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Argyle Television releases quarterly results
SAN ANTONIO--(BUSINESS WIRE)--May 14, 1997--Argyle Television Inc. (Nasdaq/NM:ARGL) Wednesday announced first-quarter operating results for the three-month period ended March 31, 1997.
Total revenues for the three-month period ended March 31, 1997, were $17.9 million, up 15.5 percent from $15.5 million for the three-month period ended March 31, 1996.
Broadcast cash flow for the period was $5.9 million, up 1.7 percent from $5.8 million for the 1996 period, and earnings before interest, tax, depreciation and amortization (EBITDA) were $4.9 million, up 2.1 percent from $4.8 million for the 1996 period.
Pro forma total revenues for the three-month period ended March 31, 1997, were $18.9 million, up 3.3 percent from $18.3 million for the three-month period ended March 31, 1996. Pro forma broadcast cash flow for the period was $6.7 million, up 1.5 percent from $6.6 million for the 1996 period.
Excluding the differential in pro forma political revenues between quarters, the increase in total revenues was 5.0 percent and the increase in broadcast cash flow was 6.3 percent.
Pro forma total revenues and pro forma broadcast cash flow assume that each of the television stations currently owned by Argyle (including WLWT-TV in Cincinnati and KOCO-TV in Oklahoma City, which were acquired on Jan. 31, 1997, in a two-station swap with Gannett, and KHBS-TV/KHOG-TV, Fort Smith/Fayetteville, Ark., which Argyle acquired as of June 1, 1996) were acquired at the beginning of each respective period.
Pro forma broadcast cash flow also gives effect to the elimination of certain expenses associated with the transactions consummated, transitional costs, severance and certain expenses associated with restructured employee-benefit plans at the acquired stations.
On March 26, 1997, Argyle announced that it had entered into a definitive agreement the The Hearst Corp. to combine the television- broadcasting division of Hearst with and into Argyle, with Argyle to be renamed ``Hearst-Argyle Television Inc.''
This transaction is subject to Argyle shareholder approval and certain other conditions, but, as previously announced, Argyle expects that this transaction will be completed in mid- to late-third-quarter 1997. On May 9, 1997, the waiting period for the Hearst transaction under the Hart-Scott-Rodino Antitrust Act was terminated early.
Commenting on the quarter's events, Chairman and Chief Executive Officer Bob Marbut said: ``Strategically, the first quarter of 1997 marked an historic milestone for Argyle, its shareholders and employees as a result of the announced agreement to merge with Hearst Broadcasting.
``From its first day of operation, the newly created company (Hearst-Argyle Television) will be one of the largest independent television groups of network-affiliated stations -- both in terms of households reached and audience delivered. Also, preparation for the pending merger is going very smoothly, and we look forward to closing the transaction on our targeted timeline.
``Financially, we were able to report positive comparisons in GAAP and in pro forma revenues and BCF, respectively, for the first quarter of 1997 vs. the first quarter of 1996.
``These results were achieved despite the current challenging national advertising environment, the inclusion of significant political revenues last year, additional expenses associated with flood coverage by WLWT and the Oklahoma City bombing-trial coverage by KOCO, and the commitment of senior-management resources to both the Gannett swap and the Hearst transaction,'' he said.
Addressing the very important operational accomplishments during the quarter, President and Chief Operating Officer Blake Byrne said: ``We are terribly pleased with the introduction of WLWT and KOCO to the Argyle family of stations.
``Significant management, personnel and structural changes were promptly initiated, and a rigorous strategic planning and budgeting process is well under way at both stations. We look forward to the growth opportunities these two stations offer as well as the many synergies the entire Argyle group expects to realize as we merge with Hearst Broadcasting.''
Using Argyle's pro forma results and assuming that the Hearst transaction had occurred at the beginning of the respective periods, the combined company would have had total pro forma revenues for the three months ended March 31, 1997, of $81.3 million, as compared with $80.6 million for the same 1996 period, an increase of .9 percent; pro forma broadcast cash flow for the three months ended March 31, 1997, of $30.2 million, as compared with $28.3 million for the same 1996 period, an increase of 6.7 percent; and pro forma EBITDA for the the three months ended March 31, 1997, of $27.7 million, as compared with $25.8 million for the same 1996 period, an increase of 7.4 percent.
Pro forma revenues and broadcast cash flow do not give effect to any synergies or economies of scale that may occur as a result of the merger.
Today, Argyle Television owns and operates network-affiliated television stations WLWT-TV, the NBC affiliate in Cincinnati; KOCO-TV, the ABC affiliate in Oklahoma City; WNAC-TV, the Fox affiliate in Providence, R.I.; KITV-TV, the ABC affiliate in Honolulu; WAPT-TV, the ABC affiliate in Jackson, Miss.; and KHBS-TV, the ABC affiliate in Fort Smith, and its satellite KHOG-TV, the ABC affiliate in Fayetteville.
