Capital Cities/ABC reported slightly improved operating results in the second quarter Tuesday, even though earnings decreased at the ABC Television Network.
Consolidated net income for the second quarter of 1993 was $ 151.9 million, compared with $ 147.5 million reported for the same period of 1992. Earnings per share increased 4% to $ 9.21, from $ 8.84 reported in the year earlier period.
Wall Street was less than thrilled with the results; the consensus earnings expectation was $ 9.36 per share. “The results were a little disappointing,” said analyst Dennis McAlpine of Josephthal, Lyon & Ross. He said he had been expecting a better performance out of the network as well as the company’s newspaper operations, which were down for the first time.
Even so, Capital Cities/ABC stock Tuesday gained $ 2 a share to close at $ 505.
Operating income for the second quarter of 1993 was $ 271 million compared with $ 268.7 million in 1992.
Broadcasting operating earnings for the quarter were $ 244.5 million, a 3% improvement over 1992. The company said operating income for the television stations and radio increased significantly, while earnings for the video operations increased slightly.
But earnings for the network decreased, principally as a result of soft advertising demand in the quarter combined with provisions for additional reductions in staffing, the company said.
Oppenheimer analyst Jessica Reif estimated an 18% decrease to about $ 59 million for network earnings, which were not made public.
Earnings from publishing operations also declined moderately (about 4%) as a result of decreases by most operating groups. Net revenues increased 3% to $ 1. 439 billion with broadcasting operations up 6%.
Net revenues up
The company said net revenues for the network increased slightly (Reif estimates they increased 2% to just under $ 700 million), while the television stations reported significant gains (about 14% to $ 243 million).
Video operations continued to report substantial revenue increases, up over 12% to $ 172 million, primarily due to growth at ESPN, while radio revenues increased moderately. Publishing revenues, excluding the effect of 1992 dispositions, increased 4% in the second quarter of 1993.
Redemption of notes
The company said the redemption of notes and debentures in 1992 and 1993 resulted in significantly lower net interest expense in the second quarter 1993.
Results for the second quarter of 1992 included a net gain of $ 25 million on the sale of the company’s interest in Tele-5, a German television station, which was partially offset by losses incurred on the disposal of non-operating assets.
Excluding the 1992 non-recurring net gain ($ 11.4 million after income taxes, or 68 cents per share), earnings per share for the second quarter 1993 improved 13% from the second quarter 1992.
Consolidated net income, before an extraordinary charge for the first six months, was $ 222.4 millioncompared with $ 189.3 million before the cumulative effect of accounting changes in 1992.
Earnings per share before these items for 1993 was $ 13.51, an increase of 19 % from the $ 11.35 reported in 1992. During 1993, an extraordinary charge (after tax) of $ 12.1 million, or 74 cents per share, was recorded relating to the early debt redemptions. The company noted that results for 1992 have been restated to reflect accounting rule changes. The adoption of these new accounting standards resulted in an after-tax non-cash charge of $ 143.2 million , or $ 8.63 per share.