Fisher Communications, Inc. (NASDAQ: FSCI) today reported its
financial results for the fourth quarter and the fiscal year ended
December 31, 2008.
2008 Fourth Quarter Summary
The deepening economic recession and its impact on advertising
spending continued to affect the Company's financial performance in
the fourth quarter of 2008. Strong political revenue accompanied by
continued improvement in key performance metrics offset broad
declines in core advertising categories:
-- Television revenue increased 12% in the fourth quarter of 2008 compared
with the same period last year.
-- Strong political revenue in the quarter drove same-station
television revenue 3.8% higher in the fourth quarter of 2008
compared with the same period last year, despite significant
declines in key advertising categories including Automotive (down
44%) and Retail (down 12%).
-- Despite virtually no Presidential campaign spending in Fisher
markets, gross television political revenue increased $8.5 million
from the fourth quarter of 2007 to $13.8 million in the fourth
quarter of 2008.
-- Television broadcast cash flow (BCF) margin was 40% in the quarter,
unchanged from the fourth quarter of 2007.
-- Fisher's television stations continued to see ratings improvement. In
the November ratings period:
-- Fisher stations ranked either #1 or #2 in early evening news in five
out of seven markets and in primetime in six out of seven markets.
-- Fisher stations held or improved their late news market rank in the
coveted Adults 25-54 demographic.
-- The Company negotiated retransmission consent agreements in the fourth
quarter that are expected to favorably impact cash flow in 2009.
-- The Company recorded a non-cash equity investment, goodwill and
intangible asset impairment charge of $78.2 million in the fourth
quarter as a result of an interim impairment assessment under FAS 142.
2008 Full Year Summary
Despite substantial weakness in core advertising categories,
particularly in the third and fourth quarters, the Company's same
station revenue increased year over year:
-- Television revenue increased 12% in 2008 compared to 2007.
-- Same-station television revenue increased 2.7% in 2008 compared to
2007, driven by strong political revenue in the third and fourth
quarters offsetting significant declines in key advertising
categories including Automotive (down 26%) and Retail (down 12%).
-- Despite virtually no Presidential campaign spending in Fisher
markets, the Company recorded gross television political revenue of
$22.0 million in 2008, an increase from $6.7 million in 2007.
-- Television BCF margin improved to 30%, from 29% in 2007.
-- Reflecting the Company's on-going commitment to improving ratings and
selling effectiveness, nearly all of Fisher's television and radio
stations increased their market share this year, including a nearly 400
basis point gain at the Bakersfield duopoly.
-- Revenue and BCF for the Company's Univision stations increased 24% and
52%, respectively, from 2007.
-- The Company paid a special cash dividend of $3.50 per share on August
29, 2008.
-- Fisher completed the sale of its remaining shares of common stock of
Safeco Corporation in the second and third quarters, which resulted
in a pre-tax gain of $152.6 million in 2008.
Goodwill, Intangible Asset, and Equity Investment Impairment
During the fourth quarter, the Company assessed the carrying
amount of its equity investments as well as intangible assets and
goodwill pursuant to FAS 142. Given the rapid economic
deterioration and decrease in the Company's stock price during the
quarter, the Company conducted the assessment as of year end. As a
result of its analysis, the Company recorded a pre-tax, non-cash
equity investment, intangible asset, and goodwill impairment charge
of $78.2 million in the quarter.
Termination of Senior Credit Facility and Repurchase of Senior
Notes
The Company's Board of Directors continues to closely monitor
the market conditions to identify strategic opportunities to reduce
its debt. During the fourth quarter, the Board authorized the
repurchase of a portion of the Company's outstanding Senior Notes.
In addition, the Company terminated its $20 million Senior Credit
Facility ("Revolver") on December 19, 2008. The Revolver placed
restrictions on, among other things, the Company's ability to
repurchase its Senior Notes. In the first quarter of 2009, the
Company repurchased $15.15 million in aggregate principal amount of
its 8.625% senior notes due in 2014, for total consideration of
$13.05 million in cash. The Company will record a gain of
$1,792,000 in 2009 in connection with these repurchases, net of a
charge for related unamortized debt issuance costs of $308,000.
