Turner Broadcasting Reports $85-Million Loss in 2nd Quarter

Turner Broadcasting System on Friday reported a second-quarter loss of more than $85 million, mainly due to its expensive acquisition of MGM/UA Entertainment Co. and the ratings flop of its recent Goodwill Games telecasts.

The Atlanta-based company posted a net loss of $85.8 million, compared to a loss of $6.7 million in the second quarter last year.

Without an extraordinary charge of $13.7 million, Turner would have reported a profit of $7.06 million in the second quarter last year.

Second-quarter revenue rose to $158.1 million from $99.3 million.

TBS said the loss in the quarter ended June 30 stemmed from $45 million in increased amortization and $60 million in interest expense involved with Turner’s $1.2-billion acquisition of Culver City-based MGM/UA and its film library.

Because of the continuing expenses, “it is anticipated that such future operating results will continue to reflect large net losses,” the company said.

Turner also said it lost $26 million in staging last month’s Goodwill Games, an Olympic-style amateur athletic event held in Moscow.

The games, which cost Turner an estimated $35 million to produce, were televised over 129 hours on its Atlanta-based WTBS “superstation,” which is received nationwide by cable and satellite. The events drew poor ratings, however, forcing the company to renegotiate some ad sales agreements.

Anthony Hoffman, a New York investment banker and media specialist, said the cash flow from the MGM library and TBS operations should be sufficient to sustain the company through next year. “Then you have to wonder what the company will do over the long term to produce earnings,” he said.

TBS intends to sell all of its MGM holdings except the film library for about $460 million, with the proceeds to be used to pay off part of $600 million in notes due Sept. 15.

But because “there is no assurance the proposed sale . . . will, in fact, close” before the notes are due, TBS will extend the maturity of those notes until Dec. 15, the company said. That could bring more costs through increased interest.

Ted Turner, chairman and majority owner of TBS, said in a statement that the net losses were, “on their face, quite large.” But “the company’s underlying business operations continue to show satisfactory growth in both revenue and operating income,” he said.

TBS owns WTBS, Cable News Network, CNN Headline News, baseball’s Atlanta Braves and basketball’s Atlanta Hawks, among other properties.