Times Mirror profits fell sharply in fourth quarter

February 07, 1991|By Peter H. Frank

In the midst of an industrywide downturn in newspaper profits, Times Mirror Co., owner of The Sun and The Evening Sun, reported yesterday a sharp drop in fourth-quarter earnings last year and warned of further problems in the current period.

The Los Angeles-based company said profits fell more than 38 percent in the final three months, to $45.6 million, or 35 cents a share, from $74.1 million, or 57 cents a share, a year earlier. Revenue changed little, increasing slightly more than 2 percent, to $956 million.

"The difficult operating environment that adversely affected our advertising-based businesses in 1990 continued in the fourth quarter," Robert F. Erburu, chairman and chief executive of Times Mirror, said in a statement.

"The impact of the recession on retailers nationwide blunted the traditionally strong holiday advertising season and continued to depress demand in other key areas of newspaper advertising such as help wanted, auto and real estate."

The company's lower earnings resulted primarily from a severe drop-off in income at the company's newspaper subsidiaries, which also include the Los Angeles Times, Newsday and the Hartford Courant.

More than half of the company's $3.6 billion in revenue for last year came from its newspaper-publishing division, and that segment's profits fell by nearly half as increased costs related to higher circulation, higher cost for newsprint and lower advertising revenues squeezed profit margins.

Times Mirror does not report separate results for its newspaper subsidiaries, but Suzanne S. Hovdey, a company spokeswoman in Los Angeles, said advertising lineage -- a measure of total ads in a newspaper -- fell 16.7 percent during 1990 at the two Baltimore newspapers. Advertising in December in Baltimore was down 14 percent from a year earlier, she said.

Local retail ads, which could be further hurt by the recent closing of Epstein's stores and the bankruptcies of W. Bell & Co. and Channel Home Centers Inc., fell nearly 19 percent last year in Baltimore.

Times Mirror said advertising at its newspapers decreased 1.5 percent overall, to $1.65 billion last year, and continues to be down.

"With the nation's economy still in a recession and advertising revenues severely impacted by the outbreak of war, we now anticipate significant deterioration in our operating performance in the first quarter of 1991," Mr. Erburu said.

Times Mirror's earnings came as little surprise to analysts, who said they had expected the decline.

"It was a bad year," said Paul Wayne, who tracks Times Mirror as director of research at Crowell, Weedon & Co. in Los Angeles.

He blamed the large decline in income primarily on a sudden drop in advertising late last year at the Los Angeles Times.

Times Mirror stock closed yesterday at $31, up 12 1/2 cents a share.

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