Commentary on the Fourth Quarter and Year End
Fisher President and Chief Executive Officer Colleen B. Brown
commented, "The economic slowdown deepened in the fourth quarter,
which resulted in further declines in advertising spending, most
notably in the key categories of Automotive and Retail. Despite the
weakening advertising picture, Fisher was able to increase
same-station revenue, in the fourth quarter as well as 2008 as a
whole, due to strong political spending and improved market share
in a majority of our markets.
"In this weak economic environment, we will remain focused on
improving our operational performance. We will continue to
aggressively compete for every advertising dollar and strategically
identify new streams of revenue, including retransmission from our
distribution partners, our Internet platform and our digital
spectrum. We also will maintain a disciplined focus on containing
costs, but are mindful of avoiding decisions that will undermine
the significant momentum we have achieved in improving our
operations over the past several years."
Fourth Quarter Results
Consolidated Results
Revenues for the fourth quarter of 2008 were $47.7 million,
compared to revenues of $44.5 million in the fourth quarter of
2007, a 7.2% increase. The increase was primarily due to the
addition of KBAK and KBFX in Bakersfield, California, acquired on
January 1, 2008. Strong political revenue of $14.2 million (gross)
also accounted for the increased revenue.
Loss from operations was $69.3 million for the quarter, compared
with income from operations of $8.5 million during the same period
in 2007. The decrease was due primarily to the $78.2 million
non-cash impairment charge. Excluding the impairment charge, the
Company would have recorded income from operations of $8.9 million.
EBITDA totaled $12.4 million for the fourth quarter of 2008, a 9.2%
increase from the fourth quarter of 2007. Net loss for the fourth
quarter was $47.7 million, or $5.46 per share, compared to net
income of $31.4 million or $3.60 per share in the fourth quarter of
2007.
Television Results
For the fourth quarter of 2008, the Television segment reported
revenues of $37.9 million, a 12% increase over the $33.7 million
generated in the comparable period of 2007. TV BCF was $14.5
million, compared with $13.2 million in the same period of 2007, an
increase of 9%. The Company reported a TV BCF margin of 40% in the
quarter.
During the fourth quarter, the Television segment recorded $13.8
million of political revenue, compared to $5.3 million during the
same period last year, an increase of 159%. Fisher also generated
$864,000 in total retransmission consent revenue in the fourth
quarter, an increase of 31% from the fourth quarter of 2007.
On a same-station basis, Fisher's 2008 fourth quarter Television
segment revenue (which includes Internet) was $35.0 million
compared with $33.7 million for the same period in 2007, an
increase of 3.9%. The increase was primarily attributable to higher
political revenue. Same-station results exclude the operating
results from KBAK-TV and KBFX-CA, the CBS and FOX affiliates,
respectively, serving the Bakersfield, California market, which
were acquired on January 1, 2008.
Radio Results
For the fourth quarter of 2008, the Radio segment reported
revenues of $6.6 million, a decrease of 18.3% from the $8.0 million
earned in the comparable period of 2007. Loss from operations was
$1.0 million, compared with income from operations of $1.3 million
in the fourth quarter of 2007. The decrease in revenue and increase
in loss from operations was primarily attributable to an 18%
decrease in Seattle market revenue.
Fisher Plaza Results
For the fourth quarter of 2008, the Plaza segment reported
revenues of $3.3 million, an 18% increase over the $2.8 million
generated in the fourth quarter of 2007. Income from operations was
$1.3 million, an increase of $482,000 and 57% compared to the same
period in 2007. The increases were largely attributable to higher
rent and service fees associated with a new tenant who began
occupancy on January 1, 2008. Occupancy remained unchanged, year
over year, at 97% at the end of the fourth quarter of 2008.
2008 Results
Consolidated Results
The Company recorded revenue of $173.8 million in 2008, compared
to $162.3 million in 2007, a 7.1% increase. The increase in revenue
was primarily due to the addition of KBAK and KBFX in Bakersfield,
California, acquired on January 1, 2008.
Loss from operations was $72.1 for 2008, compared with income
from operations of $14.8 million in 2007. This decrease was due
primarily to the non-cash impairment charge recorded in the fourth
quarter as well as lower radio revenues. Excluding the impairment
charge, the Company would have recorded income from operations of
$6.1 million in 2008. EBITDA totaled $25.6 million for 2008, a 5.8%
decrease from 2007. Net income for 2008 was $44.7 million, or $5.11
per share, compared to $31.9 million, or $3.65 per share in
2007.
