continuing operations of $315.3 million for the full year 2015. For the full year 2016, diluted income per common share from continuing operations was $0.96 compared to diluted loss per common share from continuing operations of $3.33 for the full year 2015. Adjusted EPS from continuing operations for the full year 2016 was $2.13 compared to $1.54 for the full year 2015. Both diluted earnings per common share from continuing operations and Adjusted EPS from continuing operations include an income tax benefit of $11 million, or $0.13 per common share, for the full year 2016 and an income tax benefit of $8 million, or $0.08 per common share, for the full year 2015 related to certain tax adjustments.
Consolidated Adjusted EBITDA increased to $181.5 million in the fourth quarter of 2016 from $131.9 million in the fourth quarter of 2015, representing an increase of $49.6 million, or 38%. The increase in consolidated Adjusted EBITDA was primarily attributable to higher political advertising revenues and increased retransmission and carriage fee revenues, partially offset by a decrease in core advertising revenues and real estate revenues. For the full year 2016, consolidated Adjusted EBITDA increased $91.4 million, or 21%, to $531.1 million as compared to $439.7 million in the full year 2015.
Cash distributions from equity investments in the fourth quarter of 2016 were $27.0 million compared to $19.1 million in the fourth quarter of 2015. Cash distributions for the full year 2016 were $170.5 million compared to $180.2 million for the full year 2015.
Television and Entertainment
Revenues were $525.7 million in the fourth quarter of 2016 compared to $465.5 million in the fourth quarter of 2015, an increase of $60.2 million, or 13%. This was driven by a $68.3 million increase in net political advertising revenue, an increase in retransmission revenue of $14.9 million, or 20%, and an increase in carriage fee revenue of $8.0 million, or 35%, partially offset by a decrease in core advertising revenue (comprised of local and national advertising, excluding political and digital) of $33.0 million, or 10%. Core advertising was negatively impacted by displacement from significant political advertising during the first five weeks of the fourth quarter.
Television and Entertainment segment revenues for the full year 2016 were $1,909.9 million compared to $1,752.5 million for the full year 2015, an increase of $157.4 million, or 9%. The increase was driven by a $116.7 million increase in net political advertising revenue, an increase in retransmission revenues of $51.6 million, or 18%, and an increase in carriage fee revenues of $35.7 million, or 42%, partially offset by lower core advertising revenue.
Television and Entertainment operating profit for the fourth quarter of 2016 was $136.9 million compared to an operating loss of $365.2 million in the fourth quarter of 2015. Television and Entertainment operating profit before impairments of goodwill and other intangible assets was $140.3 million and $19.8 million for the fourth quarters of 2016 and 2015, respectively. The increase was primarily due to higher operating revenues in the fourth quarter of 2016 and the absence of the program impairment charge in the fourth quarter of 2015. Television and Entertainment Adjusted EBITDA for the fourth quarter of 2016 was $199.5 million compared to $151.6 million in the fourth quarter of 2015, an increase of $48.0 million, or 32%, primarily due to higher net political advertising, retransmission and carriage fee revenues, partially offset by lower core advertising revenue as well as higher programming expenses, excluding the program impairment charge in the fourth quarter of 2015.
For the full year 2016, Television and Entertainment operating profit was $324.8 million as compared to an operating loss of $175.1 million for the full year 2015. Television and Entertainment operating profit before impairments of goodwill and other intangible assets was $328.2 million and $209.9 million in 2016 and 2015, respectively. Television and Entertainment Adjusted EBITDA was $604.0 million as compared to $513.2 million for the full year 2015, an increase of $90.8 million, or 18%.
Corporate and Other
Real estate revenues for the fourth quarter of 2016 were $3.9 million compared to $12.5 million for the fourth quarter of 2015, representing a decrease of $8.6 million, or 69%, primarily due to loss of revenue from real estate properties sold during 2016. Real estate revenues for the full year 2016 were $38.0 million, compared to $49.4 million for the full year 2015, representing a decrease of $11.4 million, or 23%.
Corporate and Other operating loss for the fourth quarter of 2016 was $23.7 million compared to $31.7 million in the fourth quarter of 2015. The reduction of the loss was primarily attributable to lower corporate and real estate operating expenses, partially offset by a decline in real estate revenues. Corporate and Other Adjusted EBITDA for the fourth quarter of 2016 represented a loss of $18.0 million compared to a loss of $19.6 million in the fourth quarter of 2015. For the full year 2016, Corporate and Other operating profit was $108.7 million compared to a loss of $94.2 million for the full year 2015, primarily attributable to net pretax gains on real estate sales of $213.1 million, as discussed above. Corporate and Other Adjusted EBITDA represented a loss of $72.9 million for the full year 2016 compared to a loss of $73.5 million for the full year 2015.
RETURN OF CAPITAL TO SHAREHOLDERS
Stock Repurchase Program
On February 24, 2016, the Board of Directors (the “Board”) authorized the current stock repurchase program under which the Company may repurchase up to $400 million of its outstanding Class A common stock. During the fourth quarter of 2016, the Company repurchased 2,253,370 shares of the Company’s Class A common stock in open market transactions for an aggregate purchase price of approximately $75 million. Since the announcement of the new stock repurchase program on February 24, 2016 through March 1, 2017, the Company has repurchased an aggregate of 6,432,455 shares of the Company’s Class A common stock in open market transactions at an aggregate purchase price of approximately $232 million. As of March 1, 2017, the remaining authorized amount under the current program totaled approximately $168 million.
Special Cash Dividend
On January 2, 2017, the Board authorized and declared a special cash dividend of $5.77 per share of common stock, which was paid on February 3, 2017 to holders of record of common stock and warrants at the close of business on January 13, 2017. The total aggregate payment on February 3, 2017 totaled $499 million.
