LIN TV Corp. Announces Third Quarter 2009 Results

October 29, 2009 7:30 AM EDT

PROVIDENCE, R.I.--(BUSINESS WIRE)-- LIN TV Corp. (NYSE: TVL) today reported third quarter 2009 results.

Summary of Results for the Third Quarter 2009

    --  Net revenues decreased 18% to $81.4 million, compared to $98.8 million
        in the third quarter of 2008.
    --  Digital revenues, which include Internet advertising revenues and
        retransmission consent fees, increased 28% to $10.4 million, compared to
        $8.1 million in the third quarter of 2008.
    --  General operating expenses decreased 9% to $60.9 million, compared to
        $66.8 million in the third quarter of 2008.
    --  Operating income was $13.8 million, compared to operating income of
        $24.5 million in the third quarter of 2008.
    --  Loss from continuing operations was $0.9 million, including a special
        item of $1.2 million after-tax, compared to income from continuing
        operations of $10.2 million in the third quarter of 2008.
    --  Net loss per diluted share was $0.02, compared to net income per diluted
        share of $0.20 in the third quarter of 2008.

Commenting on the third quarter results, LIN TV's President and Chief Executive Officer Vincent L. Sadusky said: "As anticipated, the economic conditions in our markets remained difficult which resulted in reduced advertising expenditures by our advertisers. Our efficiency plan resulted in meaningful expense reductions and coupled with digital revenue growth, allowed us to exceed our guidance. Looking ahead, the pace of economic growth and recovery remains uncertain, however, we are experiencing modest improvement in advertising demand. We believe our productivity gains, continued growth in our digital business and the return of political advertising will result in significant cash flow growth in 2010."

Acquisition of Red McCombs Media, LP

On October 2, 2009, the Company completed the acquisition of Red McCombs Media, LP ("RM Media"), an online advertising and media services company based in Austin, Texas. The acquisition provides the Company with a national interactive footprint and significantly expands the Company's multi-platform offerings by providing national online advertising and enhanced services, including targeted display, rich media, video advertising, custom-built vertical channels, search engine marketing, search engine optimization, and mobile marketing.

Key Balance Sheet and Cash Flow Items

Total debt outstanding at September 30, 2009 was $680.8 million, as compared to $743.4 million at December 31, 2008. Unrestricted cash and cash equivalent balances at September 30, 2009 were $11.8 million, as compared to $20.1 million at December 31, 2008. During the quarter ended September 30, 2009, the Company paid $4.0 million of principal on its term loan balances and $7.0 million of principal on its revolving credit facility. The Company's outstanding revolving credit facility balance was $203.0 million at September 30, 2009, as compared to $135.0 million at December 31, 2008, with $22.0 million available for borrowing under that facility. Consolidated leverage, as defined in the Company's Amended and Restated Credit Agreement, was 7.8x as of September 30, 2009 compared to 5.7x as of December 31, 2008.

Other components of cash flow for the third quarter of 2009 were cash capital expenditures of $1.3 million and cash payments for programming of $6.6 million.

Third Quarter 2009 Special Item

During the quarter ended September 30, 2009, the Company recorded an impairment charge of $2.0 million, or $1.2 million after-tax, relating to an accrued loan to the Company's joint venture with NBC Universal, which has experienced depressed cash flows during this economic downturn. The charge relates to a write down of amounts the Company expects to advance to the joint venture during the fourth quarter of 2009 and through the first quarter of 2010 under a shortfall funding agreement with NBC Universal.

Operating Highlights

Throughout the economic downturn, the Company has continued to improve its product quality and compete vigorously for audience share.

Local News Leadership and Ratings Highlights:

    --  15 of the Company's "Big-4" network affiliate stations ranked #1 or #2
        from sign-on/sign-off during the July 2009 ratings period in households.
    --  13 of the Company's "Big-4" network affiliate stations grew audience
        across all local news dayparts in household ratings year-to-year during
        the July 2009 ratings period.
    --  Seven television stations ranked #1 in household ratings for all weekday
        newscasts (morning, early evening and late news): WOOD-TV; WAVY-TV;
        WIVB-TV; WANE-TV; WWLP-TV; WTHI-TV; and WLFI-TV.
    --  The Company increased local programming by 235 hours compared to the
        same period in 2008.