Television Results
The Television segment reported revenues of $124.0 million in
2008, a 12% increase over the $110.8 million generated in 2007. TV
BCF was $35.6 million, compared with $31.8 million in 2007, an
increase of 12%. The Company reported a TV BCF margin of 30% in
2008, an increase from 29% in 2007.
The Television segment recorded $22.0 million of political
revenue in 2008, compared to $6.7 million in 2007, an increase of
228%. Fisher also generated $3.1 million in total retransmission
consent revenue in 2008, an increase of 20% from the prior
year.
On a same-station basis, Fisher's Television segment revenue
(which includes Internet) was $113.8 million in 2008, compared with
$110.8 million in 2007, an increase of 2.7%. The increase was
primarily attributable to higher Internet revenue and stronger than
expected political revenue.
Radio Results
The Radio segment reported revenues of $36.7 million in 2008, a
decrease of 9% from the $40.3 million earned in 2007. Loss from
operations was $4.6 million, compared with income from operations
of $1.0 million in 2007. The decrease in revenue and increase in
loss from operations was primarily attributable to a 10% decrease
in Seattle market revenue as well as a decrease associated with the
broadcast of Seattle Mariners baseball games, which was down 12%
from 2007. Excluding the impact of the Mariners, revenue was down
7% from 2007. 2008 was the final year of Fisher's commitments under
the broadcast rights agreement with the Seattle Mariners.
Fisher Plaza Results
The Plaza segment reported revenues of $13.1 million in 2008, a
16% increase over the $11.3 million generated in 2007. Income from
operations was $5.5 million, an increase of $1.4 and 35% from prior
year.
Fourth Quarter and 2008 Conference Call
Fisher will host a conference call today at 1:00 p.m. (PDT).
Senior management will discuss the financial results and host a
question and answer session. The dial in number for the audio
conference call is 1-866-271-5140; confirmation code 42592183. A
live audio webcast of the call will be accessible to the public on
Fisher's Web site, www.fsci.com. A recording of the webcast will
subsequently be archived on the Web site and available for replay
for one week following the call. An audio replay of the call can be
accessed for one week by dialing 1-888-286-8010 and entering
confirmation code 23092195.
Definitions and Disclosures Regarding Non-GAAP Financial
Information
Broadcast cash flow is calculated as income (loss) from
operations plus amortization of program rights, depreciation and
amortization, non-cash charges, Internet and corporate expenses
minus payments for broadcast rights, amortization of non-cash
benefit resulting from a change in national advertising
representation firm and non-convergence Internet revenue.
EBITDA is calculated as income from operations plus amortization
of program rights, depreciation and amortization, stock-based
compensation, and non-cash charges minus payments for broadcast
rights and amortization of non-cash benefit resulting from a change
in national advertising representation firm.
Broadcast cash flow and EBITDA results are non-GAAP financial
measures. The Company believes the presentation of these non-GAAP
measures is useful to investors because they are used by lenders to
measure the Company's ability to service debt; by industry analysts
to determine the market value of stations and their operating
performance; by management to identify the cash available to
service debt, make strategic acquisitions and investments, maintain
capital assets and fund ongoing operations and working capital
needs; and, because they reflect the most up-to-date operating
results of the stations inclusive of pending acquisitions, time
brokerage agreements or local marketing agreements. Management
believes they also provide an additional basis from which investors
can establish forecasts and valuations for the Company's business.
For a reconciliation of these non-GAAP financial measurements to
the GAAP financial results cited in this news announcement, please
see the supplemental tables at the end of this release.
About Fisher Communications, Inc.
Fisher Communications, Inc. is a Seattle-based communications
company that owns and operates 13 full power television stations
(including a 50%-owned television station), 7 low power television
stations and 8 radio stations in the Western United States. The
Company owns and operates Fisher Pathways, a satellite and fiber
transmission provider and Fisher Plaza, a media,
telecommunications, and data center facility located near downtown
Seattle For more information about Fisher Communications, Inc., go
to www.fsci.com.
