Fisher Communications, Inc. (NASDAQ: FSCI) today reported its
financial results for the second quarter ended June 30, 2009.
2009 Second Quarter Summary
-- Television revenue decreased 26% in the second quarter of 2009 compared
with the same period last year, reflecting continued weakness in
advertising during the quarter due to the challenging macro-economic
environment, and a $2.0 million decline in political spending compared
to the second quarter of 2008. Excluding political spending, television
revenue declined 22% in the second quarter of 2009 compared to the same
period last year.
-- Key advertising categories continued to experience significant
declines from the second quarter of 2008, including automotive
(down 58%), retail (down 25%), and professional services
(down 26%).
-- Television broadcast cash flow ("BCF") was $1.1 million in the
second quarter, down from $9.1 million in the second quarter
of 2008.
-- Radio revenue decreased 49% in the second quarter compared to the
second quarter of 2008, while radio BCF increased $1.4 million
compared to the same period last year, a result of the termination
of the Company's Seattle Mariners broadcast contract in 2008.
Excluding the financial impact of the Seattle Mariners broadcast
contract in 2008, radio revenue declined 21% and radio BCF decreased
30% over the same period.
Retransmission
Over the past three quarters, the Company executed final
agreements or reached agreements in principle on key financial
terms for new retransmission agreements with most of its
distribution partners, whose prior retransmission agreements with
the Company expired in December 2008. The Company and several of
its cable distribution partners had not executed final agreements
at June 30, 2009, even though key financial terms, including fees
from January 1, 2009 forward, had been finalized. Accordingly, the
Company's second quarter financial results do not include
approximately $2 million of cable retransmission fees attributable
to those contracts for the period from January 1, 2009 to June 30,
2009. In July 2009, the agreements were fully executed. Therefore,
the Company will record the retransmission fees attributable to the
first six months of 2009 for those contracts as revenue in the
third quarter of 2009.
On June 10, 2009, Fisher and DISH Network ("DISH") executed a
new multi-year retransmission agreement. As part of the agreement,
the Company agreed to release all prior legal claims against DISH.
The Company's retransmission fees under the new DISH agreement
began accruing as of the date of execution.
Seattle Radio
During the second quarter of 2009, Fisher began simulcasting its
all-news radio station, KOMO AM 1000, on the FM dial at 97.7
pursuant to a local marketing agreement entered into with the
station's owner.
In July, advertisers in the Seattle-Tacoma market began buying
radio advertising on the basis of Arbitron's new Personal People
Meter (PPM) ratings system. Fisher's Hot Adult Contemporary
station, branded as STAR 101.5, became the #1 ranked station in all
key dayparts and demographics for the first three months of the new
ratings system. The KOMO AM/FM simulcast also significantly
improved its competitive position under the new ratings system for
the month of June (the first full month of the simulcast), ranking
#1 in its targeted Adults 35-64 demographic in afternoon Drive and
#3 in Adults 35-64 during morning Drive.
Repurchase of Senior Notes
In the second quarter of 2009, the Company repurchased $12.8
million in aggregate principal amount of its 8.625% senior notes
due in 2014 for total consideration of $11.4 million in cash,
reflecting a discount to the face value of the notes of
approximately 11%. The Company recorded a net gain of $1.2 million
in the second quarter in connection with these repurchases.
Fisher Plaza Electrical Fire
On July 2, 2009, a small electrical fire contained within a
garage level equipment room of the east building of Fisher Plaza
disrupted city supplied electrical service to that building. The
building is currently being powered by a combination of electricity
from Seattle City Light and building generators, with back-up
electricity available from a series of portable generators. The
Company currently expects to be on 100% city power later this
month.
The cause of the electrical fire remains under investigation.
Based on the currently available information and our insurance
coverage amounts, the Company currently does not expect the
incident's financial impact to be material.
Commentary on the Second Quarter
Fisher President and Chief Executive Officer Colleen B. Brown
said: "Our financial performance continues to be affected by the
overall weakness in the economy and its impact on our clients'
advertising budgets. While we expect that our advertising and
business partners will remain cautious until the economic recovery
begins, we believe we are seeing signs that the worst may be behind
us, including an improvement in TV ad pacing. It is too early to
make definitive predictions, but these are positive indications
that we will be closely monitoring for the remainder of the
year.