Digital Highlights:

    --  Retransmission consent fees increased 36% in the third quarter of 2009,
        compared to the same period in 2008.
    --  The Company delivered its largest audience to-date across all of its web
        sites in the third quarter of 2009, including a combined 184.2 million
        total user actions, an increase of 37% compared to the same period last
        year. Time spent on site increased 77% and unique visitors increased 25%
        compared to the same period last year.
    --  The Company delivered 32 million video views with an average duration of
        more than 2 minutes.
    --  75% of the Company's station web sites rank #1 for time spent on site in
        the local market compared to its broadcast media competitors.1
    --  Mobile impressions increased 54% to 28.7 million in the third quarter of
        2009 compared to the second quarter of 20092. Also during the third
        quarter of 2009, the Company was the first broadcaster in its local
        markets to launch BlackBerry smartphone applications. Since the launch
        of the Company's Blackberry and iPhone applications, the Company has
        generated over 60 million impressions and 160,000 application downloads.

Revenue:

    --  Core local and national advertising sales combined, which excludes
        political advertising sales, decreased 16% to $75.6 million in the third
        quarter of 2009, compared to $90.3 million for the same period in 2008,
        reflecting the continued impact of the economic downturn nationally and
        across all of the Company's markets.
    --  The Company's political advertising sales were $3.0 million for the
        quarter ended September 30, 2009, compared to $11.4 million in the same
        period last year.

Operating Expenses:

    --  General operating expenses for the three months ended September 30, 2009
        decreased by $5.9 million, or 9% compared to the third quarter 2008,
        driven largely by decreases in direct operating expenses and selling,
        general and administrative expenses of $3.3 million and $3.6 million,
        respectively, offset by the impact of a deferred compensation benefit
        that was recorded in 2008, which did not recur in 2009.

Business Outlook

The results presented in this release, including all of the amounts discussed in this Business Outlook section, reflect the classification of the operations of Banks Broadcasting, Inc. as discontinued operations for all periods presented. The Company has provided historical quarterly financial information for its continuing operations on its web site. Interested parties should go to www.lintv.com and in the "Investor Relations" section, click on "Financial Reports & Releases," then "Quarterly and Other Reports" and then "Supplemental Financial Data."

Based on current sales order pacings, the market decline for both local and national advertising spending and reduced political advertising this year, the Company expects that fourth quarter 2009 net revenues will decrease in the range of 8.8% to 14.6% (or $9.2 million to $15.2 million), compared to net revenues of $104.2 million for the fourth quarter of 2008. Fourth quarter 2008 revenues included $20.7 million of net political advertising. For the full year, we currently expect that 2009 net revenues will decrease in the range of 16.6% to 18.1% (or $66.4 million to $72.4 million) compared to reported net revenues of $399.8 million in 2008.

In addition, due to decreases in variable sales costs and other cost reduction actions, the Company expects that its station direct operating and SG&A expenses will decrease in the range of 4.9% to 9.9% (or $2.9 million to $5.9 million) for the fourth quarter of 2009 compared to expenses of $59.9 million for the fourth quarter of 2008. For the full year, we expect station direct operating and SG&A expenses will decrease in the range of 9.7% to 10.9% (or $22.6 million to $25.6 million) compared to reported expenses of $233.8 million for 2008.