Forward-Looking Statements
This news release includes forward-looking statements. We have
based these forward-looking statements on our current expectations
and projections about future events. Forward-looking statements
include information preceded by, followed by, or that includes the
words "guidance," "believes," "expects," "anticipates," "could," or
similar expressions. For these statements, the Company claims the
protection of the safe harbor for forward-looking statements
contained in the Private Securities Litigation Reform Act of 1995.
The forward-looking statements contained in this news release,
concerning, among other things, changes in revenue, cash flow and
operating expenses, involve risks and uncertainties, and are
subject to change based on various important factors, including the
impact of changes in national and regional economies, our ability
to service and refinance our outstanding debt, successful
integration of acquired television stations (including achievement
of synergies and cost reductions), pricing fluctuations in local
and national advertising, future regulatory actions and conditions
in the television stations' operating areas, competition from
others in the broadcast television markets served by the Company,
volatility in programming costs, the effects of governmental
regulation of broadcasting, industry consolidation, technological
developments and major world news events. Unless required by law,
we undertake no obligation to update or revise any forward-looking
statements, whether as a result of new information, future events
or otherwise. In light of these risks, uncertainties and
assumptions, the forward-looking events discussed in this news
release might not occur. You should not place undue reliance on
these forward-looking statements, which speak only as of the date
of this release. For more details on factors that could affect
these expectations, please see the risk factors in our Annual
Report on Form 10-K for the year ended December 31, 2007, which we
have filed with the Securities and Exchange Commission, and in our
Annual Report on Form 10-K for the year ended December 31, 2008,
which we expect to file with the SEC on March 16, 2009.
FISHER COMMUNICATIONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Twelve months ended Three months ended
(in thousands, except per-share December 31 December 31
amounts) Unaudited 2008 2007 2008 2007
========= ========= ========= =========
Revenue $ 173,791 $ 162,266 $ 47,745 $ 44,521
Costs and expenses
Direct operating costs 69,810 62,054 17,130 15,627
Selling, general and
administrative expenses 65,859 55,243 15,784 15,625
Impairment of goodwill and
intangible assets 76,742 - 76,742 -
Impairment of investment in
equity investee 1,468 - 1,468 -
Amortization of program
rights 19,288 18,686 2,470 1,882
Depreciation and amortization 12,703 11,518 3,413 2,864
--------- --------- --------- ---------
245,870 147,501 117,007 35,998
--------- --------- --------- ---------
Income (loss) from operations (72,079) 14,765 (69,262) 8,523
Other income, net 156,570 45,688 764 42,005
Interest expense (13,928) (13,671) (3,585) (3,449)
--------- --------- --------- ---------
Income (loss) from continuing
operations before income taxes 70,563 46,782 (72,083) 47,079
Provision (benefit) for federal
and state income taxes 24,833 15,903 (24,710) 15,411
--------- --------- --------- ---------
Income (loss) from continuing
operations 45,730 30,879 (47,373) 31,668
Income (loss) from discontinued
operations, net of income
taxes (1,072) 995 (352) (272)
--------- --------- --------- ---------
Net income (loss) $ 44,658 $ 31,874 $ (47,725) $ 31,396
========= ========= ========= =========
Income (loss) per share:
From continuing operations $ 5.23 $ 3.54 $ (5.42) $ 3.63
From discontinued operations (0.12) 0.11 (0.04) (0.03)
--------- --------- --------- ---------
Net income (loss) per share $ 5.11 $ 3.65 $ (5.46) $ 3.60
========= ========= ========= =========
Income (loss) per share
assuming dilution:
From continuing operations $ 5.23 $ 3.54 $ (5.42) $ 3.63
From discontinued operations (0.12) 0.11 (0.04) (0.03)
--------- --------- --------- ---------
Net income (loss) per share
assuming dilution $ 5.11 $ 3.65 $ (5.46) $ 3.60
========= ========= ========= =========
Weighted average shares
outstanding 8,732 8,723 8,735 8,725
Weighted average shares
outstanding assuming dilution 8,735 8,728 8,738 8,731
Dividends declared per share $ 3.50 $ - $ - $ -
========= ========= ========= =========
Reclassifications
Certain amounts in the 2007 condensed consolidated statements of
operations have been reclassified to conform to the 2008 presentation.