Following completion of the Hearst transaction, Argyle (which will be renamed ``Hearst-Argyle Television Inc.'') will also own WCVB-TV, the ABC affiliate in Boston; WTAE-TV, the ABC affiliate in Pittsburgh; WBAL-TV, the NBC affiliate in Baltimore; KMBC-TV, the ABC affiliate in Kansas City, Mo.; WISN-TV, the ABC affiliate in Milwaukee; and WDTN-TV, the ABC affiliate in Dayton, Ohio, as well as Hearst Broadcast Productions.
Hearst-Argyle also will manage WWWB-TV, the WB affiliate in Tampa, Fla.; WPBF-TV, the ABC affiliate in West Palm Beach, Fla., that Hearst has agreed to acquire; KCWB-TV, the WB affiliate in Kansas City, Mo.; and two radio stations (WBAL-AM and WIYY-FM, Baltimore) -- these managed stations will continue to be owned by The Hearst Corp.
Under current Federal Communications Commission regulations, Argyle's WNAC in Providence would have to be divested because of an overlap with Hearst's WCVB in Boston, and Hearst's WDTN in Dayton would have to be divested because of an overlap with Argyle's WLWT in Cincinnati.
DISCUSSION OF FINANCIAL RESULTS
Actual/Historical Results
The quarter ended March 31, 1997, for the company (WZZM and WGRZ for January; KITV, WAPT, the Arkansas stations, and the company's share of broadcast cash flow from the Clear Channel venture for the entire quarter; and WLWT and KOCO for February and March) is compared with the first quarter ended March 31, 1996, for the company (WZZM, WNAC, WAPT, KITV and WGRZ).
The company received 50 percent of the combined broadcast cash flow of the company's WNAC and of WPRI, a CBS affiliate located in Providence, owned by Clear Channel Communications Inc. The company records its share of the Clear Channel venture broadcast cash flow in total revenues, which affects the comparability of total revenues with prior periods, accordingly.
Total revenues for the three months ended March 31, 1997, were $17.9 million, up 15.5 percent from total revenues of $15.5 million for the first quarter of 1996.
Approximately $1.9 million of the increase in total revenues for the quarter is attributable to the acquisition of the Arkansas stations during June 1996. In addition, the Gannett swap added $1.5 million net to total revenues for the quarter.
These revenue gains were offset by the Clear Channel venture, which accounts for a $1.0 million decrease in recorded total revenues for the quarter, because only the company's share of the Clear Channel venture broadcast cash flow is included in total revenues.
Broadcast cash flow was $5.9 million for the three months ended March 31, 1997, a 1.7 percent increase above the $5.8 million level for the first quarter of 1996; and the broadcast cash flow margin was 32.8 percent for the first quarter of 1997, vs. 37.4 percent for the same quarter a year ago.
EBITDA was $4.9 million for the first quarter of 1997, a 2.1 percent increase over the $4.8 million earned during the same 1996 period.
The broadcast-cash-flow increase resulted primarily from the acquisition of the Arkansas stations during June 1996 net of the effects of the Gannett swap, which occurred on Jan. 31, 1997.
The broadcast-cash-flow margin decrease was due primarily to the addition of WLWT and KOCO pursuant to the Gannett swap and the Arkansas stations, all of which have had lower margins than the historical margins of the Argyle station group.
Pro Forma Results
The pro forma results for the quarter ended March 31, 1997, for WNAC, WAPT, KITV, the Arkansas stations, WLWT and KOCO are compared with the pro forma results for the quarter ended March 31, 1996, for the same stations. Both quarters include the elimination of certain transaction-related expenses and other combining adjustments.
For comparability purposes, only the broadcast cash flow for WNAC has been included in total revenues for all periods. Pro forma results do not give effect to any other opportunities or strategies that may be available to management for margin improvement in connection with the Gannett swap, or to synergies or economies of scale that may result because of the Hearst transaction.
On a pro forma basis, total revenues for the three months ended March 31, 1997, were $18.9 million, up 3.3 percent over total revenues of $18.3 million for the same 1996 period; broadcast cash flow for the three months ended March 31, 1997, was $6.7 million, up 1.5 percent over broadcast cash flow of $6.6 million for the same 1996 period; and EBITDA for the three months ended March 31, 1997, was $5.7 million, up 1.8 percent over EBITDA of $5.6 million for the same 1996 period.
Excluding the differential in pro forma political revenues between quarters, the increase in total revenues was 5.0 percent, broadcast cash flow was 6.3 percent and EBITDA was 7.5 percent. -0-
Argyle Television Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
(In thousands, except per-share data)
Three Months Ended
March 31,
1996 (a) 1997 (b)
Total revenues $15,495 $17,879
Station operating expenses 8,898 10,781
Amortization 1,289 1,057
Depreciation and amortization 4,986 6,558
Station operating income (loss) 322 (517)
Corporate general and
administrative expenses 983 1,008
Noncash compensation expense 169 260
Operating loss (830) (1,785)
Interest expense, net 3,500 4,418
Net loss $(4,330) $(6,203)
Less preferred-stock dividends -- (356)
Loss applicable to common stock $(4,330) $(6,559)
Loss per common share $(0.39) $(0.58)
Weighted average number of
common shares outstanding 11,119 11,347
Number of common shares outstanding 11,119 11,347
Supplemental Financial Data
Broadcast cash flow (c) $5,800 $5,869
Broadcast cash flow margin 37.4% 32.8%
EBITDA (d) $4,817 $4,861
EBITDA margin 31.1% 27.2%
Program payments $797 $1,229
(a) Includes results from WZZM, WAPT, WNAC, KITV and WGRZ for the
entire period.