The Company's current outlook for revenues, expenses and cash flow items for the fourth quarter and full year 2009, excluding special items, are anticipated to be in the following ranges:

                                Fourth Quarter 2009     Full Year 2009

Net advertising revenues        $73.0 to $76.0 million  $272.7 to $275.7 million

Net digital revenues            $13.0 to $15.0 million  $42.5 to $44.5 million

Network comp/Barter/Other       $3.0 to $4.0 million    $12.2 to $13.2 million
revenues

Total net revenues              $89.0 to $95.0 million  $327.4 to $333.4 million

Direct operating and SG&A       $54.0 to $57.0 million  $208.2 to $211.2 million
expenses(1)

Station non-cash stock-based    $0.2 to $0.4 million    $0.7 to $0.9 million
compensation expense

Amortization of program rights  $6.0 to $6.5 million    $24.2 to $24.7 million

Cash payments for programming   $6.5 to $7.0 million    $27.2 to $27.7 million

Corporate expense(1)            $4.0 to $4.5 million    $17.2 to $17.7 million

Corporate non-cash stock-based  $0.2 to $0.4 million    $1.3 to $1.5 million
compensation expense

Depreciation and amortization   $8.2 to $8.5 million    $31.4 to $31.7 million
of intangibles

Cash capital expenditures       $5.0 to $6.0 million    $9.5 to $10.5 million

Cash interest expense           $10.0 - $10.5 million   $39.3 - $39.8 million

Debt principal amortization     $4.0 million            $15.9 million

Cash taxes                      $0.0 to $0.1 million    $0.0 to $0.1 million

Effective tax rate              30% to 33%              92% to 95%

Distributions from equity       $0.0                    $2.6 million
investments

(1) Includes non-cash stock-based compensation expense.

LIN TV advises that all of the information and factors set forth above are subject to risks, uncertainties and assumptions (see the "Forward Looking Statements" heading below), which could individually or collectively cause actual results to differ materially from those projected above.

Conference Call

LIN TV will hold a conference call to discuss its third quarter results today, October 29, 2009, at 9:00 AM Eastern Time. To participate in the call, please dial 1-800-533-7954 for U.S. callers and 1-785-830-1924 for international callers. The call-in pass code is 5491051. Callers who intend to participate in the call should dial-in 10 minutes before the start of the call to ensure access. The conference call will also be webcast simultaneously from LIN TV Corp.'s website, www.lintv.com, and can be accessed there through a link on the home page (under the Latest News section). For those unavailable to participate in the live teleconference, a replay can be accessed via the Investor Relations section of www.lintv.com or by dialing 1-888-203-1112 and entering the same passcode as above. The telephone replay will be available through November 12, 2009.

Access to Non-GAAP Financial Measures and Other Supplemental Financial Data

The Company reports and discusses its operating results using financial measures consistent with generally accepted accounting principles (GAAP) and believes this should be the primary basis for evaluating its performance. The preceding discussion of our results includes a discussion of loss from continuing operations, including special items, and includes a section detailing these items. Loss from continuing operations, including special items, is a non-GAAP financial measure and is not intended to replace loss from continuing operations, a directly comparable GAAP financial measure. Special items are items that are significant, and unusual or infrequent and provide more comparable information about the Company's operating performance. Additionally, non-GAAP financial measures such as Broadcast Cash Flow (BCF), Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) and Free Cash Flow (FCF) should not be viewed as alternatives or substitutes for GAAP reporting. However, BCF, Adjusted EBITDA and FCF are common supplemental measures of performance used by investors, lenders, rating agencies and financial analysts. As a result, these non-GAAP measures can provide certain additional insight about the market value of the Company and its stations; the Company's ability to fund acquisitions, investments and working capital needs; the Company's ability to service its debt; the Company's performance versus other peer companies in its industry; and other operating performance trends for its business. The Company makes available reconciliations of its operating income (loss), a GAAP reporting measure, to BCF, Adjusted EBITDA and FCF on the Company's web site. In addition, the Company provides additional information on its web site, at the same location, regarding historical revenue by source, pro forma income statement information and certain other components of cash flow. Interested parties should go to www.lintv.com and in the "Investor Relations" section, click on "Financial Reports & Releases", then "Quarterly and Other Reports" and then "Supplemental Financial Data".