"We are pleased to have completed our key cable retransmission
agreements, gaining some recognition for the value of our stations,
and to have settled our dispute with DISH Network. In this
challenging economic environment, we continue to seek new
opportunities to drive incremental revenue by expanding our
broadcast to broadband strategy. We also remain focused on
improving our operational performance and effectively managing our
cost structure."
Second Quarter Results
Consolidated Results
Revenue for the second quarter of 2009 was $32.0 million,
compared to revenue of $45.7 million in the second quarter of 2008,
a decrease of $13.7 million, or 30%. The Company anticipated a
significant portion of the decline, given that 2009 is an
off-political year and the Company did not renew its Seattle
Mariners broadcast contract in 2008.
Loss from operations was $2.1 million for the quarter, compared
with a loss from operations of $3.5 million during the same period
in 2008. The improvement was due primarily to a 31% decrease in
total operating costs from the second quarter of 2008, which offset
the 30% decline in revenue. Second quarter 2008 operating costs
included approximately $6 million of non-recurring, non-cash
charges. EBITDA totaled $1.2 million for the second quarter of
2009, compared to $6.5 million in the second quarter of 2008. Net
loss for the second quarter was $2.1 million, or $0.24 per share,
compared to net income of $63.7 million or $7.29 per share in the
second quarter of 2008. Net income in the second quarter of 2008
included an after-tax gain on the sale of 1.5 million shares of
Safeco Corporation of $67.4 million. Excluding the after-tax gain,
net loss in the second quarter of 2008 was $3.7 million, or $0.42
per share.
Television Results
For the second quarter of 2009, the television segment reported
revenue of $22.7 million, a 26% decrease from the $30.9 million
generated in the comparable period of 2008. The decline was
attributable to lower local, national, and political advertising
revenue at a majority of our stations. TV BCF was $1.1 million,
compared with $9.1 million in the same period of 2008, a decrease
of 87%. The decrease in BCF was solely attributable to revenue
declines.
During the second quarter, the television segment recorded
$247,000 of political revenue, compared to $2.2 million during the
same period last year, a decrease of 89%. Fisher recorded $791,000
in total retransmission consent revenue in the second quarter, an
increase of 6% from the second quarter of 2008. This amount
excludes approximately $1 million in retransmission fees for the
second quarter (and another $1 million for the first quarter)
attributable to certain retransmission consent agreements for which
the key financial terms were finalized but which were not executed
until the third quarter of 2009.
Radio Results
For the second quarter of 2009, the radio segment reported
revenue of $5.9 million, a decrease of 49% from the $11.6 million
earned in the comparable period of 2008. The decrease in revenue
was more than offset by lower expenses, attributable largely to the
absence of the Seattle Mariners broadcast contract in the second
quarter of 2009. Radio BCF was $1.4 million, compared with a
negative BCF of $6,000 in the second quarter of 2008. Excluding the
Mariners contract, BCF decreased 30% from $2.0 million in the
second quarter of 2008, a result of a 21% decline in non-Mariners
revenue partially offset by a comparable reduction in non-Mariners
expenses.
Fisher Plaza Results
For the second quarter of 2009, the Plaza segment reported
revenue of $3.4 million, an 8% increase from the second quarter of
2008. Income from operations was $1.7 million, an increase of
$374,000 and 29% compared to the same period in 2008. Plaza
occupancy was 96% at the end of the second quarter of 2009,
compared to 97% at the end of the second quarter of 2008. The
slight decrease was attributable to a change in classification of
approximately 4,400 square feet formerly occupied by Fisher but now
vacant and available for lease.
Key Balance Sheet and Cash Flow Items
Cash, cash equivalents and short-term investments were $58.5
million at the end of the second quarter of 2009, compared to $91.5
million at December 31, 2008. The reduction was primarily due to
the Company\'s repurchase of $28 million in principal amount of its
senior notes during the first six months of 2009.
