Tribune Media Company Reports Third Quarter 2018 Results

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SOURCE Tribune Media Company

NEW YORK, Nov. 9, 2018 /PRNewswire/ — Tribune Media Company (NYSE: TRCO) (the “Company”) today reported its results for the three months and nine months ended September 30, 2018.

THIRD QUARTER 2018 FINANCIAL HIGHLIGHTS (compared to third quarter 2017)

  • Consolidated operating revenues increased 11% to $498.0 million (increased 12% excluding third quarter 2017 barter revenues, which are no longer recognized in 2018)
  • Consolidated operating profit was $37.1 million compared to an operating loss of $29.5 million for the third quarter of 2017
  • Consolidated Adjusted EBITDA increased 14% to $136.8 million
  • Television and Entertainment advertising revenues increased 11% to $327.2 million
  • Core advertising revenues (which exclude political and digital revenues) decreased 2% to $267.8 million
  • Net political advertising revenues were $42.5 million, an increase of 90% compared to third quarter 2014 and an increase of 36% over third quarter 2016
  • Retransmission revenues increased 12% to $116.6 million
  • Carriage fee revenues increased 30% to $40.1 million

“We are very pleased with our record third quarter revenue and Adjusted EBITDA which reflect the strong operational year we are having,” said Peter Kern, Tribune Media’s Chief Executive Officer. “We drove share gains in political and core advertising along with reaping the benefits of unprecedented political spending and stronger core advertising in our markets. Net of displacement, we estimate core advertising growth would have been in positive territory for the quarter, which is a significant improvement compared to the first half of the year. This robust advertising performance along with continued growth in retransmission and carriage fees and diligent focus on costs produced a terrific third quarter. We are proud of the work our teams have done during this time, and we look forward to a strong finish to the year.”

THIRD QUARTER AND YEAR-TO-DATE RESULTS

Consolidated

Consolidated operating revenues for the third quarter of 2018 were $498.0 million compared to $450.5 million in the third quarter of 2017, representing an increase of $47.5 million, or 11%. The increase was primarily driven by higher political advertising revenues, retransmission revenues and carriage fee revenues, partially offset by lower core advertising revenues and the absence of barter revenues, which are no longer recognized under the new revenue guidance adopted in the first quarter of 2018. Excluding third quarter 2017 barter revenues, consolidated operating revenues increased by 12%.

For the nine months ended September 30, 2018, consolidated operating revenues were $1,431.0 million compared to $1,360.0 million in the nine months ended September 30, 2017, representing an increase of $71.0 million, or 5%. Excluding barter revenues in the nine months ended September 30, 2017, consolidated operating revenues increased by 7%.

Consolidated operating profit was $37.1 million for the third quarter of 2018 compared to an operating loss of $29.5 million for the third quarter of 2017, representing an increase of $66.6 million. The increase was primarily attributable to higher operating profit at Television and Entertainment, driven by an increase in revenues and a decrease in programming expenses primarily due to a lower impairment charge on syndicated programming at WGN America, partially offset by higher compensation expense. For the nine months ended September 30, 2018, consolidated operating profit increased $360.2 million to $322.5 million from an operating loss of $37.8 million in the nine months ended September 30, 2017, largely as a result of a $133 million net pretax gain related to licenses sold in the FCC spectrum auction and surrendered in January 2018, as well as higher Television and Entertainment revenues, lower programming expenses and a lower operating loss at Corporate and Other driven primarily by a decline in compensation and outside services expense.

Consolidated income from continuing operations was $54.1 million in the third quarter of 2018 compared to a consolidated loss from continuing operations of $18.7 million in the third quarter of 2017. In the third quarter of 2018, the Company recorded an additional income tax benefit of $24 million, or $0.27 per common share, to revise the provisional discrete net tax benefit recorded in the fourth quarter of 2017 due to Tax Reform. Diluted earnings per common share from continuing operations for the third quarter of 2018 was $0.61 compared to a diluted loss per common share from continuing operations of $0.21 for the third quarter of 2017. Adjusted diluted earnings per share (“Adjusted EPS”) from continuing operations for the third quarter of 2018 was $0.63 compared to $0.31 for the third quarter of 2017. Both diluted earnings per common share from continuing operations and Adjusted EPS from continuing operations include an income tax benefit of $3 million, or $0.04 per common share, in the third quarter of 2018 and a $1 million income tax charge, or $0.02 per common share, in the third quarter of 2017, related to certain tax adjustments.

