Q1 Highlights
Consolidated revenue +21% compared to the 1 st quarter of 2013
Consolidated Adjusted EBITDA +37% compared to the 1 st quarter of 2013
Completed the acquisition of Gracenote on January 31, 2014
Company Results
Consolidated revenues in the first quarter of 2014 were $852.2 million compared to $705.0 million in the first quarter of 2013, representing an increase of $147.2 million, or 21%. The acquisition of Local TV increased revenues by $144.8 million.
Consolidated Adjusted EBITDA increased to $297.9 million in the first quarter of 2014 from $216.9 million in the first quarter of 2013. The increase was primarily due to the acquisition of Local TV and an increase in cash distributions from equity investments, partially offset by costs incurred in the initial stages of establishing Tribune Digital Ventures and an increase in Corporate expenses.
Cash distributions from equity investments in the quarter were $120.3 million, which included a $12.4 million one-time receipt from TV Food Network relating to a management fee dispute that was settled in December 2013. The distributions received in the same period in 2013 were $89.9 million.
Broadcasting
Broadcasting revenues were $398.4 million in the first quarter of 2014, an increase of 67% or $159.2 million as compared to $239.2 million in the first quarter of 2013.
Broadcasting Adjusted EBITDA was $139.1 million in the first quarter of 2014, compared to $79.6 million in the first quarter of 2013, an increase of 75%.
Pro forma for acquisition of Local TV (see attached quarterly pro forma financial disclosures) (1)
Pro forma for the acquisition of Local TV, Broadcasting revenues were $398.4 million in the first quarter of 2014 compared to $369.3 million in the first quarter of 2013. This represents an increase of $29.1 million or 7.9%. Retransmission consent revenues in the quarter were $55.6 million, compared to $29.6 million in the first quarter of 2013, an increase of $26.0 million, or 88%. Advertising revenues increased to $304.3 million in the first quarter of 2014 as compared with $300.6 million in the first quarter of 2013, representing an increase of $3.7 million, or 1.2%. Political advertising revenues accounted for $1.4 million of this increase.
Pro forma for the acquisition of Local TV, Broadcasting Adjusted EBITDA was $139.1 million in the first quarter of 2014, compared to $130.1 million in the first quarter of 2013. The increase was driven by the growth in the TV Station group including the acquisition of Local TV, of $26.4 million, offset primarily by declines in WGN America resulting from increased production and promotion investments associated with new programming, and costs incurred in the initial stages of establishing Tribune Studios.
Publishing
Publishing segment revenues in the first quarter of 2014 were $453.8 million, compared to $465.9 million in the first quarter of 2013, a decline of $12.1 million or 2.6%. This decline was primarily attributable to declines in advertising revenue of $19.3 million and declines in revenues from commercial printing and delivery services of $4.1 million, offset by increases in other revenues largely resulting from the acquisition of Gracenote in the quarter.
Publishing Adjusted EBITDA was $55.8 million in the first quarter of 2014, compared to $58.0 million in the first quarter of 2013, a decline of 3.8%. Adjusted EBITDA in the newspaper businesses was essentially flat, while costs incurred in the initial stages of establishing Tribune Digital Ventures negatively impacted the year-over-year comparison.
Commenting on the first quarter results, Peter Liguori,Tribune Company President and Chief Executive Officerstated, "In the first quarter of 2014 we demonstrated early signs of the strength of our new broadcast scale. As a consolidated business with the Local TV stations, revenues generated by retransmission consent fees hit an all-time high for the Company growing 88% compared to last year.We are also encouraged by the activity we are seeinginthe political landscape and its prospects for advertising for the second half of 2014.Programming and brandinginvestments onWGN Americaresulted in thesuccessfullaunch of the network's first original series, Salem, in April, which delivered the highest ratings for the network inseven years.We alsoscaledour metadata competenciesthrough the acquisition of Gracenote in the quarter. Additionally, our newspapers continuedtodeliver very good results in a challenging environment, and we are confidentin the prospects for that business as we move closer to spinning it off from Tribune Company.We remain focused on achieving ourobjectiveto driveprofitable growth in each of ourbusinesses."
TRIBUNE is one of the country's leading multimedia companies, operating businesses in broadcasting, publishing, and interactive. The company's broadcasting group owns or operates 42 television stations, WGN America on national cable, the national multicast networks Antenna TV and THIS TV, Tribune Studios and Chicago's WGN-AM. In publishing, Tribune's leading daily newspapers include the Los Angeles Times, Chicago Tribune, TheBaltimore Sun, Sun Sentinel (South Florida), Orlando Sentinel, Hartford Courant, The Morning Call and Daily Press. Popular news and information websites complement Tribune's print and broadcast properties and extend the company's nationwide audience.