Certain employment-related expenses totaling approximately $1.5 million
and $6.0 million for the three and twelve months ended December 31, 2007,
respectively, which were previously reported within "Selling, general and
administrative expenses," are now reported within "Direct operating
costs."
FISHER COMMUNICATIONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS December 31
(in thousands) Unaudited 2008 2007
========= ==========
Assets
Current assets $ 130,408 $ 47,619
Marketable securities, at market value 769 129,223
Other assets 91,676 163,084
Property, plant and equipment, net 148,440 146,008
--------- ----------
Total assets $ 371,293 $ 485,934
========= ==========
Liabilities and stockholders' equity
Current liabilities $ 25,503 $ 29,571
Long-term debt 150,000 150,000
Deferred income taxes - 45,274
Other liabilities 31,046 27,692
--------- ----------
Total liabilities $ 206,549 $ 252,537
--------- ----------
Stockholders' equity, other than accumulated other
comprehensive income 167,625 152,718
Accumulated other comprehensive income, net of
income taxes (2,881) 80,679
--------- ----------
Total stockholders' equity 164,744 233,397
--------- ----------
Total liabilities and stockholders' equity $ 371,293 $ 485,934
========= ==========
Fisher Communications, Inc.
GAAP to Non-GAAP Reconciliations
(in thousands)
The following table provides a reconciliation of income (loss) from
operations to EBITDA in each of the periods presented:
Twelve Months ended Three Months ended
December 31 December 31
---------------------- ----------------------
2008 2007 2008 2007
---------- ---------- ---------- ----------
Income (loss) from
operations
(per GAAP, Statements of
Operations) $ (72,079) $ 14,765 $ (69,262) $ 8,523
Add:
Amortization of program
rights 19,288 18,686 2,470 1,882
Depreciation and
amortization 12,703 11,518 3,413 2,864
Stock-based
compensation 918 733 253 219
Impairment of goodwill,
intangibles and equity
investment 78,210 - 78,210 -
Non-cash charge
resulting from
forfeiture of
non-refundable deposit 1,000 - - -
Net non-cash charge
resulting from change
in national
advertising
representation firm 4,990 - - -
Subtract:
Payments for television
and radio broadcast
rights 18,154 17,645 2,305 1,905
Amortization of
non-cash benefit
resulting from change
in national
advertising
representation firm 1,264 869 366 217
---------- ---------- ---------- ----------
EBITDA (Non-GAAP) $ 25,612 $ 27,188 $ 12,413 $ 11,366
========== ========== ========== ==========
EBITDA as a percentage of
Revenue 14.7% 16.8% 26.0% 25.5%
========== ========== ========== ==========
The following table provides a reconciliation of television segment income
from operations to television segment broadcast cash flow in each of the
periods presented:
Twelve Months ended Three Months ended
December 31 December 31
---------------------- ----------------------
2008 2007 2008 2007
---------- ---------- ---------- ----------
Television segment income
from operations (per GAAP) $ (61,276) $ 19,866 $ (66,159) $ 9,984
Add:
Amortization of program
rights 8,538 8,186 2,470 1,882
Depreciation and
amortization 8,053 6,990 2,059 1,747
Impairment of goodwill,
intangibles and equity
investment 76,800 - 76,800 -
Net non-cash charge
resulting from change
in national
advertising
representation firm 4,990 - - -
Corporate and internet
expenses 10,063 7,237 2,462 2,105
Subtract:
Payments for television
broadcast rights 8,404 8,145 2,305 1,905
Amortization of
non-cash benefit
resulting from change
in national
advertising
representation firm 1,264 869 366 217
Non-convergence
internet revenue 1,943 1,470 507 379
---------- ---------- ---------- ----------
Television segment
Broadcast Cash Flow
(Non-GAAP) $ 35,557 $ 31,795 $ 14,454 $ 13,217
========== ========== ========== ==========
Television segment
Broadcast Cash Flow as a
percentage of Revenue 29.6% 29.2% 39.9% 39.9%
========== ========== ========== ==========
Contacts: Sard Verbinnen & Co Paul Kranhold or Ron Low (415)
618-8750 Robin Weinberg (212) 687-8080
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