Consolidated income from continuing operations was $279.7 million for the nine months ended September 30, 2018 compared to a consolidated loss from continuing operations of $149.7 million for the nine months ended September 30, 2017, which included total non-cash pretax impairment charges of $180.8 million ($117.0 million after tax), or $1.35 per common share, to write down the Company’s investment in CareerBuilder, LLC (“CareerBuilder”). For the nine months ended September 30, 2018, diluted earnings per common share from continuing operations was $3.17 compared to diluted loss per common share from continuing operations of $1.72 for the nine months ended September 30, 2017. Adjusted EPS from continuing operations for the nine months ended September 30, 2018 was $2.13 compared to $0.60 for the nine months ended September 30, 2017. Both diluted earnings per common share from continuing operations and Adjusted EPS from continuing operations for the nine months ended September 30, 2018 include an income tax benefit of less than $1 million and an income tax benefit of $1 million, or $0.01 per common share, for the nine months ended September 30, 2017.

Net income attributable to Tribune Media Company was $54.1 million in the third quarter of 2018 compared to a net loss attributable to Tribune Media Company of $18.7 million in the third quarter of 2017. Net income attributable to Tribune Media Company was $279.7 million for the nine months ended September 30, 2018 compared to a net loss attributable to Tribune Media Company of $134.7 million for the nine months ended September 30, 2017.

Consolidated Adjusted EBITDA increased to $136.8 million in the third quarter of 2018 from $119.9 million in the third quarter of 2017, representing an increase of $16.9 million, or 14%. The increase in consolidated Adjusted EBITDA was primarily attributable to higher advertising revenues, retransmission revenues and carriage fee revenues, partially offset by higher programming expense, which excludes program impairment charges, at Television and Entertainment. For the nine months ended September 30, 2018, consolidated Adjusted EBITDA increased $144.7 million, or 53%, to $417.5 million compared to $272.8 million for the nine months ended September 30, 2017.

Income on equity investments, net increased $11.3 million, or 54%, in the three months ended September 30, 2018 primarily due to higher equity income from TV Food Network and CareerBuilder. The Company recognized equity income from TV Food Network of $32.2 million and $26.0 million for the three months ended September 30, 2018 and September 30, 2017, respectively, as well as equity income from CareerBuilder of $0.4 million for the three months ended September 30, 2018 and an equity loss of $5.1 million for the three months ended September 30, 2017. The increase in the equity income of TV Food Network was due to higher reported net income. The increase in the equity income of CareerBuilder was largely due to the absence of non-recurring transaction expenses incurred by CareerBuilder in 2017 related to the CareerBuilder sale on July 31, 2017. Income on equity investments, net increased $25.2 million, or 26%, in the nine months ended September 30, 2018 largely due to higher equity income from TV Food Network and CareerBuilder, as discussed above, along with recognizing our share of the gain on the sale of one of CareerBuilder’s business operations on May 14, 2018.

There were no cash distributions from equity investments in the third quarter of 2018 as TV Food Network adjusted its required year-to-date cash distributions to cover the Company’s taxes on its share of partnership income based on the reduction in tax rates from Tax Reform, which resulted in no distribution required for the third quarter of 2018. This only impacts the timing of distributions in 2018 and does not impact total expected excess cash distributions from TV Food Network related to 2018. Cash distributions from equity investments in the third quarter of 2017 were $32.9 million, which included an excess cash distribution of $15.8 million from CareerBuilder related to the partial sale of CareerBuilder. On September 13, 2018, the Company sold its remaining ownership interest in CareerBuilder for pretax proceeds of $11 million and recognized a pretax loss of $5 million. Cash distributions from equity investments for the nine months ended September 30, 2018 were $158.9 million compared to $182.6 million for the nine months ended September 30, 2017.