Total debt outstanding was $122.1 million at the end of the
second quarter of 2009, compared to $150.0 million at December 31,
2008. The Company's Debt to Operating Cash Flow Ratio, as defined
in the Company's senior notes indenture, was 7.2 as of June 30,
2009 compared to 5.3 as of December 31, 2008.
Other components of cash flow for the second quarter of 2009
were capital expenditures of $5.3 million and cash payments for
broadcast rights of $4.6 million.
Second Quarter 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 1-800-561-2718; confirmation code 42407004. 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
approximately 2 hours after the live event. The replay will be
available 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 60664924.
Definitions and Disclosures Regarding Non-GAAP Financial
Information
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
non-GAAP financial measures such as Broadcast Cash Flow (BCF) and
Earnings Before Interest, Taxes, Depreciation and Amortization
(EBITDA). These non-GAAP measures should not be viewed as
alternatives or substitutes for GAAP reporting.
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; and 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.
Television and radio BCF is calculated as income (loss) from the
segment 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.
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 addition to 2 radio stations not
owned by the Company but for which the Company provides programming
or sales services) in the Western United States. The Company also
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," or "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, 2008, as
updated by the risk factors contained in our Quarterly Report on
Form 10-Q for the quarter ended March 31, 2009, both of which we
have filed with the Securities and Exchange Commission.
Fisher Communications, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited)
(in thousands, Six months ended Three months ended
except per-share June 30, % June 30, %
amounts) 2009 2008 change 2009 2008 change
-------- -------- ------ -------- -------- ------
Revenue $ 60,496 $ 83,749 -28% $ 31,983 $ 45,694 -30%
-------- -------- ------ -------- -------- ------
Operating expenses
Direct operating
costs 31,678 35,090 -10% 15,850 17,729 -11%
Selling, general
and
administrative
expenses 24,954 35,189 -29% 12,514 21,332 -41%
Amortization of
program rights 4,577 9,461 -52% 2,281 7,015 -67%
Depreciation and
amortization 6,723 6,213 8% 3,391 3,104 9%
-------- -------- ------ -------- -------- ------
67,932 85,953 -21% 34,036 49,180 -31%
-------- -------- ------ -------- -------- ------
Loss from
operations (7,436) (2,204) 237% (2,053) (3,486) -41%
Gain on
extinguishment of
senior notes, net 2,965 - 1,173 -
Other income, net 829 105,762 535 104,732
Interest expense (6,203) (6,902) (2,938) (3,544)
-------- -------- -------- --------
Income (loss) from
continuing
operations before
income taxes (9,845) 96,656 (3,283) 97,702
Provision
(benefit) for
income taxes (3,446) 33,546 (1,149) 33,772
-------- -------- -------- --------
Income (loss)
from continuing
operations (6,399) 63,110 (2,134) 63,930
Loss from
discontinued
operations, net
of income taxes - (502) - (256)
-------- -------- -------- --------
Net income (loss) $ (6,399) $ 62,608 $ (2,134) $ 63,674
-------- -------- -------- --------
Income (loss)
per share:
From continuing
operations $ (0.73) $ 7.23 $ (0.24) $ 7.32
From
discontinued
operations - (0.06) - (0.03)
-------- -------- -------- --------
Basic and
diluted net
income (loss)
per share $ (0.73) $ 7.17 $ (0.24) $ 7.29
-------- -------- -------- --------
Income (loss) per
share assuming
dilution:
From continuing
operations $ (0.73) $ 7.23 $ (0.24) $ 7.32
From
discontinued
operations - (0.06) - (0.03)
-------- -------- -------- --------
Net income
(loss) per
share assuming
dilution $ (0.73) $ 7.17 $ (0.24) $ 7.29
-------- -------- -------- --------
Weighted average
shares
outstanding 8,772 8,730 8,774 8,731
Weighted average
shares
outstanding
