Tribune Media’s third quarter results underscore the gusher of political advertising spending around this month’s midterm federal election.
Tribune Media saw a 90% in political ad spending in the quarter compared to the comparable frame during the previous midterm federal election cycle in 2014. The money flow was even 36% faster than the spending in Q3 during the 2016 presidential race. In a sign of the general health of the economy, Tribune said it would have raked in even more advertising revenue overall in the quarter but for the political advertisements that crowded out its regular non-political ad clients.
Tribune pulled in net political ad revenue of $42.5 million in the third quarter. In the current fourth quarter, Tribune has banked some $99 million. The net political ad haul for the year is projected to be $172 million.
Tribune Media CEO Peter Kern said the spike in political ad spending may not be end anytime soon.
“We may be seeing a fundamental shift in spending patterns in this category,” Kern told Wall Street analysts Friday morning during a conference call. “We may be seeing the start of an ‘always on’ political cycle,” which he said would generate “meaningful increases” in political spending even during non-election years in many states.
The political gusher helped Tribune post solid numbers all around, buoyed also by growing retransmission consent coin (up 12%) and carriage fees for WGN America (up 30%). Tribune took a $28 million write-down on the value of its deal with CBS for the syndication rights to drama series “Elementary.” That compared to an $80 million charge in the year-ago quarter for declines in the value of rerun rights to “Elementary” and another CBS drama, “Person of Interest.”
Tribune’s total revenue for the quarter was up 11% to $498 million. Operating profit swung into the black to $37.1 million compared to a loss of $29.5 million in the year-ago quarter.
Tribune took some charges in the quarter for the cost of breaking up its deal to be acquired by Sinclair Broadcast Group. The $3.9 billion merger cratered in August after a 15-month slog through the regulatory review. Both companies have since filed lawsuits against each other.
The conventional wisdom in TV station group circles is that Tribune Media will once again go on the block and possibly be sold off in pieces this time around. Kern didn’t offer any insights on the call other than to say that Tribune is still deciding whether to be a seller or a buyer. A number of sizable station groups with clusters in medium and small markets are expected to change hands in the next year or so.
“Right now we think the industry is poised for further consolidation. We certainly believe that we should be a consolidator pr a consolidate-ee,” Kern said. “We certainly do have an appetite (for M&A) and have been looking what’s available on the market. There is a pipeline of things small and large coming down the path. You can assume we look at all of them.”