Quarterly Dividend
On February 14, 2017, the Board declared a quarterly cash dividend on the Company’s common stock of $0.25 per share to be paid on March 27, 2017 to holders of record of the Company’s common stock and warrants as of March 13, 2017. This is the eighth consecutive quarterly dividend declared under the Company’s dividend program announced on March 6, 2015. Future dividends will be subject to the discretion of the Board.
RECENT DEVELOPMENTS
Sale of Digital and Data Business
On December 19, 2016, the Company entered into an agreement with Nielsen to sell equity interests in substantially all of the Digital and Data business (“Gracenote Sale”) for $560 million in cash, subject to certain purchase price adjustments. The Company completed the sale on January 31, 2017 and received gross proceeds of $581 million.
On February 1, 2017, the Company used $400 million of proceeds from the Gracenote Sale to pay down a portion of the Company’s term loan facility.
Real Estate Transactions
In the year ended December 31, 2016, the Company sold several properties for net pretax proceeds totaling $506 million and recognized a net pretax gain of $213 million. Real estate sales in the fourth quarter of 2016 totaled $1 million. The Company defines net proceeds as pretax cash proceeds on the sale of properties, less associated selling costs.
Strategic Review
In February 2016, the Company announced that it had retained financial advisors for a strategic review of the Company’s assets. Since then, the Company has closed $506 million of real estate transactions and the $560 million Gracenote Sale (each as described above), and paid a $499 million special cash dividend and utilized $232 million of the current $400 million share repurchase authorization. The Company also continues to take a balanced approach to its liquidity in the context of its capital structure, and used $400 million from the proceeds of the Gracenote Sale to pay down outstanding borrowings under the Company’s term loan facility. In addition, the Company continues to consider a variety of other actions, including but not limited to returns of capital to shareholders and debt repayment.
On September 7, 2016, TEGNA announced that it was evaluating strategic alternatives for CareerBuilder, in which it holds a 53% ownership interest, including a possible sale. There can be no assurance of the terms, timing or structure of any transaction involving such business or whether any transaction will take place at all. Any such transaction is subject to risks and uncertainty.
Spectrum Auction
On February 8, 2017, the Company announced that it expects to receive approximately $190 million in pretax proceeds resulting from the FCC’s recently completed reverse auction for broadcast spectrum. The anticipated proceeds reflect the FCC’s acceptance of one or more bids placed by the Company or channel share partners of television stations owned or operated by the Company during the auction to modify and/or surrender spectrum used by certain of such bidder’s television stations. The results of the auction are not expected to produce any material change in the Company’s operations or results. The Company expects to receive the proceeds in the second half of 2017.
FINANCIAL GUIDANCE
The following represents the Company’s financial guidance for the full year 2017. The actual results for the full year may differ materially from the below guidance, which is based on our assets and operations as they exist today. The following statements, by their nature, are forward-looking and are subject to substantial risks and uncertainties, which are discussed below under “Cautionary Statement Regarding Forward-Looking Statements.”
For full year 2017, the Company expects:
Consolidated revenues to be between $1.865 billion and $1.916 billion
Consolidated Adjusted EBITDA to be between $440 million and $480 million
Television and Entertainment segment revenues to be between $1.855 billion and $1.905 billion
Television and Entertainment segment Adjusted EBITDA to be between $523 million and $559 million
Real estate revenues to be between $10 million and $11 million
Real estate expenses to be between $5 million and $6 million
Corporate expenses to be between $84 million and $88 million
Corporate and Other Adjusted EBITDA to be between $(79) million and $(83) million
Capital expenditures to be between $75 million and $95 million
Cash taxes to be between $85 million and $100 million (excludes cash tax payments for transactions such as real estate sales, the Gracenote Sale and anticipated spectrum proceeds)
Cash interest to be approximately $152 million
See “Non-GAAP Financial Measures” below for more information regarding certain financial measures the Company presents that are not recognized under accounting principles generally accepted in the U.S. (“GAAP”).
CONFERENCE CALL INFORMATION
The Company will host a conference call today at 8:30 a.m. ET to discuss its fourth quarter and full year results and a presentation deck will be posted to the Company’s website in advance of the call. The conference call can be accessed on the Investor Relations homepage of Tribune Media’s website at www.tribunemedia.com, or by dialing (888) 317-6003 (domestic) or (412) 317-6061 (international). The confirmation code is 0671867.
An audio webcast replay will be available in the Events and Presentations section of the Tribune Media website approximately one hour after completion of the call. A replay of the call will also be available until March 8, 2017 at (877) 344-7529 (domestic) or (412) 317-0088 (international). The confirmation code for the replay is 10101170.
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For a copy of this press release, complete with tables, please visit Investor Relations.
Tribune Media Company (NYSE: TRCO) is home to a diverse portfolio of television and digital properties driven by quality news, entertainment and sports programming. Tribune Media is comprised of Tribune Broadcasting’s 42 owned or operated local television stations reaching approximately 50 million households, national entertainment cable network WGN America, whose reach is approaching 80 million households, Tribune Studios, and a variety of digital applications and websites commanding 60 million monthly unique visitors online. Tribune Media also includes Chicago’s WGN-AM and the national multicast networks Antenna TV and THIS TV. Additionally, the Company owns and manages a significant number of real estate properties across the U.S. and holds a variety of investments, including a 32% interest in CareerBuilder, LLC and a 31% interest in Television Food Network, G.P., which operates Food Network and Cooking Channel. For more information please visit www.tribunemedia.com.
INVESTOR CONTACT:
James Arestia
Director/Investor Relations
(646) 563-8296
jarestia@tribunemedia.com
MEDIA CONTACT:
Gary Weitman
SVP/Corporate Relations
(312) 222-3394
gweitman@tribunemedia.com