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Times Mirror Net Off 49%; Ad Slump Cited

April 24, 1991|JOHN LIPPMAN | TIMES STAFF WRITER

Times Mirror Co., hit by an industrywide slump in advertising, reported Tuesday that its revenue slipped 1.3% to $864 million in the first quarter, and net income fell 49% to $23.2 million.

The company, which owns the Los Angeles Times and other media properties, blamed the declines on advertising cutbacks because of the recession and increased costs related to circulation growth and covering the Persian Gulf War.

"These results underscore how economic conditions in our key media markets have worsened since last year, particularly in Southern California, which was not as greatly affected by the depressed economy in the first quarter of 1990 as our Eastern markets," said Robert F. Erburu, chairman and chief executive of Times Mirror.

The company's first-quarter performance reflects the overall state of the industry, analysts explained. "Newspaper executives are saying this is the worst they've seen since the Great Depression," said Mary Ann Winter, an analyst with the New York investment bank Brown Bros. Harriman.

Revenues and operating profits were down sharply in both the company's newspaper and TV station divisions, which are tied to the current weakness in the advertising marketplace. But revenue and operating profit in the cable TV and in book and magazine publishing were up significantly.

"It was painful but not unexpected," said Eric Philo, an analyst with Goldman, Sachs & Co., an investment bank in New York. Times Mirror "hit the buzz saw of falling revenue and rising costs."

The declines came despite strong circulation growth for both the Los Angeles Times and Newsday. Revenue for the newspaper division declined 7% in the first quarter to $479 million, while operating profit dropped 73.4% to $14.8 million.

Cable TV reported a 21.3% increase in revenue to $107.7 million and a 94.2% increase in operating profit to $28.7 million. Those results include a $9.6-million pretax gain from the sale of an investment and a cable TV system in Lake Havasu City, Ariz.

The book and magazine publishing division reported an 8.2% increase in revenue to $256 million and a 17.2% rise in operating profit to $25.7 million.

Hardest hit among the company's four operating divisions was the broadcast TV station division, where revenue fell 15.1% to $19.4 million, and operating profit plunged 87.8% to $767,000. Times Mirror said the results were because of lower advertising revenue and higher programming costs, which were both exacerbated by the war.

Erburu said that solid circulation gains for the newspapers, coupled with success in reducing costs, should position the company to "improve significantly under more favorable economic conditions." He cautioned, however, that the company was "guarded in the near term until we see definitive signs of a recovery in advertising."

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