Last week, Tribune Publishing Company reported its fourth quarter and full year 2019 financial results which were a mixed bag. The company’s fourth quarter results showed losses, though Tribune finished the full year 2019 with revenue increases and net income. For Q4 2019, Tribune had revenue of $252.3 million, a decrease of $31.2 million, or 11%, year-over-year, compared to $283.5 million in the fourth quarter of 2018. The decrease was attributed to a $30.1 million decline in M segment revenue (media revenue less digital revenue and associated expenses) and $4.9 million in revenue from the company’s transition agreement related to assets sold to the California News Group, including the Los Angeles Times, San Diego Union-Tribune and ForSaleByOwner.com.
Other highlights for the fourth quarter include the following:
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– Segment M revenue was $197.0 million, a decrease of 13.3%, attributed to a decrease in ad revenue.
– Segment X revenue (digital and other revenue) was $53.2 million, a 7.7% increase due to growth in digital-only subscription revenue and revenue from BestReviews.com.
– Content revenue increased 18.6% during the fourth quarter.
– At the end of the fourth quarter, Tribune had 334,000 digital-only subscribers, a 33.6% increase over the prior year period and a 6.5% increase over the third quarter of 2019.
– Total operating expenses for Q4 were $255.2 million, an 11.2% decrease year-over-year.
– Loss from continuing operations was $4.4 million, compared to income of $4.0 million in Q4 2018.
– Adjusted EBITDA was $30.8 million, compared to $46.5 million in the prior year quarter
“We made significant investments in the company throughout the year, hiring more than 250 editorial employees in 2019. We also invested in our digital products, rolling out a new, state-of-the-art content management system. Furthermore, our relentless execution and cross functional leadership drove a significant year-over-year improvement in income from continuing operations and adjusted EBITDA, and we are pleased to be able to return capital to our shareholders through a recurring dividend. This demonstrates the confidence we have in our ability to generate cash flow,” said Terry Jimenez, Tribune Publishing CEO and president in a March 4 news release.
“Our intense focus on our mission and our strategic initiatives will yield the best outcomes for our people, customers and shareholders. As we progress through 2020, we are optimistic about the strength of our business and the opportunities that lie ahead,” Jimenez added. “At the core of our success is the journalism our newsrooms produce. Tribune remains a leading news source for our readers, and we are proud of the impact our reporting has across the communities we serve.”
Full year 2019 highlights include:
– Income from continuing operations increased by $43.0 million compared to 2018.
– Earnings per share increased by $0.39 per share.
– Total operating expenses decreased $100.9 million over 2018.
– Adjusted EBITDA was $101.4 million, an 8.0% increase.
– The company returned $62.9 million to shareholders through dividends.
– At the end of the year, capital expenditures were $18.6 million, and the company’s cash balance was $61.0 million.
Tribune Publishing provided the following outlook for 2020:
– Full year 2020 adjusted EBITDA will range between $100.0 million and $105.0 million.
– For the first quarter, revenue will range between $210.0 million to $215.0 million and adjusted EBITDA between $12.0 million and $13.0 million.
What Tribune Publishing did not address was the elephant in the room – layoffs, voluntary buyouts and an expected acquisition by Alden Global Capital this summer. As Ken Doctor reported last year, Tribune and Alden entered into a cooperation agreement where Alden, which had increased its stake to 32% in November, would sit tight until June 30, 2020. At that time, Alden could purchase a stake beyond 33%. In exchange, Tribune added two new board members to be selected by Alden.
In January 2020, Tribune offered voluntary buyouts to employees at nine of its papers. Meanwhile, two investigative reporters at the Chicago Tribune desperately sought an alternative solution to prevent the legacy paper from becoming just another hedge fund asset. Bottom line: Tribune Publishing’s financials at year end are not particularly meaningful. The company is ripe for an acquisition in which we can expect Alden to slash expenses – and staff – to return more value to their shareholders. Hedge funds are not in the newspaper business to provide good, quality local journalism to communities across the country. They buy them to make money, whatever it takes.