Tribune Media Co. (TRCO, Financial) recently revealed its first-quarter results for fiscal 2015, reporting a drop in year-over-year net income from $41.07 million in Q1 2014 to $36.24 million in Q1 2015. The company logged earnings of 37 cents a share for the quarter, down from the prior-year quarter’s 41 cents, but in line with the consensus estimates. However, with the company divesting its print publishing business, including newspapers such as the Chicago Tribune and the Los Angeles Times in August 2014 to form a spin-off, EPS from continuing operations for the first quarter of 2015 stood at 37 cents a share compared to 28 cents a share in the prior-year quarter. Following the results, Tribune Media shares fell to a low of $55.5 before recovering to $56 at closing bell.
Gracenote acquisition helps boost revenues
Tribune Media reported 6% year-over-year growth in revenues to $472.7 million during the first quarter of fiscal 2015 on the back of growth in the company’s Digital and Data segment as well as higher re-transmission charges at its Television and Entertainment segment. The company also said it had grown its revenue market share across all four of its biggest markets, although the gains were partially offset by a decrease in year-over-year advertising revenues. While the company aired the Super Bowl on 14 Fox-affiliated stations in Q1 2014, the figures dropped to just two NBC-affiliated stations in Q1 2015. Further, revenues for the quarter fell short of the consensus estimate mark of $475 million.
Segmentwise, Tribune Media saw revenues growing from $31.5 million in the prior-year quarter to $50.2 million in Q1 2015, on the back of gains from the company’s Gracenote acquisition last year. The acquisition also contributed significantly to the company’s adjusted earnings growth from $5 million in the year-ago quarter to $12.5 million. At the Television and Entertainment segment, Tribune Media saw a modest 2.5% year-over-year growth to $410 million. However, mounting programming costs resulted in a decline in adjusted earnings from $140 million in the year-ago quarter to $135 million in the first quarter of 2015.
The Road Ahead
Following the results, Tribune Media, which competes with businesses such as New York Times Co. (NYT, Financial) and Gannett Co. Inc. (GCI, Financial), also announced its guidance for the full fiscal 2015. The company projected adjusted EBITDA of $480-$490 million on revenues of $2.00-$2.03 billion for FY2015, in line with the consensus estimate figures. Consensus estimates peg the company’s Q2 earnings at 30 cents a share while for the full fiscal; earnings are likely to come in at $1.44 a share.
Further, the company expects to see a 30% year-over-year growth in consolidated adjusted EBITDA for fiscal 2016. The company’s former publishing division – Tribune Publishing Co. also recently announced plans to acquire Tribune Media’s San Diego Union-Tribune as well as a Southern California-based cluster of nine digital and weekly properties for $85 million.
Final thoughts
Tribune Media reported lackluster results for the first quarter of fiscal 2015 with earnings that were in line with the consensus estimate, but indicated a year-over-year decline. On the other hand, revenues fell short of the consensus estimate despite growing on a year-over-year basis. While the company is battling with a paradigm shift in the way people consume news, advertising revenues from its television and entertainment arm is also slow on the uptake. Consequently, investors are bearish about the company’s short-term prospects. However, while experts are looking at a low 3% average annual earnings growth rate for Tribune Media over the next five years, they expect the earnings growth to peak at around 72% in fiscal 2016. Consequently, the Tribune Media stock currently carries a ‘hold’ guidance.