Television and Entertainment

Revenues were $494.6 million in the third quarter of 2018 compared to $447.3 million in the third quarter of 2017, an increase of $47.3 million, or 11%. Excluding barter revenues in the third quarter of 2017, revenues increased $54.4 million, or 12%. The increase was driven by a $37.3 million increase in political advertising revenue, a $12.0 million, or 12%, increase in retransmission revenues and a $9.1 million, or 30%, increase in carriage fee revenues, partially offset by a $5.3 million, or 2%, decrease in core advertising revenues.

Television and Entertainment segment revenues for the nine months ended September 30, 2018 were $1,421.7 million compared to $1,349.4 million for the nine months ended September 30, 2017, an increase of $72.3 million, or 5%. Excluding barter revenues in 2017, revenues increased $93.4 million, or 7%. The increase was driven by a $61.3 million increase in political advertising revenue, a $48.2 million, or 16%, increase in retransmission revenues and a $26.1 million, or 27%, increase in carriage fee revenues, partially offset by a decrease in core advertising revenues of $51.4 million, or 6%.

Television and Entertainment operating profit was $67.3 million for the third quarter of 2018 compared to an operating loss of $1.4 million for the third quarter of 2017, an increase of $68.7 million. The increase was primarily due to a $47.3 million increase in revenues, as described above, and a $38.0 million decline in programming expense, primarily due to lower program impairment charges and the absence of barter expense due to the new revenue guidance adopted in 2018, partially offset by a $24 million increase in network affiliate fees mainly due to the renewal of network affiliation agreements in eight markets with FOX Broadcasting Company during the third quarter of 2018. Programming expense for the third quarter of 2018 included a $28 million program impairment charge for the syndicated program Elementary at WGN America, compared to an $80 million program impairment charge for the syndicated programs Elementary and Person of Interest at WGN America in the third quarter of 2017.

Television and Entertainment Adjusted EBITDA was $153.0 million for the third quarter of 2018 compared to $135.1 million in the third quarter of 2017, an increase of $17.9 million, or 13%, primarily due to higher political advertising revenues, retransmission revenues and carriage fee revenues, partially offset by lower core advertising revenues and barter revenues, as described above, and higher programming expense, which excludes program impairment charges.

For the nine months ended September 30, 2018, Television and Entertainment operating profit was $398.9 million compared to $68.9 million for the nine months ended September 30, 2017, an increase of $330.0 million, which included the $133 million net pretax gain related to licenses sold in the FCC spectrum auction. Television and Entertainment Adjusted EBITDA was $462.0 million compared to $322.0 million for the nine months ended September 30, 2017, an increase of $140.0 million, or 43%.

Television and Entertainment Broadcast Cash Flow was $170.6 million for the third quarter of 2018 compared to $129.7 million in the third quarter of 2017, an increase of $40.9 million, or 32%. For the nine months ended September 30, 2018, Television and Entertainment Broadcast Cash Flow was $447.2 million compared to $321.6 million for the nine months ended September 30, 2017, an increase of $125.6 million, or 39%.

Corporate and Other

Real estate revenues for the third quarter of 2018 were $3.4 million compared to $3.2 million for the third quarter of 2017, representing an increase of $0.2 million, or 5%. Real estate revenues for the nine months ended September 30, 2018 were $9.3 million compared to $10.6 million for the nine months ended September 30, 2017, representing a decrease of $1.3 million, or 12%.

Corporate and Other operating loss for the third quarter of 2018 was $30.2 million compared to $28.1 million for the third quarter of 2017. Corporate and Other Adjusted EBITDA for the third quarter of 2018 represented a loss of $16.3 million compared to a loss of $15.3 million for the third quarter of 2017. For the nine months ended September 30, 2018, Corporate and Other operating loss was $76.4 million compared to $106.6 million for the nine months ended September 30, 2017. Corporate and Other Adjusted EBITDA for the nine months ended September 30, 2018 represented a loss of $44.5 million compared to a loss of $49.2 million for the nine months ended September 30, 2017.

Discontinued Operations

On January 31, 2017, the Company completed the sale of substantially all of the Digital and Data business operations (the “Gracenote Sale”) and received gross proceeds of $584 million, including a purchase price adjustment of $3 million. The historical results of operations for the businesses included in the Gracenote Sale are reported as discontinued operations for all periods presented herein. Accordingly, all references made to financial data in this release are to Tribune Media Company’s continuing operations.

