Times Mirror Profit Rises on Flat Revenue
Times Mirror Co., the media company that publishes the Los Angeles Times and other newspapers, said Wednesday that its earnings in the fourth quarter of 1986 increased 71% over the year before to $99.3 million. While most of the growth came from divesting subsidiaries, pretax profit from operations alone rose 7.5%.
Net earnings for 1986 overall rose 72% to a record $408 million, again mostly due to sale of assets. Pretax operating profit for the year was up 8.2%.
The results reflect a major restructuring of Times Mirror in 1986, in which the company sold off various subsidiaries and made some large newspaper and magazine acquisitions. Those deals gave Times Mirror a pretax gain of $29.6 million in the fourth quarter and $222 million for the year overall and significantly improved profit.
Revenue generally was flat, rising less than 1% in the fourth quarter to $806 million, and declining slightly for the year overall to $2.95 billion from $2.96 billion.
The decline was due, in part, to the loss of revenue from those divisions sold off, analysts said.
Bruce Thorp, an analyst with the brokerage firm of Lynch, Jones & Ryan, said the results were about as anticipated. “We read 1986 as very much a transition year in which the company was primarily disposing of unwanted businesses” and acquiring some others, Thorp said.
Times Mirror Chairman and Chief Executive Robert F. Erburu called 1986 “one of the most momentous” years in the company’s history because of the various sales and acquisitions. “All these moves have important long-term implications and position the company to achieve continued and increasing growth in the future.”
In the fourth quarter, Times Mirror sold Graphic Controls, a technical chart and graphics company, and H. M. Gousha Co., a publisher of maps, atlases and car manuals. Earlier in 1986 the company sold its microwave operations, three television stations, interest in a Las Vegas cable TV system and the Dallas Times Herald.
The company also acquired the Baltimore Sun newspapers, Broadcasting magazine, the National Journal in Washington, CRC Press (a publisher of scientific journals) and the remaining 60% it didn’t already own in Rhode Island Cable Television.
The deals are part of Times Mirror’s long-term strategy of concentrating on primary areas of business: newspapers, magazines, cable and broadcast television, plus professional and scientific print and electronic publishing. Based in Los Angeles, Times Mirror owns eight newspapers including The Times, Newsday, the Sun, the Hartford Courant and the Denver Post.
Victoria Butcher, an analyst with the brokerage firm of F. Eberstadt & Co., said the restructuring has pleased Wall Street because it should result in more consistent earnings growth.
In the short term, however, analysts said the restructuring could depress earnings, at least in 1987, both because of the loss of revenue from divested subsidiaries and the expenses related to the acquisitions.
“It will be 1988 before profitability starts to move back up,” Thorp said.
Each of Times Mirror’s operating groups showed improved profit for the year except for cable television, whose earnings were affected by the absence of profit from the divested microwave subsidiary. Cable television operating profit dropped 22.5% for the year to $37 million.
Operating profit from newspaper publishing, on the other hand, rose 18.5% to $331 million. Book and magazine publishing operating profit rose 14.4% to $98 million. Broadcast television operating profit rose 10.2% to $71 million.
Earnings in 1986 also were helped by changes in accounting procedures under new federal guidelines called the Statement of Financial Accounting Standards No. 87. The new standards resulted in a gain of $4.9 million after taxes in the fourth quarter and $25.3 million for the year.