Forward-Looking Statements

The information discussed in this press release, particularly in the section with the heading Business Outlook, includes forward-looking statements about the Company's future operating results within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. The Company based these forward-looking statements on its current assumptions, knowledge, estimates and projections about factors that could affect its future operations. Although the Company believes that its assumptions made in connection with the forward-looking statements are reasonable, no assurances can be given that those assumptions and expectations will prove to be correct. Statements in this press release that are forward-looking include, but are not limited to, statements regarding quarter and full year station time sales order pacings; local, national and political advertising growth; digital, network compensation, barter and other revenue growth; direct operating, SG&A, barter, amortization of program rights and corporate expense growth; and cash programming, cash capital expenditures, cash interest expense and principal amortization, future compliance with financial covenants in our credit agreement, cash tax payments and effective tax rates and distributions from equity investments. These forward-looking statements are subject to various risks, uncertainties and assumptions which may cause these expectations and assumptions not to occur or to differ materially from those outcomes projected in the forward-looking statements. Such risks and uncertainties include, but are not limited to, the potential continuing deterioration of national and/or local economies; restrictions on the Company's operations as a result of the Company's indebtedness; global or local events that could disrupt TV broadcasting; continuing softening of the domestic advertising market; further consolidation of national and local advertisers, and the national sales representation market; potential liabilities related to the Company's guarantee of the debt obligations of its joint venture with NBC Universal; risks associated with acquisitions, including integration of acquired businesses; changes in TV viewing patterns, ratings and commercial viewing measurement; increases in news and syndicated programming costs, and capital expenditures; changes in television network affiliation agreements; changes in government regulation; competition; seasonality; effects of complying with accounting standards; potential influence of certain stockholders, including HM Capital Partners I LP and its affiliates, and other risks discussed 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. The Company 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.

About LIN TV

LIN TV Corp., along with its subsidiaries, is a local multi-media company that owns and/or operates 27 network-affiliated broadcast television stations in 17 U.S. markets and more than 50 interactive television station and niche web sites. LIN TV's digital advertising and services agency, RM Media, leverages unique technology, new product innovation and customized interactive and mobile advertising solutions to deliver measurable results to local, regional and national clients.

LIN TV Corp. is traded on the New York Stock Exchange under the symbol "TVL". Financial information about the company is available at www.lintv.com.

1 comScore media metrics data; July-September 2009. Columbus is not measured by comScore.

2 The Company launched its mobile business in the fourth quarter of 2008, and therefore cannot make year-over-year comparisons.

- financial tables follow -

LIN TV Corp.

Consolidated Statements of Operations

(unaudited)

                Three months ended September  Nine months ended September 30,
                30,

                2009        2008              2009         2008

                (in thousands)

Net revenues    $ 81,371    $ 98,804          $ 238,363    $ 295,571

Operating
costs and
expenses:

Direct            25,635      28,977            79,083       88,666
operating

Selling,
general and       24,727      28,321            75,089       85,157
administrative

Amortization
of program        6,317       5,856             18,221       17,620
rights

Corporate         4,206       3,683             13,193       14,922

General
operating         60,885      66,837            185,586      206,365
expenses

Depreciation,
amortization
and other
operating
charges
(benefits):

Depreciation      7,561       7,308             23,135       22,125

Amortization
of intangible     24          44                64           228
assets

Impairment of
goodwill and      -           -                 39,894       296,972
broadcast
licenses

Restructuring     -           -                 498          -
charge

(Gain) loss
from asset        (886   )    74                (3,544  )    (296     )
dispositions

Operating         13,787      24,541            (7,270  )    (229,823 )
income (loss)

Other expense
(income):

Interest          11,259      13,241            32,314       41,554
expense, net

Share of loss
(income) in       2,000       (662   )          2,000        (861     )
equity
investments

Loss (income)
on                -           491               (50,149 )    4,195
extinguishment
of debt

Other, net        (232   )    1,036             (176    )    622

Total other
expense           13,027      14,106            (16,011 )    45,510
(income), net