Non-GAAP Financial Measures
This press release includes a discussion of Adjusted EBITDA for the Company and our operating segments (Publishing, Broadcasting and Corporate). Adjusted EBITDA is a financial measure that is not recognized under accounting principles generally accepted in the U.S. ("GAAP"). Adjusted EBITDA is defined as earnings before income taxes, interest income, interest expense, pension expense, equity income and losses, depreciation and amortization, stock-based compensation, certain special items (including severance), non-operating items and reorganization items plus cash distributions from equity investments less cash pension contributions. Adjusted EBITDA for the Company's operating segments is calculated as segment operating profit plus depreciation, amortization, pension expense, stock-based compensation and certain special items (including severance). We believe that Adjusted EBITDA is a measure commonly used by investors to evaluate our performance and that of our competitors. We also present Adjusted EBITDA because we believe investors, analysts and rating agencies consider it useful in measuring our ability to meet our debt service obligations. We further believe that the disclosure of Adjusted EBITDA is useful to investors, as this non-GAAP measure is used, among other measures, by our management to evaluate our performance. By disclosing Adjusted EBITDA, we believe that we create for investors a greater understanding of, and an enhanced level of transparency into, the means by which our management operates our company. Adjusted EBITDA is not a measure presented in accordance with GAAP, and our use of the term Adjusted EBITDA may vary from that of others in our industry. Adjusted EBITDA should not be considered as an alternative to net income (loss), operating profit, revenues or any other performance measures derived in accordance with GAAP as measures of operating performance or liquidity.
This press release includes a discussion of Adjusted EBITDA for the Company and our operating segments (Publishing, Broadcasting and Corporate). Adjusted EBITDA is a financial measure that is not recognized under accounting principles generally accepted in the U.S. ("GAAP"). Adjusted EBITDA is defined as earnings before income taxes, interest income, interest expense, pension expense, equity income and losses, depreciation and amortization, stock-based compensation, certain special items (including severance), non-operating items and reorganization items plus cash distributions from equity investments less cash pension contributions. Adjusted EBITDA for the Company's operating segments is calculated as segment operating profit plus depreciation, amortization, pension expense, stock-based compensation and certain special items (including severance). We believe that Adjusted EBITDA is a measure commonly used by investors to evaluate our performance and that of our competitors. We also present Adjusted EBITDA because we believe investors, analysts and rating agencies consider it useful in measuring our ability to meet our debt service obligations. We further believe that the disclosure of Adjusted EBITDA is useful to investors, as this non-GAAP measure is used, among other measures, by our management to evaluate our performance. By disclosing Adjusted EBITDA, we believe that we create for investors a greater understanding of, and an enhanced level of transparency into, the means by which our management operates our company. Adjusted EBITDA is not a measure presented in accordance with GAAP, and our use of the term Adjusted EBITDA may vary from that of others in our industry. Adjusted EBITDA should not be considered as an alternative to net income (loss), operating profit, revenues or any other performance measures derived in accordance with GAAP as measures of operating performance or liquidity.
Cautionary Statement Regarding Forward-Looking Statements
Certain disclosures in this press release include certain forward-looking statements that are based largely on our current expectations and reflect various estimates and assumptions by the Company. Forward-looking statements are subject to certain risks, trends and uncertainties that could cause actual results and achievements to differ materially from those expressed in such forward-looking statements, and are in some instances beyond our control. Such risks, trends and uncertainties include: the Company's adoption of fresh-start reporting which caused its consolidated financial statements for periods subsequent to the date we and our subsidiaries (the "Debtors") emerged from chapter 11 bankruptcy to not be comparable to prior periods; the Company's ability to satisfy future capital and liquidity requirements; our ability to access the credit and capital markets at the times and in the amounts needed and on acceptable terms; our ability to retire outstanding debt and satisfy other contractual commitments; increased interest rate risk due to variable rate indebtedness; changes in advertising demand, circulation levels and audience shares; changes in the overall market for television advertising, regulatory and judicial rulings; availability and cost of broadcast rights; competition and other economic conditions including fragmentation of the media landscape and competition from other media alternatives; our ability to develop and grow its on-line businesses; changes in newsprint prices; changes in accounting standards; adverse results from litigation, governmental investigations or tax-related proceedings or audits; our ability to settle unresolved claims filed in connection with the Debtors' chapter 11 cases and resolve the appeals seeking to overturn the confirmation order issued by the U.S. Bankruptcy Court for the District of Delaware on July 23, 2012; our ability to satisfy its pension and other postretirement employee benefit obligations; our ability to attract and retain employees; the effect of labor strikes, lock-outs and labor negotiations; our ability to realize benefits or synergies from acquisitions or divestitures or to operate our businesses effectively following acquisitions or divestitures; our ability to successfully integrate the acquisition of Local TV Holdings, LLC ("Local TV"), including our ability to program the acquired stations to successfully generate improved ratings and increased advertising revenue and to maintain relationships with cable operators, satellite providers and other key commercial partners of Local TV, retain key Local TV employees, and realize the expected benefits and synergies including the expected accretion in earnings; our ability to successfully complete the proposed spin-off of essentially all of our publishing businesses, including the ability to (i) realize the anticipated benefits of the proposed spin-off transaction, achieve requisite regulatory approvals and retain key personnel and (ii) successfully navigate unanticipated developments that may delay or negatively impact the proposed spin-off transaction, changes in market conditions and disruption to business operations as a result of the proposed transaction; our reliance on third-party vendors for various services; our ability to adapt to technological changes; and other events beyond our control that may result in unexpected adverse operating results.
The words "believe," "expect," "anticipate," "estimate," "could," "should," "intend," "may," "plan," "seek," "will," "designed," "assume," "implied" and similar expressions generally identify forward-looking statements. Whether or not any such forward-looking statements are in fact achieved will depend on future events, some of which are beyond the control of the Company. Readers are cautioned not to place undue reliance on such forward-looking statements, which are being made as of the date of this press release. We undertake no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.
(1) Amounts are pro forma for the acquisition of Local TV, which was completed on December 27, 2013, as if the acquisition had occurred as of the beginning of 2013, and are based on Local TV's historical basis of presentation and do not reflect the impact of purchase accounting.
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