NEW YORK — Station owner Hearst-Argyle Television warned Thursday that its earnings would come in short of Wall Street’s expectations, prompting some concern in the market about the effects of the softening economy on the performance of station groups.
Hearst-Argyle, which owns 24 stations nationwide (mainly ABC and NBC affiliates), said earnings would come in around $178.7 million, falling short of both last year’s $182.3 million and a consensus estimate of $181.4 million.
Company blamed the generally sluggish economy, which failed to show significant signs of recovery this spring, as well as its stations’ round-the-clock coverage of the war in Iraq, which displaced advertising and trimmed revenues.
Nevertheless, Hearst-Argyle prexy and chief exec David J. Barrett said execs are “encouraged that numerous core ad categories continue to perform well against the prior year.”
Wachovia Securities analyst Jim Boyle shared Barrett’s optimism, raising his earnings estimates for both the quarter and the year and noting that the financial impact of the war in Iraq was “much less than we had anticipated.”
Boyle also noted that recent moves to loosen government regulations on TV-station ownership “should expand margins and significantly enhance valuations due to looser in-market duopoly rules and allowing newspaper entry into TV in the same market.”
The second-quarter warning sent Hearst-Argyle shares down 1.6% to $25.37 in the short pre-holiday trading session Thursday. Company said that it plans to hold its second-quarter earnings conference call on July 30.
Fellow station owners also slipped in Thursday’s trading. Sinclair Broadcast Group sank 2% to $11.44, and Belo fell by 0.8% to end the day at $22.80.