Times Mirror Co., the media company that owns the Los Angeles Times, said Tuesday that its 1987 earnings fell 34.7% while revenue hit a record high.
Full-year earnings of $266.5 million were hurt by a one-time, $41.5-million pretax loss on the sale of the Denver Post in December. In contrast, 1986 earnings of $408.1 million were helped by a one-time pretax gain of $222.2 million from the sale of newspapers, cable television systems and television stations. Revenues for 1987 reached a record $3.15 billion, up 7% from 1986.
The results were generally in line with most industry analysts' expectations. However, many were caught off guard by a fourth-quarter decline in operating profit at the company's newspaper division. Profit fell 4.6% to $105.9 million, mostly due to higher newsprint costs and expenses associated with expansion of the New York edition of Newsday and unbudgeted expansion of several sections of the Los Angeles Times.
"The only question mark was the newspaper division earnings," said industry analyst Victoria Butcher at Eberstadt Fleming. "They were down and that was not expected," she said of the decline.
In reaction, Times Mirror stock fell $1.625 a share Tuesday to close at $35.50 in composite trading on the New York Stock Exchange.
Analyst Jeffrey Russell at Drexel Burnham Lambert noted that newspaper advertising revenue during the Christmas season were not as high as in years past. Also, higher costs associated with circulation increases came many months before newspapers were scheduled to raise their ad rates. Ad rates were adjusted early this year.
4th Quarter Results
In a statement, company Chairman Robert F. Erburu said: "1987 was a milestone year for Times Mirror. Revenues passed the $3-billion mark for the first time and our restructuring and asset redeployment program has been completed. We are now well-positioned for long-term future growth."
During the fourth quarter, Los Angeles-based Times Mirror reported revenue of $863.1 million, up 7% from the year before.
Fourth-quarter earnings of $54.7 million--down 44.9% from the year before--also reflected the loss associated with the sale of the Denver Post and the one-time gains posted in 1986.
The company's operating profit for 1987 increased 13.8% to $589.4 million. Fourth-quarter operating profit declined 2% to $156.8 million, a result of lower profits from Times Mirror newspapers, book and magazine, and broadcast television divisions.
The individual financial performance of Times Mirror's divisions during 1987 was as follows:
- Operating profit from newspapers--which include The Times, Newsday, New York Newsday, the Hartford Courant, the Baltimore Sun and other papers--reached $377.9 million, up 14.2% from 1986. Revenue increased 15.6% to nearly $2 billion.
- The book and magazine division reported operating profit of $119.5 million--up 21.6%--on revenue of $648.4 million, up 10.5%.
- The sluggish Texas economy hurt the performance of Times Mirror television stations in Dallas and Austin. Operating profit for the division fell 17.6% to $58.4 million, while revenue declined 13.6% to $110.1 million.
- Cable television operations saw operating profit decline 21.5% to $28.8 million. Revenue fell 1.3% to $239.8 million. Times Mirror noted that the company's microwave business was sold in 1986 and its results were no longer included.