(b) Includes results from WAPT, KITV and the Arkansas stations for
the entire period, WZZM and WGRZ for January, WLWT and KOCO for
February-March, and the company's share of the Clear Channel venture
(WNAC/WPRI) for the entire period. The company's share of the Clear
Channel venture broadcast cash flow is included in total revenues.
(c) Broadcast cash flow is defined as station operating income, plus
depreciation and amortization, plus amortization of program rights
minus program payments. Broadcast cash flow is presented here not
as a measure of operating results and does not purport to represent
cash provided by operating activities. Broadcast cash flow should
not be considered in isolation or as a substitute for measures of
performance prepared in accordance with generally accepted
accounting principles.
(d) EBITDA is defined as operating income (loss), plus depreciation
and amortization, plus amortization of program rights, minus program
payments plus noncash compensation expense. EBITDA is presented
here not as a measure of operating results, but rather as a measure
of debt service ability. EBITDA does not purport to represent cash
provided by operating activities and should not be considered in
isolation or as a substitute for measures of performance prepared in
accordance with generally accepted accounting principles.
Argyle Television Inc.
Pro Forma Condensed Consolidated Statements of Operations
(Unaudited)
(in thousands, except per-share data)
6 Stations -- Three Months Ended
March 31,
Pro Forma
1996 1997
Total revenues (a) $18,326 $18,854
Station operating expenses (b) 10,661 11,055
Amortization of program rights 1,147 1,073
Depreciation and amortization (c)(d) 6,267 6,696
Station operating income (loss) 251 30
Corporate general and
administrative expenses 983 1,008
Noncash compensation expense 169 260
Operating loss (901) (1,238)
Interest expense, net (e) 4,179 4,418
Loss from continuing operations (5,080) (5,656)
Less preferred-stock dividends (f) $(356) $(356)
Loss applicable to common stock ($5,436) ($6,012)
Loss per common share ($0.48) ($0.53)
Pro forma number of common shares
outstanding 11,347 11,347
Supplemental Financial Data
Broadcast cash flow (g) $6,616 $6,693
Broadcast cash flow margin 36.1% 35.5%
EBITDA (h) $5,633 $5,685
EBITDA margin 30.7% 30.2%
Program payments $1,049 $1,106
Notes to Pro Forma Condensed Consolidated Statements of Operations
(a) Includes the effect of the company's share of WNAC/WPRI
broadcast cash flow in total revenues.
(b) Reflects the elimination of certain expenses relating to
employees who have either been terminated or will be terminated and
not replaced and certain other expenses that would have been
eliminated under the company's transition plan.
(c) Reflects change in depreciation expense due to purchase
accounting adjustments to equipment and buildings, net of
depreciation already recorded in the historical financial
statements. The estimated useful lives used for equipment range
from 5 to 25 years and the estimated useful life used for buildings
ranges from 25 to 39 years.
(d) Reflects amortization of intangible assets resulting from
purchase accounting adjustments, net of amortization already
recorded in the historical financial statements. The estimated
useful lives used for these intangible assets were as follows: FCC
licenses and network affiliation agreements -- 15 years; other
intangibles -- 2 to 5 years.
(e) Reflects interest expense recorded in conjunction with FASB
Statement No. 119 relating to interest-rate protection agreements,
interest expense on the pro forma debt and the amortization of
deferred financing costs over the period of the related financings.
1996 1997
The notes at an interest rate of 9.75% $3,656 $3,656
Fair value adjustments of interest-rate
protection agreements -- non-cash (580) (328)
Amortization of deferred financing costs 148 155
Bank credit agreement at an assumed interest
rate of 8.5% 955 935
$4,179 $4,418
(f) Reflects preferred-stock dividends relating to the preferred
stock issued in conjunction with the acquisition of the Arkansas
stations. The dividend calculation is shown here for purposes of
calculating loss per common share.
(g) Broadcast cash flow is defined as station operating income, plus
depreciation and amortization, plus amortization of program rights,
minus program payments. Broadcast cash flow is presented here not
as a measure of operating results and does not purport to represent
cash provided by operating activities. Broadcast cash flow should
not be considered in isolation or as a substitute for measures of
performance prepared in accordance with generally accepted
accounting principles.
(h) EBITDA is defined as operating income, plus depreciation and
amortization, plus amortization of program rights, minus program
payments plus noncash compensation expense. EBITDA is presented
here not as a measure of operating results and does not purport to
represent cash provided by operating activities. EBITDA should not
be considered in isolation or as a substitute for measures of
performance prepared in accordance with generally accepted
accounting principles.
Bob Marbut, 210/828-1700
COPYRIGHT 1997 Business Wire
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