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Fisher Communications Inc. (FSCI)
Q3 2009 Earnings Call
November 05, 2009; 04:00 pm ET
Colleen Brown - President & Chief Executive Officer
Joseph Lovejoy - Senior Vice President & Chief Financial Officer
Bishop Cheen - Wells Fargo
Matthew Swope - Broadpoint Capital
Previous Statements by FSCI
» Fisher Communications, Inc. Q4 2008 Earnings Call Transcript
» Fisher Communications Inc. Q3 2008 Earnings Call Transcript
» Fisher Communications, Inc. Q4 2007 Earnings Call Transcript
I would now like to turn the presentation over to your host for today’s call Mr. Joe Lovejoy, Senior Vice President and Chief Financial Officer, please proceed.
Thank you, good afternoon everyone. Before we get started let me remind you that this call contains forward-looking statements relating to the development of the company’s operations, products and services and anticipated future operating results. These forward-looking statements include information preceded by or that includes the words believes, expects or similar expressions.
These statements are based on current information and projections about future events and are necessarily subject to a number of risks and uncertainties and actual results may differ materially from expectations. Factors that could cause actual results to differ materially from those expectations are described in our annual report on Form 10-K and quarterly reports on Form 10-Q as filed periodically with the Securities and Exchange Commission.
The company undertakes no obligation to update publicly any forward-looking statements due to new information, events or circumstances after the date of this conference call or to reflect the occurrence of unanticipated events. A webcast of this call is available on the investor relations portion of our website and will be archived in audio form on the website for a limited period.
With that, I will turn the call over to Colleen Brown, our President and Chief Executive Officer.
Good afternoon. As usual Joe and I will deliver some prepared remarks and then we’ll open it up for questions.
By now I hope all of you have had a chance to review our third quarter press release, which was issued this morning and in short our near term performance continues to be affected by the difficult economic environment and as you may recall we began to see signs of advertising weakness in the middle of last year.
With the weakening economy advertising revenue began to drop in 2008 as companies started cutting advertising spending to match harsh economic realities. Over the past year this downward trend has continued, as you know we are operating in one of the deepest recession since World War II and the broadcast industry has been particularly hard hit given our reliance on advertising.
Our results for the quarter continue to reflect the overall challenges facing the industry. For the quarter consolidated revenue was $34.5 million, loss from operations was $3.6 million, net loss for the quarter was $4 million or $0.46 per share broadcasting and net advertising revenue fell by 33% compared to the third quarter of 2008 and broadcasting direct operating costs were down by 26%.
The sharp decline in the overall advertising revenue continues to be driven by weak consumer confidence and the ongoing reluctance of companies to expand their marketing budgets in the face of job losses, declining home value and weak consumer spending. Among our major television advertising categories for the quarter, automotive fell 31%, retail was down 26% and professional services declined 4%.
Our third quarter financial results include a substantial charge related to the July 2 electrical fire at Fisher Plaza. I would like to make clear that we believe a significant portion of our incurred expenses will be covered under our insurance policies, and Joe will talk more about Fisher Plaza in a few minutes.
During the quarter we successfully renegotiated a five year agreement for KOMO and K2s ABC affiliation, while we haven’t commented on the amount of these fees due to contractual terms. The amounts are immaterial to our financial results.
In the quarter, we also finalized the retransmission agreements that we mentioned in our last call. This allowed us to record approximately $2 million retrans consent fees attributable to the first half of the year in the third quarter. With nearly all of our key retrans agreements in place for the next several years, we are beginning to receive some major compensation for our valuable content.
As I previously discussed with you, Fisher is using its competitive strength to help navigate the powerful economic headwinds that we are working against in the industry. As always and particularly now during this economic cycle, it’s more important than ever that we remain focused on the key operational and financial priorities that will make a difference. These include developing new sources of revenue, expanding the quality of our content, increasing our market share by aggressively pursuing every ad dollar, diligently managing our cost and diversifying our reach.
For example, we have improved ratings by substantially with the addition of key program decisions and our revenue share of core business has grown a 140 basis points compared to the third quarter of 2008. While we are disappointed with the current marketplace on ability to outperform our peers in many areas in this environment is something worth noting.
Historically, the broadcast sector is the best position to benefit when the economic recovery takes hold. We believe the division remains the most effective means of reaching the mass audience and is the most effective means to drive results for advertisers. We are beginning to see several encouraging signs that give his optimism for next year. For example, sell out levels have strengthened and four of four top 10 categories are actually up over third-quarter of 2008.