RETURN OF CAPITAL TO SHAREHOLDERS

Quarterly Dividend

On November 8, 2018, the Board of Directors (the “Board”) declared a quarterly cash dividend on the Company’s common stock of $0.25 per share to be paid on December 4, 2018 to holders of record of the Company’s common stock and warrants as of November 19, 2018. Future dividends will be subject to the discretion of the Company’s Board.

RECENT DEVELOPMENTS

Termination of Sinclair Merger Agreement

As previously disclosed, on August 9, 2018, the Company provided notification to Sinclair Broadcast Group, Inc. (“Sinclair”) that it had terminated the Merger Agreement, effective immediately, on the basis of Sinclair’s willful and material breaches of its covenants and the expiration of the end date thereunder. Additionally, on August 9, 2018, the Company filed a complaint in the Delaware Court of Chancery against Sinclair (the “Complaint”), alleging that Sinclair willfully and materially breached its obligations under the Merger Agreement and seeking damages for all losses incurred as a result of Sinclair’s breach of contract under the Merger Agreement. On August 29, 2018, Sinclair filed an answer to the Company’s Complaint and a counterclaim (the “Counterclaim”). On September 18, 2018, the Company filed an answer to the Counterclaim. The Company believes the Counterclaim is without merit and intends to defend it vigorously. In connection with the termination of the Merger Agreement on August 9, 2018, the Company provided notification to Fox that it has terminated the Fox Purchase Agreement, effective immediately. Under the terms of each of the Merger Agreement and the Fox Purchase Agreement, no termination fees were payable by any party.

Real Estate Transactions

On October 9, 2018, the Company sold its Melville, NY property for net proceeds of $53 million. The Company expects to recognize a net pretax gain of approximately $24 million in the fourth quarter of 2018 relating to the sale. On October 23, 2018, the Company sold its Hartford, CT property for net proceeds of $6 million. The Company expects to recognize a net pretax gain of less than $1 million in the fourth quarter of 2018 relating to the sale. The Company defines net proceeds as pretax cash proceeds on the sale of properties, net of associated selling costs.

FCC Spectrum Auction

On April 13, 2017, the FCC announced the conclusion of the incentive auction, the results of the reverse and forward auction and the repacking of broadcast television spectrum. The Company participated in the auction and received approximately $191 million in pretax proceeds (including $26 million of proceeds received by Dreamcatcher Broadcasting LLC (“Dreamcatcher”)) as of December 31, 2017. FCC licenses that were part of the FCC spectrum auction with a carrying value of $39 million have been included in assets held for sale as of December 31, 2017. In 2017, the Company received $172 million in gross pretax proceeds for these licenses as part of the spectrum auction and in the first quarter of 2018 recognized a net pretax gain of $133 million related to the surrender of the spectrum of these television stations in January 2018.

CONFERENCE CALL INFORMATION

The Company will host a conference call today at 8:30 a.m. ET. The conference call can be accessed on the Investor Relations homepage of Tribune Media’s website at www.tribunemedia.com, or by dialing (888) 317-6003 (domestic) or (412) 317-6061 (international). The confirmation code is 3324366.

An audio webcast replay will be available in the Events and Presentations section of the Tribune Media website approximately one hour after completion of the call. A replay of the call will also be available until November 9, 2019 at (877) 344-7529 (domestic) or (412) 317-0088 (international). The confirmation code for the replay is 10125839.

The Company is not providing financial guidance for the remainder of 2018.

Tribune Media Company (NYSE: TRCO) is home to a diverse portfolio of television and digital properties driven by quality news, entertainment and sports programming. Tribune Media is comprised of Tribune Broadcasting’s 42 owned or operated local television stations reaching approximately 50 million households, national entertainment cable network WGN America, whose reach is more than 77 million households, and a variety of digital applications and websites commanding 54 million monthly unique visitors online. Tribune Media also includes Chicago’s WGN-AM and the national multicast networks Antenna TV and THIS TV, and Covers Media Group, an unrivaled source of online sports betting information. Additionally, the Company owns and manages a significant number of real estate properties across the U.S. and holds a variety of investments, including a 31% interest in Television Food Network, G.P., which operates Food Network and Cooking Channel. For more information please visit www.tribunemedia.com.