assuming dilution 8,772 8,732 8,774 8,735
Fisher Communications, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(unaudited)
June 30, December 31,
(in thousands) 2009 2008
------------ ------------
ASSETS
Current Assets
Cash and cash equivalents $ 58,467 $ 31,835
Short-term investments - 59,697
Receivables, net 22,116 26,044
Income taxes receivable 6,353 2,763
Deferred income taxes 1,763 1,763
Prepaid expenses and other assets 2,173 2,200
Television and radio broadcast rights 1,558 6,106
------------ ------------
Total current assets 92,430 130,408
Cash value of life insurance and
retirement deposits 17,758 17,425
Goodwill 13,293 13,293
Intangible assets 40,897 41,015
Other assets 6,045 6,955
Deferred income taxes 13,537 13,757
Property, plant and equipment, net 148,843 148,440
------------ ------------
Total Assets $ 332,803 $ 371,293
------------ ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Trade accounts payable $ 3,572 $ 4,339
Accrued payroll and related benefits 6,254 4,301
Interest payable 3,237 3,773
Television and radio broadcast rights
payable 1,573 6,124
Current portion of accrued retirement
benefits 1,254 1,254
Other current liabilities 6,169 5,712
------------ ------------
Total current liabilities 22,059 25,503
Long-term debt 122,050 150,000
Accrued retirement benefits 19,415 19,439
Other liabilities 10,395 11,607
------------ ------------
Total Stockholders' Equity 158,884 164,744
------------ ------------
Total Liabilities and Stockholders' Equity $ 332,803 $ 371,293
------------ ------------
Fisher Communications, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flow
(Unaudited)
Six months ended June 30,
(in thousands) 2009 2008
------------ ------------
Cash flows from operating activities
Net income (loss) $ (6,399) $ 62,608
Adjustments to reconcile net income (loss)
to net cash used in operating activities
Depreciation and amortization 6,723 6,253
Deferred income taxes 203 74
Amortization of deferred financing fees 247 316
Amortization of broadcast rights 4,577 9,461
Gain on extinguishment of senior notes,
net (2,965) -
Payments for broadcast rights (4,593) (9,588)
Amortization of short-term investment
discount (303) -
Gain on sale of marketable securities - (103,621)
Net non-cash contract termination fee - 4,990
Amortization of non-cash contract
termination fee (731) (533)
Equity in operations of equity investees 73 (1)
Stock-based compensation 495 426
Other 63 182
Change in operating assets and liabilities
Receivables 3,928 (3,062)
Prepaid expenses and other current assets 27 (618)
Cash value of life insurance and
retirement deposits (333) (413)
Other assets 92 1,005
Trade accounts payable, accrued payroll
and related benefits, interest payable,
and other current liabilities (648) 818
Income taxes receivable and payable (3,591) 16,253
Accrued retirement benefits (23) 11
Other liabilities (384) (483)
------------ ------------
Net cash used in operating activities (3,542) (15,922)
------------ ------------
Cash flows from investing activities
Purchases of marketable securities - (56)
Proceeds from sale of marketable securities - 89,845
Purchase of television stations - (52,365)
Decrease in restricted cash - 52,365
Redemption of short-term investments 60,000 -
Purchase of property, plant and equipment (5,322) (5,436)
------------ ------------
Net cash provided by investing
activities 54,678 84,353
------------ ------------
Cash flows from financing activities
Borrowings under borrowing agreements - 14,000
Payments on borrowing agreements - (14,000)
Repurchase of senior notes (24,428) -
Payments on capital lease obligations (76) (70)
------------ ------------
Net cash used in financing activities (24,504) (70)
------------ ------------
Net increase in cash and cash equivalents 26,632 68,361
Cash and cash equivalents, beginning of period 31,835 6,510
------------ ------------
Cash and cash equivalents, end of period $ 58,467 $ 74,871
------------ ------------
Fisher Communications, Inc. and Subsidiaries
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:
Six Months ended Three Months ended
June 30, June 30,
-------------------- --------------------
2009 2008 2009 2008
--------- --------- --------- ---------
Income (loss) from operations
(per GAAP, Statements of
Operations) $ (7,436) $ (2,204) $ (2,053) $ (3,486)
Add:
Amortization of program
rights 4,577 9,461 2,281 7,015
Depreciation and
amortization 6,723 6,213 3,391 3,104
Stock-based compensation 495 426 196 261
Non-cash charge resulting
from forfeiture of
non-refundable deposit - 1,000 - 1,000
Net non-cash charge
resulting from change in
national advertising
representation firm - 4,990 - 4,990
Subtract:
Payments for television and
radio broadcast rights 4,593 9,588 2,295 6,105
Amortization of non-cash
benefit resulting from
change in national
advertising representation
firm 731 533 366 316
--------- --------- --------- ---------
EBITDA (Non-GAAP) $ (965) $ 9,765 $ 1,154 $ 6,463
========= ========= ========= =========
EBITDA as a percentage of
Revenue (1.6%) 11.7% 3.6% 14.1%
========= ========= ========= =========
The following table provides a reconciliation of net income (loss) to
adjusted net loss in the periods presented:
Three Months ended
June 30,
--------------------
2009 2008
--------- ---------
Net income (loss) $ (2,134) $ 63,674
Subtract:
After-tax gain on sale of Safeco shares - 67,354
--------- ---------
Adjusted net loss (Non-GAAP) $ (2,134) $ (3,680)
========= =========
The following table provides a reconciliation of television segment income
(loss) from operations to television broadcast cash flow in each of the
periods presented:
Six Months ended Three Months ended
June 30, June 30,
-------------------- --------------------
2009 2008 2009 2008
--------- --------- --------- ---------
Television segment income
(loss) from operations $ (5,771) $ 2,697 $ (2,178) $ 152
Add:
Amortization of program
rights 4,577 3,979 2,281 1,988
Depreciation and
amortization 4,339 3,976 2,183 2,007
Corporate and internet
expenses 4,277 5,562 1,891 2,716
Net non-cash charge
resulting from change in
national advertising
representation firm - 4,990 - 4,990
Subtract:
Payments for television
broadcast rights 4,593 4,017 2,295 1,927
Amortization of non-cash
benefit resulting from
change in national
advertising representation
firm 731 533 366 316
Non-convergence internet
revenue 709 1,013 376 556
--------- --------- --------- ---------
Television Broadcast Cash Flow
(Non-GAAP) $ 1,389 $ 15,641 $ 1,140 $ 9,054
========= ========= ========= =========
Television Broadcast Cash Flow
as a percentage of Television
Segment Revenue 3.2% 26.6% 5.0% 29.3%
========= ========= ========= =========
Television Segment Revenue $ 43,004 $ 58,808 $ 22,721 $ 30,899
========= ========= ========= =========
The following table provides a reconciliation of radio segment income
(loss) from operations to radio broadcast cash flow in each of the
periods presented:
Six Months ended June 30, Three Months ended June 30,
-------------------------- --------------------------
2009 2008 2008 (1) 2009 2008 2008 (1)
------- ------- -------- ------- ------- --------
Radio segment
income (loss)
from operations $ 857 $(1,807) $ 1,743 $ 931 $(1,434) $ 1,366
Add:
Amortization
of program
rights - 5,482 - - 5,027 -
Depreciation
and
amortization 372 449 449 174 216 216
Corporate
expenses
and other 644 388 401 268 363 380
Subtract:
Payments for
radio
broadcast
rights - 5,571 - - 4,178 -
------- ------- -------- ------- ------- --------
Radio Broadcast
Cash Flow
(Non-GAAP) $ 1,873 $(1,059) $ 2,593 $ 1,373 $ (6) $ 1,962
======= ======= ======== ======= ======= ========
Radio Broadcast
Cash Flow as a
percentage of
Radio Segment
Revenue 17.3% -5.7% 18.6% 23.2% -0.1% 26.4%
======= ======= ======== ======= ======= ========
Radio Segment
Revenue $10,797 $18,478 $ 13,943 $ 5,909 $11,603 $ 7,440
======= ======= ======== ======= ======= ========
(1) Excludes the financial impact of the Seattle Mariners broadcast
contract.
Contacts: Sard Verbinnen & Co Paul Kranhold or Ron Low (415)
618-8750 Robin Weinberg (212) 687-8080
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