MCA Posts Profit in 4th Quarter Despite $50-Million Writedown of TV Earnings

Despite a previously reported $50-million writedown of expected television earnings, MCA ended its 1986 fourth quarter and full year with net profits of $21.6 million and $155.2 million, respectively.

A year earlier, the giant Los Angeles-based entertainment firm reported net profit of $51.7 million for the fourth quarter and $150 million for the full year.

MCA said 1986 revenue hit a record $2.4 billion, compared to $2.1 billion a year earlier. Fourth-quarter revenue rose to a record $645.4 million from $623.9 million in the same period of 1985.

MCA’s fourth-quarter profit was aided by income tax credits of $12.5 million, compared to a $21-million provision for paying taxes a year ago. Because of the writeoff, MCA’s filmed entertainment group suffered an operating loss of $46.4 million in the fourth quarter, but its other divisions performed well enough to produce $13.1 million in overall operating earnings. Improvements were reported in all divisions, which include music entertainment, retail and mail order, book publishing, toy products and other operations.

The company explained that its writeoff, which was disclosed a week earlier, was “due to the present condition of the television syndication market and the unprecedented financial difficulties apparently being experienced by a large number of television stations.”

It specified that it revised downward its income forecasts for certain television series, thereby increasing amortization costs, and also increased its bad debt reserve for accounts receivable from “such stations.”