Non-GAAP Financial Measures

This press release includes a discussion of Adjusted EBITDA and Adjusted EPS for the Company and Adjusted EBITDA for our operating segments (Television and Entertainment and Corporate and Other) and presents Broadcast Cash Flow for our Television and Entertainment segment. Adjusted EPS, Adjusted EBITDA and Broadcast Cash Flow are financial measures that are not recognized under GAAP. Adjusted EPS is calculated based on income (loss) from continuing operations before investment transactions, loss on extinguishments and modification of debt, certain special items (including severance), certain income tax charges, non-operating items, gain (loss) on sales of real estate, gain on sales of spectrum, impairments and other non-cash charges and reorganization items per common share. Adjusted EBITDA for the Company is defined as income (loss) from continuing operations before income taxes, investment transactions, loss on extinguishments and modification of debt, interest and dividend income, interest expense, pension expense (credit), equity income and losses, depreciation and amortization, stock-based compensation, certain special items (including severance), non-operating items, gain (loss) on sales of real estate, gain on sales of spectrum, impairments and other non-cash charges and reorganization items. Adjusted EBITDA for the Company’s operating segments is calculated as segment operating profit plus depreciation, amortization, pension expense (credit), stock-based compensation, impairments and other non-cash charges, gain (loss) on sales of real estate, gain on sales of spectrum and certain special items (including severance). Broadcast Cash Flow for the Television and Entertainment segment is calculated as Television and Entertainment Adjusted EBITDA plus broadcast rights amortization expense less broadcast rights cash payments. We believe that Adjusted EBITDA and Broadcast Cash Flow are measures commonly used by investors to evaluate our performance with that of our competitors. We also present Adjusted EBITDA because we believe investors, analysts and rating agencies consider it useful in measuring our ability to meet our debt service obligations. We further believe that the disclosure of Adjusted EPS, Adjusted EBITDA and Broadcast Cash Flow is useful to investors as these non-GAAP measures are used, among other measures, by our management to evaluate our performance. By disclosing Adjusted EPS, Adjusted EBITDA and Broadcast Cash Flow, we believe that we create for investors a greater understanding of, and an enhanced level of transparency into, the means by which our management operates our company. Adjusted EPS, Adjusted EBITDA and Broadcast Cash Flow are not measures presented in accordance with GAAP, and our use of these terms may vary from that of others in our industry. Adjusted EPS, Adjusted EBITDA and Broadcast Cash Flow should not be considered as an alternative to net income, operating profit, revenues, cash provided by operating activities or any other measures derived in accordance with GAAP as measures of operating performance or liquidity. The tables at the end of this press release include reconciliations of consolidated Adjusted EPS and Adjusted EBITDA and segment Adjusted EBITDA and Broadcast Cash Flow to the most directly comparable financial measures calculated and presented in accordance with GAAP. 

Cautionary Statement Regarding Forward-Looking Statements

This press release contains “forward-looking statements” within the meaning of the federal securities laws. Forward-looking statements are subject to known and unknown risks and uncertainties, many of which may be beyond our control. Forward-looking statements may include, but are not limited to, the termination of the Merger Agreement with Sinclair and the related litigation, our real estate monetization strategy, our costs savings initiatives, the changes to our WGN America original programming, the conditions in our industry, our operations, our economic performance and financial condition, including, in particular, statements relating to our business and growth strategy. Important factors that could cause actual results, developments and business decisions to differ materially from these forward-looking statements are uncertainties discussed below and in the “Risk Factors” section of the Company’s filings with the SEC. “Forward-looking statements” include all statements that do not relate solely to historical or current facts, and can be identified by the use of words such as “may,” “might,” “will,” “could,” “should,” “estimate,” “project,” “plan,” “anticipate,” “expect,” “intend,” “outlook,” “seek,” “designed,” “assume,” “implied,” “believe” and other similar expressions. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates. These forward-looking statements are based on estimates and assumptions by our management that, although we believe to be reasonable, are inherently uncertain and subject to a number of risks and uncertainties. 

