LIN TV Corp. (TVL)
Q4 2008 Earnings Call Transcript
March 12, 2009, 2009 8:30 am ET
Vincent Sadusky – President & CEO
Scott Blumenthal – EVP, Television
Rich Schmaeling – SVP & CFO
Tim Schlock – Wachovia Wells Fargo
Avi Steiner – J.P. Morgan
Aaron Watts – Deutsche Bank
Edward Atorino – Benchmark
Bishop Cheen – Wachovia
Stacey Finerman– Goldman Sachs
Jonathan Levine – Jefferies
Ken Silver – The Royal Bank of Scotland
Previous Statements by TVL
» LIN TV Corporation Q3 2008 Earnings Call Transcript
» LIN TV Corp. Q2 2008 Earnings Call Transcript
» LIN TV Corp. Q1 2008 Earnings Call Transcript
This conference call may include statements that constitute forward-looking statements, particularly in the area described as business outlook. But also including any other statements of future business prospects or financial results, including, but not limited to the use of words like believe, expect, estimate, project, or other similar expressions.
Forward-looking statements inherently involve risks and uncertainties, including among other factors, general economic conditions, demand for advertising, competition for audience and programming, government regulations, and new technologies that could cause our actual results to differ materially from the forward-looking statements. Factors that could contribute to such differences include the risks detailed in the company's annual report on form 10-K and other filings made with the Securities and Exchange Commission, which are available on the company's Web site www.lintv.com in the Investor Relations section or at www.sec.gov, which discussions are incorporated in this release by reference.
LIN TV undertakes no obligation to publicly update or revise any forward-looking statements whether as a result of new information, future events, or otherwise, unless otherwise required to by applicable law. At this time, I’d like to turn the call over to LIN TV’s President and Chief Executive Officer, Mr. Vincent Sadusky.
Good morning. I’ll start with an overview of our fourth quarter and full year results and get right into the significant actions we have taken to improve our financial condition and operating performance during this economic recession. Scott Blumenthal, our Executive Vice President on Television will update you on our station’s operations and efficiency measures. And in front of me, Rich Schmaeling, our Senior Vice President and Chief Financial Officer, will provide our fourth quarter and full year financial strategy and results. We will close with our current 2009 business outlook, and then we will take your questions.
LIN TV’s net revenues decreased 4% in the fourth quarter as the economic recession deepened and the financial distress facing auto makers heightened to unprecedented levels. TV ad sales were down 7% on the fourth quarter despite generating $24.4 million in political advertising. Political advertising was one of the bright spots in 2008. Our television stations generated $47 million in political advertising for the year, a 40% increase over the 2004 presidential election cycle on a pro forma same station basis.
Another bright spot was LIN’s ability to generate significant digital revenues. In Q4 of 2008, digital revenues, which include Internet advertising revenues and retransmission consent fees, continued their tremendous growth pattern, increasing 96% to $9.3 million, offsetting some of the negative TV ad sales results. Digital revenues for the full year 2008 increased 95% to $29.1 million.
Digital revenues continued to differentiate our company and was a major factor in our ability to increase net revenues by 1% in 2008. Compared to our peers, LIN delivered one of our industry’s strongest results. We believe digital revenues will help offset some of the projected TV ad sales decline in 2009.
As we’ve mentioned on our third quarter earnings call, in response to the weak economy, we plan to further rework our cost structure and take a fourth quarter restructuring charge. In Q4, we incurred a $12.9 million restructuring charge for workforce reduction and the cancellation of certain syndicated television program contracts. We anticipate saving approximately $9.2 million per year from this restructuring.
We also took a fourth quarter impairment charge of $732.3 million to reduce the carrying value of our intangible assets. A portion of that impairment charge was for broadcast licenses, goodwill, and broadcast equipment made obsolete by the digital transition. We also recorded a $53.6 million charge for our investment in the NBC Universal joint venture. Rich will provide more details on accounting charges later in the call.
We focus on making smart efficiency changes as well as improving our balance sheet during this unprecedented economic downturn. We’ve taken a number of significant steps, all of which have already been implemented or well on their way to emerge in this downturn a stronger and more efficient company.
First, we have initiated an aggressive cost reduction plan totaling $25 million or 9% of LIN TV’s 2008 operating expense base as part of our plan to significantly reengineer workflow throughout our television stations. Our actions will include moving more LIN stations into our technology hubs, improve content sharing between our interactive and TV products, and changing the way we gather and produce news.
From 2006 through 2009, cumulative workforce reductions will total more than 300 full time employees or 14%. And 70 positions will have been reinvested, primarily in Internet and digital growth initiatives. Those numbers demonstrate our management team’s commitment to making changes that will positively impact our business.
LIN TV’s early investment in state-of-the-art technology equipment enabled our company to automate several labor intensive functions so we have been able to work more efficiently using fewer resources. Many of our studios are fully equipped with robotic cameras that are programmed with hundreds of shots and our master control operations are nearly all automated. In addition, we have eliminated the finance and administrative positions at our individual stations, and centralized these functions resulting in considerable cost savings.