Spanish-language telecaster Telemundo Group Inc. posted net income of $ 6.9 million, or 18 cents per share, for the fourth quarter ended Dec. 31, 1993, including a charge of $ 2.7 million for costs related to Chapter 11 bankruptcy proceedings from July to December.
Analysts said net income was deceptively high since the company has not paid interest expense since last June, when it consented to Chapter 11.
Telemundo, which reaches 85% of all U.S. Hispanic households, posted quarterly operating income of $ 9.7 million, up 21% — on the low end of Wall Street estimates — as revenues climbed almost 18% to $ 52.4 million. Commercial airtime revenues rose 18% to $ 48.1 million.
Telemundo, which previously agreed on a restructuring plan with its largest creditors, is currently working with the creditors’ committee to shape a definite reorganization plan that will require the approval of all creditors and the Bankruptcy Court. In recent news, it signed a deal in January with Reuters Television Ltd. and three other partners to create an international Spanish-language television network.
For the year, Telemundo’s net loss shrank to $ 14.1 million (38 cents) from 1992’s comparable loss of $ 26.7 million (72 cents). The current loss, however, included interest expense of $ 24.4 million accrued prior to the June bankruptcy.
Annual operating income gained 53% to $ 16.6 million while total revenues added 16% to $ 177.8 million. Of that, commercial airtime revenues increased 18% to $ 162.7 million.
“The problem is that Telemundo was financed incorrectly — too much debt and too little equity. The business is basically sound,” said John Reddan, analyst at Moran & Associates.
“Once they come out of bankruptcy,” he added, “we think they will be recapitalized and set on a sounder footing.”