The following list represents some, but not necessarily all, of the factors that could cause actual results to differ from  historical results or those anticipated or predicted by these forward-looking statements; our continued ability to successfully execute our business strategy, including our continued exploration of strategic and financial alternatives to enhance shareholder value following our termination of the Merger Agreement; uncertainty associated with the litigation relating to the termination of the Merger Agreement, including the amount and timing of damages, if any, we may be awarded or incur and the costs of pursuing and defending such litigation; changes in advertising demand and audience shares; competition and other economic conditions including incremental fragmentation of the media landscape and competition from other media alternatives; changes in the overall market for broadcast and cable television advertising, including through regulatory and judicial rulings; our ability to protect our intellectual property and other proprietary rights; our ability to adapt to technological changes; availability and cost of quality network, syndicated and sports programming affecting our television ratings; the loss, cost and / or modification of our network affiliation agreements; our ability to renegotiate retransmission consent agreements, or resolve disputes, with multichannel video programming distributors; our ability to realize the full value, or successfully complete the planned divestitures of  our real estate assets; the valuation process and potential sale of the Company’s interest in Chicago Entertainment Ventures, LLC; the incurrence of additional tax-related liabilities related to historical income tax returns; the potential impact of the modifications to the spectrum on the operation of our television stations and the costs, terms and restrictions associated with such actions; the incurrence of costs to address contamination issues at physical sites owned, operated or used by our businesses; adverse results from litigation, governmental investigations or tax-related proceedings or audits; our ability to settle unresolved claims filed in connection with our and certain of our direct and indirect wholly-owned subsidiaries’ Chapter 11 cases and resolve the appeals seeking to overturn the bankruptcy court order confirming the First Amended Joint Plan of Reorganization for Tribune Company and its Subsidiaries; our ability to satisfy future pension and other postretirement employee benefit obligations; our ability to attract and retain employees; the effect of labor strikes, lock-outs and labor negotiations; the financial performance and valuation of our equity method investments; the impairment of our existing goodwill and other intangible assets; compliance with, and the effect of changes or developments in, government regulations applicable to the television and radio broadcasting industry; changes in accounting standards; the payment of cash dividends on our common stock; impact of increases in interest rates on our variable rate indebtedness or refinancings thereof; our indebtedness and ability to comply with covenants applicable to our debt financing and other contractual commitments; our ability to satisfy future capital and liquidity requirements; our ability to access the credit and capital markets at the times and in the amounts needed and on acceptable terms; the factors discussed under the heading “Risk Factors” of the Company’s filings with the Securities and Exchange Commission; and other events beyond our control that may result in unexpected adverse operating results. In addition, in light of these risks and uncertainties, the matters referred to in the forward-looking statements contained in this press release may not in fact occur. Any forward-looking information presented herein is made only as of the date of this press release and we undertake no obligation to update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law.

TRIBUNE MEDIA COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands of dollars, except per share data)

(Unaudited)

Three Months Ended

Nine Months Ended

September 30, 2018

September 30, 2017

September 30, 2018

September 30, 2017

Operating Revenues

Television and Entertainment

$

494,619

$

447,307

$

1,421,738

$

1,349,401

Other

3,389

3,226

9,263

10,559

Total operating revenues

498,008

450,533

1,431,001

1,359,960

Operating Expenses

Programming

161,114

199,118

373,490

497,448

Direct operating expenses

101,847

98,419

302,052

294,166

Selling, general and administrative

142,747

126,507

400,581

439,350

Depreciation

13,501

14,263

40,557

41,761

Amortization

41,675

41,678

125,043

125,001

Gain on sales of spectrum

(133,197)

Total operating expenses

460,884

479,985

1,108,526

1,397,726

Operating Profit (Loss)

37,124

(29,452)

322,475

(37,766)

Income on equity investments, net

32,381

21,058

124,086

98,856

Interest and dividend income

3,239

827

7,473

1,880

Interest expense

(42,842)

(40,389)

(125,463)

(119,332)

Pension and other postretirement periodic benefit credit, net

7,035

5,703

21,104

17,111

Loss on extinguishments and modification of debt

(1,435)

(20,487)

(Loss) gain on investment transactions, net

(5,001)

5,667

(1,113)

10,617

Write-downs of investment

(180,800)

Other non-operating (loss) gain, net

(38)

53

45

Reorganization items, net

(244)

(753)

(1,822)

(1,452)

Income (Loss) from Continuing Operations Before Income Taxes

31,654

(38,774)

