Capital Cities-ABC Profit Falls 28.8% in 1st Quarter

Capital Cities-ABC Inc. said Monday that its first-quarter profit dropped 28.8% from a year ago as a weak advertising market helped send the company’s revenue down 13%.

The ABC television network posted an operating loss in the quarter in contrast with a small profit a year ago, and operating earnings were down significantly at the company’s eight TV stations.

The company said those results also reflected the absence of audience-grabbing events such as the Super Bowl and the Academy Awards show that drew major ad spending to ABC and its stations in the first three months of 1991.

Earnings were up for the quarter from publishing operations, which include newspapers, shopping guides and books.

The company held out hope for profit increases later this year, saying expense growth should be modest while the ad market appears to be improving.

In late trading on the New York Stock Exchange, Capital Cities-ABC was down $10.50 a share at $457.50.

Capital Cities-ABC said it earned $41.7 million, or $2.51 a share, for the three months ended March 29 compared to $58.6 million, or $3.50 a share, a year earlier. Many analysts were looking for earnings of about $3 a share.

Revenue fell to $1.10 billion for the quarter from $1.26 billion in 1991.

Operating income dropped 25% to $97.9 million from $130 million a year earlier, with a 28% decline in broadcasting more than offsetting a 9% increase from publishing.

Analysts said the results did not signal any major troubles for the broadcasting and publishing giant.

“The advertising market was really weak,” said Jessica Reif, media analyst at Oppenheimer & Co.

CBS had the Super Bowl broadcast this year after ABC handled it in 1991. The football championship game attracts the biggest audience of the year to television and that allows the network and its affiliates that carry the game to charge premium ad rates for the broadcast.

She said CBS may also have drawn some ads away from both ABC and NBC because it had the Winter Olympics in the first quarter and sold time during those broadcasts in packages that included the Super Bowl.

The Academy Awards show also draws huge audiences and heavy ad spending. ABC handled the broadcast again this year, but it was in the second quarter rather than the first quarter, as in 1991.

Capital Cities-ABC said its broadcast revenue fell 16% to $842.8 million from a year ago, reflecting substantial declines at the TV network and its TV stations. Publishing revenue rose 1% to $252.7 million.

But the company said that despite the recession, national and local advertising have improved this quarter and this may indicate “an end to further revenue erosion.”

If the trend continues, the company said “modestly favorable second quarter earnings comparisons could be achieved.”