Writeoff rubs out Spelling profit

NEW YORK — Spelling Entertainment Group on Tuesday posted a 23% cash-flow gain and said revenues rose 47% in the fourth quarter, but a $255 million writeoff of its Virgin Interactive unit dampened results, leading to a huge net loss for the quarter and full year.

As mirrored in results for Viacom, which owns 75% of the company’s stock, Spelling said the loss-ridden Virgin unit dragged down overall performance, and the charge covers restructuring costs in advance of an expected sale later this year. Virgin, already reclassified as a discontinued operation, isn’t reflected in current operating results.

For the fourth quarter, cash flow rose to $26.6 million, largely from a new output deal with Kirch Group, while revenues climbed to $158 million. But Spelling’s net loss for the period was $227 million, vs. an $8 million profit in the 1995 period.

Cash flow from the TV business was up 52% and revenues rose 47%, as the company stepped up production and increased certain license fees; it now has nine series on the air, and next month will launch a 10th, “Pacific Palisades,” as a midseason entry for Fox. Full-year TV cash flow however, fell 25%, to $59 million, due to higher program costs.

Weak feature film earnings led to negative cash flow of $5 million in the quarter and $11 million for the year, although revenues rose 53% in the quarter and 16% for the year, to $90 million.

For the full year, Spelling revenues (excluding Virgin) were up 10%, to $498 million, but cash flow fell 56%, to $32 million, due to weaker homevideo sales and higher programming and film costs. Net income plummeted 88%, to $4 million, but with the Virgin charge added in, the company’s loss for the year totaled $251 million.

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