Times Mirror posts 77% gain in earnings in 2nd quarter Lower costs cited

ad revenue off 2.6%

July 24, 1996|By Sean Somerville | Sean Somerville,SUN STAFF

Times Mirror Co.'s lower costs more than overcame sagging advertising revenues to help the media company post an increase in quarterly earnings of 77 percent, the company announced yesterday.

Times Mirror, which publishes The Sun, the Los Angeles Times and other newspapers, said net income for the quarter ending last month was $46 million, compared with $26 million for the same period last year.

On a per share basis, Los Angeles-based Times Mirror earned 33 cents, a 136 percent increase over last year's 14 cents and above analysts' estimates of 26 cents to 28 cents.

The company said "cost controls and expense reductions" in its newspaper group boosted operating profit 43 percent, or $23 million, to $76 million. Times Mirror last year eliminated about 700 jobs at the Times and cut 750 positions by closing New York Newsday.

The closing of New York Newsday and The Evening Sun last year also lowered the company's quarterly newsprint expenses despite rising prices, the company said yesterday.

At the same time, advertising revenues for newspapers decreased 2.6 percent, or $10.4 million, to $391.3 million. The company attributed the decline to the consolidation of grocery stores and department stores in Southern California, which suppressed the Times' advertising revenue, and the closing of New York Newsday.

The company's total revenue for the second quarter fell to $837.3 million from $843.1 million.

"We made excellent progress toward achieving our 1996 financial objectives in the second quarter, even though the advertising environment in Los Angeles remains difficult," Mark H. Willes, Times Mirror chairman and CEO, said in a statement.

Among other Times Mirror divisions, the professional information segment reported an 18.6 percent increase in operating profit to million. The consumer media segment reported an operating loss of $1.9 million, compared with a $2.7 million loss in 1995. Company officials said the improvement was the result of a restructuring of its magazines.

Yesterday's results were impressive partially because of their comparison with the second quarter of 1995, when the company experienced a $3.2 million loss from discontinued operations.

Willes predicted slower growth over the next two quarters because the company's cost cuts will make up a smaller percentage of revenues.

He also said the company will continue a promotional campaign launched in the second quarter to increase the circulation of the Times. "We expect to take further steps to build our newspaper and other businesses in the second half as we capitalize on the current decline in newsprint prices," Willes said.

Times Mirror stock rose 12.5 cents yesterday, closing at $40.50. Salomon Brothers analyst Lanny Baker said Willes told analysts he expects a 70 percent increase in earnings per share this year and a 40 percent increase in the following year.

Baker said that while the second-quarter gain reflects cost-cutting, "we're not too many months away from where the vTC balance shifts to where increases are coming from new growth."

Baker said a cut early last month in the newsstand price of the Times has already resulted in circulation gains.

He also said Times Mirror's plans to acquire Shepard's, the legal publisher, from McGraw-Hill Cos. is another possible source of growth.

Pub Date: 7/24/96

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