Income (loss)
from
continuing
operations        760         10,435            8,741        (275,333 )
before
provision for
income taxes

Provision for
(benefit from)    1,635       218               9,944        (70,666  )
income taxes

(Loss) income
from              (875   )    10,217            (1,203  )    (204,667 )
continuing
operations

Discontinued
operations:

(Loss) income
from
discontinued
operations,
net of gain
from the sale
of
discontinued
operations of
$11 for the
nine months
ended
September 30,
2009
and net of
provision for
income taxes      -           (196   )          (446    )    184
of $74 for the
three months
ended
September 30,
2008, and net
of (benefit
from)
provision for
income taxes
of
$(628) and
$215 for the
nine months
ended
September 30,
2009 and 2008,
respectively

Net (loss)      $ (875   )  $ 10,021          $ (1,649  )  $ (204,483 )
income

Basic (loss)
income per
common share:

(Loss) income
from            $ (0.02  )  $ 0.20            $ (0.02   )  $ (4.04    )
continuing
operations

(Loss) income
from
discontinued      -           -                 (0.01   )    0.01
operations,
net of tax

Net (loss)      $ (0.02  )  $ 0.20            $ (0.03   )  $ (4.03    )
income

Weighted -
average number
of common
shares
outstanding

used in
calculating
basic (loss)      51,367      50,620            51,371       50,714
income per
common share

Diluted (loss)
income per
common share:

(Loss) income
from            $ (0.02  )  $ 0.20            $ (0.02   )  $ (4.04    )
continuing
operations

(Loss) income
from
discontinued      -           -                 (0.01   )    0.01
operations,
net of tax

Net (loss)      $ (0.02  )  $ 0.20            $ (0.03   )  $ (4.03    )
income

Weighted -
average number
of common
shares
outstanding

used in
calculating
diluted (loss)    51,367      50,620            51,371       50,714
income per
common share

LIN TV Corp.

Consolidated Balance Sheets

(unaudited)

                                                  September 30    December 31

                                                  2009            2008

                                                  (in thousands)

ASSETS

Current assets:

Cash and cash equivalents                           11,762        $ 20,106

Restricted cash                                     2,000           -

Accounts receivable, less allowance for doubtful    61,927          68,277
accounts (2009 - $2,652; 2008 - $2,761)

Program rights                                      2,256           3,311

Assets held for sale                                -               430

Other current assets                                5,705           5,045

Total current assets                                83,650          97,169

Property and equipment, net                         166,420         180,679

Deferred financing costs                            9,304           8,511

Program rights                                      1,982           3,422

Goodwill                                            114,486         117,159

Broadcast licenses and other intangible assets,     392,856         430,142
net

Assets held for sale                                -               8,872

Other assets                                        4,008           6,640

Total assets                                      $ 772,706       $ 852,594

LIABILITIES, PREFERRED STOCK AND STOCKHOLDERS'
DEFICIT

Current liabilities:

Current portion of long-term debt                 $ 15,900        $ 15,900

Accounts payable                                    4,666           7,988

Accrued expenses                                    45,727          56,701

Program obligations                                 10,789          10,109

Liabilities held for sale                           -               429

Total current liabilities                           77,082          91,127

Long-term debt, excluding current portion           664,924         727,453

Deferred income taxes, net                          153,382         141,702

Program obligations                                 2,512           5,336

Other liabilities                                   63,219          69,226

Total liabilities                                   961,119         1,034,844

Stockholders' deficit:

Class A common stock, $0.01 par value,
100,000,000 shares authorized,

Issued: 29,684,218 and 29,733,672 shares at
September 30, 2009 and December 31, 2008,
respectively

Outstanding: 27,877,790 and 27,927,244 shares at
September 30, 2009 and December 31, 2008,           294             294
respectively

Class B common stock, $0.01 par value,
50,000,000 shares authorized, 23,502,059 shares
at September 30,
2009 and December 31, 2008, issued and              235             235
outstanding; convertible into an equal number of
shares of Class A or
Class C common stock

