Times Mirror’s Income Down 40% in Quarter

Reflecting an industrywide slump in the newspaper business, Times Mirror Co. said Wednesday that its third-quarter earnings dropped about 40%, while revenue rose 2.4%. Net income was $41.9 million, compared to $70.1 million for the same quarter a year ago.

“Declining advertising demand in the third quarter reflected the continued general weakness of the Northeast economy, as well as a more recent downturn in classified and retail advertising volume at the Los Angeles Times,” said Robert F. Erburu, chairman and chief executive.

Third-quarter revenue increased to $895 million, compared to $873.9 million for the same period of 1989. Revenue for the first three quarters of 1990 increased 3.7% to $2.68 billion, while net income declined about 40% to $134.9 million.

“Our non-advertising-dependent businesses, led by our professional publishing operations, turned in solid third-quarter performances and should achieve revenue and earnings growth through the remainder of the year,” Erburu said.

Overall, he said, the newspaper publishing group experienced higher newsprint costs. The Los Angeles Times also incurred increased operating costs associated with its recent circulation growth. The Times’ daily circulation jumped 8% for the six months ended Sept. 30, according to the Audit Bureau of Circulations.

Newspaper analysts were not surprised at the dip in Times Mirror’s third-quarter earnings.

“I was expecting a down quarter,” said Kenneth T. Berents, a newspaper analyst at Alex. Brown & Sons in Baltimore. “The newspaper industry is in dire straits right now. It’s a real disaster--the numbers in the Northeast are just awful.”

Berents, a former journalist, predicted that fourth-quarter earnings at most American newspapers will also “be a bust.”

“I don’t see any relief in the first half of 1991,” said Berents, who noted that The Times is faring better than Times Mirror’s other papers in terms of revenue. The company publishes several papers in the East, including Newsday in New York, the Baltimore Sun, the Hartford Courant in Connecticut and others.

Berents said 1970 was the last time the industry experienced a significant dip in advertising revenue.

Times Mirror’s cable television revenue grew 9.7% and operating profit rose 5.5% in the third quarter, mostly due to an increase in subscribers for basic cable service. Broadcast television revenue rose 7.4%, compared to the third quarter last year, but operating profit dipped 26.3%.

Book, magazine and other publishing revenue increased 7.8%, with a 4.2% increase in operating profit.

The company’s third-quarter results were affected by one-time charges taken at Newsday. The charges, which reduced earnings by 3 cents a share, were due to severance payments related to a voluntary early retirement program and lease costs.

Interest expense in the third quarter was $18.8 million, up 29.6% over last year. The higher debt level was due to financing construction of new facilities at the Los Angeles Times, Newsday and the Baltimore Sun. Times Mirror stock closed Wednesday at $23.625 per share, down 12.5 cents, in composite trading on the New York Stock Exchange.