Tronc Reports Net Loss of $3 Million, or $(0.08) Per Share for Q1 2017

Last week publisher Tronc, formerly Tribune Publishing, (NASDAQ: TRNC) published its first quarter results for the quarter ended March 26, 2017. The company reported

Subscription News: Tronc Reports Net Loss of $3 Million

Source: Tronc

Last week publisher Tronc, formerly Tribune Publishing, (NASDAQ: TRNC) published its first quarter results for the quarter ended March 26, 2017. The company reported a net loss of $3 million, or $(0.08) per fully diluted share, compared to a $6 million net loss, or $(0.22) per fully diluted share, year-over-year. Tronc also reported total revenue of $366 million, down 8.1 percent for the same period last year. Tronc publishes more than 150 titles and estimates its monthly audience at 59 million.

Other highlights for the quarter include:

  •  or $(0.08) Per Share for Q1 2017

    Source: Chicago Tribune App

    Advertising revenue for the quarter decreased 13.1 percent.

  • Circulation revenue increased 1.4 percent, with most of the growth coming from digital-only subscriptions, the Chicago Tribune and the Los Angeles Times.
  • Total operating expenses decreased $49 million.
  • Total paid all-access subscribers exceeded 1 million.
  • Total revenue for troncM (media groups) was $312 million, a 9.2 percent decrease year-over-year.
  • Advertising revenue for troncM decreased by 15.6 percent.
  • troncM operating expenses were down $31 million, or 9.6 percent.
  • troncX revenue were $55 million, a 3.2 percent decrease.
  • Advertising revenue for troncX was down 4.6 percent.
  • troncX content revenue, including digital-only subscriptions and content syndication, increased by 3.1 percent.

“I am pleased to report that Tronc continues to make progress, despite ongoing industry-wide revenue challenges. We achieved year-over-year growth in Income from Operations and Adjusted EBITDA and grew our digital audience 5%,” said CEO Justin Dearborn. “We hit a key milestone as our total paid all-access subscribers exceeded one million at the end of the first quarter. Additionally, we are proud of the recognition for our strong journalistic efforts by the winning of our 94th Pulitzer. With our strong balance sheet and focused strategy, we are confident of further progress in the coming quarters.”

Tronc has updated its 2017 full-year guidance on total revenues to be between $1.54 billion and $1.56 billion and Adjusted EBITDA between $187 million and $195 million. In February, upon reporting its fourth quarter 2016 financials, Tronc estimated revenues would be higher, ranging between $1.57 and $1.6 billion.

Investors have not had a significant reaction to the news so far. Financials were reported on Wednesday, May 3. At 4 PM EDT, stock closed at $13.88 per share. As of 4:44 PM EDT on Fri., May 5, stock was valued at $13.13 in after-hours trading. This time last year – May 9, 2016 – Tronc stock was valued at $11.50 per share.

Subscription News: Tronc Reports Net Loss of $3 Million

Source: Google Finance – Yahoo Finance – MSN Money

In 2016, Tronc and chairman Michael W. Ferro Jr. fought hard against Gannett’s attempts to take over the company. After much back and forth, and posturing on the part of Ferro including the rebranding of Tribune Publishing, Gannett dropped its plans to buy Tronc for $18.75 in November, reports the New York Times.

The latest Tronc news is that Ferro and investor Dr. Patrick Soon-Shiong are feuding. According to the New York Times, Dr. Soon-Shiong has complained at board meetings about Ferro’s lavish spending on a private plane and tickets to Chicago sports games while the company is laying off employees and calling for cost cuts. Tronc removed Dr. Soon-Shiong from its slate of directors to be put before shareholders in April. He is not listed on Tronc’s Board of Directors’ list online.

Insider Take:

Tronc may have made some financial strides in lowering its million-dollar losses, but the unrest behind the scenes makes the company’s future look less than secure. Tronc could still be ripe for a takeover, particularly if Dr. Soon-Shiong has the opportunity to buy a larger stake of the company than Ferro currently owns. At the moment, he doesn’t have that option without the board’s consent.

In a May 4, 2017 with the SEC, the 10-Q indicated Dr. Soon-Shiong and Nant Capital, LLC, purchased 8,743,619 shares of Tronc common stock, representing 26.25 percent of the total outstanding shares. The maximum he could purchase was 25 percent, so he is prohibited from buying any future shares without written approval of the board. The filing also shows that Ferro owns 9,047,748 shares of Tronc common stock, representing 27.58 percent of tronc stock. For now, that gives Ferro controlling interest, but that may not keep the wolves at bay.

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