Class C common stock, $0.01 par value,
50,000,000 shares authorized, 2 shares at
September 30, 2009 and
December 31, 2008, respectively, issued and         -               -
outstanding; convertible into an equal number of
shares of Class
A common stock

Treasury stock, 1,806,428 shares of Class A
common stock at September 30, 2009 and December     (18,005    )    (18,005    )
31, 2008, at cost

Additional paid-in capital                          1,103,364       1,101,919

Accumulated deficit                                 (1,240,739 )    (1,239,090 )

Accumulated other comprehensive loss                (33,562    )    (34,634    )

Total stockholders' deficit                         (188,413   )    (189,281   )

Preferred stock of Banks Broadcasting, Inc.         -               7,031

Total deficit                                       (188,413   )    (182,250   )

Total liabilities, preferred stock and            $ 772,706       $ 852,594
stockholders' deficit

LIN TV Corp.

Consolidated Statements of Cash Flows

(unaudited)

                                                Nine Months Ended September 30,

                                                2009         2008

                                                (in thousands)

OPERATING ACTIVITIES:

Net loss                                        $ (1,649  )  $ (204,483 )

Loss (income) from discontinued                   446          (184     )
operations

Adjustment to reconcile net loss to net cash
provided by operating activities:

Depreciation                                      23,135       22,125

Amortization of                                   64           228
intangible assets

Impairment of goodwill, broadcast licenses and    39,894       296,972
broadcast equipment

Amortization of financing costs and note          2,945        4,782
discounts

Amortization of program                           18,221       17,620
rights

Program payments                                  (18,322 )    (19,909  )

(Gain) loss on extinguishment of                  (50,149 )    4,195
debt

Share of loss (income) in equity                  2,000        (861     )
investments

Deferred income taxes,                            10,462       (71,082  )
net

Stock-based compensation                          1,615        3,583

Gain from asset                                   (3,539  )    (296     )
dispositions

Other,                                            2,120        25
net

Changes in operating assets and liabilities,
net of acquisitions and disposals:

Accounts                                          6,350        11,602
receivable

Other assets                                      (164    )    2,104

Accounts payable                                  (3,322  )    (6,822   )

Accrued interest expense                          5,914        8,889

Other accrued                                     (17,220 )    (2,076   )
expenses

Net cash provided by operating activities,        18,801       66,412
continuing operations

Net cash used in operating activities,            (101    )    (1,142   )
discontinued operations

Net cash provided by operating                    18,700       65,270
activities

INVESTING ACTIVITIES:

Capital                                           (4,772  )    (16,314  )
expenditures

Cash paid for broadcast license                   (7,561  )    -
rights

Change in restricted cash                         (2,000  )    -

Distributions from equity                         -            2,649
investments

Other                                             -            401
investments, net

Net cash used in investing activities,            (14,333 )    (13,264  )
continuing operations

Net cash provided by (used in) investing          5,875        (693     )
activities, discontinued operations

Net cash used in investing                        (8,458  )    (13,957  )
activities

FINANCING ACTIVITIES:

Net proceeds on exercises of employee and         -            1,183
director stock based compensation

Proceeds from borrowings on                       81,000       115,000
long-term debt

Principal payments on long-term                   (93,280 )    (190,025 )
debt

Payment of long-term debt                         (3,662  )    (1,232   )
financing costs

Net cash used in financing activities,            (15,942 )    (75,074  )
continuing operations

Net cash used in financing activities,            (2,644  )    -
discontinued operations

Net cash used in financing                        (18,586 )    (75,074  )
activities

Net decrease in cash and cash                     (8,344  )    (23,761  )
equivalents

Cash and cash equivalents at the                  20,106       40,031
beginning of the period

Cash and cash equivalents at the end of         $ 11,762     $ 16,270
the period

Supplemental schedule of non-cash
investing activities:

Accrual for estimated loan to joint venture     $ 2,000      $ -
with NBC Universal

    Source: LIN TV Corp.

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