346,793

(231,328)

Income tax (benefit) expense

(22,422)

(20,087)

67,096

(81,606)

Income (Loss) from Continuing Operations

54,076

(18,687)

279,697

(149,722)

Income from Discontinued Operations, net of taxes

15,039

Net Income (Loss)

$

54,076

$

(18,687)

$

279,697

$

(134,683)

Net loss from continuing operations attributable to noncontrolling interests

23

33

Net Income (Loss) attributable to Tribune Media Company

$

54,099

$

(18,687)

$

279,730

$

(134,683)

Basic Earnings (Loss) Per Common Share Attributable to Tribune Media Company from:

Continuing Operations

$

0.62

$

(0.21)

$

3.19

$

(1.72)

Discontinued Operations

0.17

Net Earnings (Loss) Per Common Share

$

0.62

$

(0.21)

$

3.19

$

(1.55)

Diluted Earnings (Loss) Per Common Share Attributable to Tribune Media Company from:

Continuing Operations

$

0.61

$

(0.21)

$

3.17

$

(1.72)

Discontinued Operations

0.17

Net Earnings (Loss) Per Common Share

$

0.61

$

(0.21)

$

3.17

$

(1.55)

TRIBUNE MEDIA COMPANY AND SUBSIDIARIES 
CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands of dollars, except for share and per share data)

(Unaudited)

September 30, 2018

December 31, 2017

Assets

Current Assets

Cash and cash equivalents

$

887,751

$

673,685

Restricted cash and cash equivalents

16,607

17,566

Accounts receivable (net of allowances of $6,350 and $4,814)

393,174

420,095

Broadcast rights

105,447

129,174

Income taxes receivable

57,197

18,274

Prepaid expenses

27,936

20,158

Other

11,957

14,039

Total current assets

1,500,069

1,292,991

Properties

Property, plant and equipment

667,920

673,682

Accumulated depreciation

(260,301)

(233,387)

Net properties

407,619

440,295

Other Assets

Broadcast rights

113,162

133,683

Goodwill

3,228,716

3,228,988

Other intangible assets, net

1,487,534

1,613,665

Assets held for sale

28,955

38,900

Investments

1,231,873

1,281,791

Other

163,565

139,015

Total other assets

6,253,805

6,436,042

Total Assets

$

8,161,493

$

8,169,328

TRIBUNE MEDIA COMPANY AND SUBSIDIARIES 
CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands of dollars, except for share and per share data)

(Unaudited)

September 30, 2018

December 31, 2017

Liabilities and Shareholders’ Equity

Current Liabilities

Accounts payable

$

41,955

$

48,319

Income taxes payable

8,452

36,252

Employee compensation and benefits

65,602

71,759

Contracts payable for broadcast rights

264,609

253,244

Deferred revenue

13,993

11,942

Interest payable

14,473

30,525

Deferred spectrum auction proceeds

172,102

Other

38,292

30,124

Total current liabilities

447,376

654,267

Non-Current Liabilities

Long-term debt (net of unamortized discounts and debt issuance costs of $31,177 and $36,332)

2,924,340

2,919,185

Deferred income taxes

581,079

508,174

Contracts payable for broadcast rights

259,671

300,420

Pension obligations, net

325,774

396,875

Postretirement, medical, life and other benefits

9,000

9,328

Other obligations

155,695

163,899

Total non-current liabilities

4,255,559

4,297,881

Total Liabilities

4,702,935

4,952,148

Commitments and Contingent Liabilities

Shareholders’ Equity

Preferred stock ($0.001 par value per share)

Authorized: 40,000,000 shares; No shares issued and outstanding at September 30, 2018 and at December 31, 2017

Class A Common Stock ($0.001 par value per share)

Authorized: 1,000,000,000 shares; 101,745,449 shares issued and 87,643,264 shares outstanding at September 30, 2018 and 101,429,999 shares issued and 87,327,814 shares outstanding at December 31, 2017

102

101

Class B Common Stock ($0.001 par value per share)

Authorized: 1,000,000,000 shares; Issued and outstanding: 5,557 shares at September 30, 2018 and December 31, 2017

Treasury stock, at cost: 14,102,185 shares at September 30, 2018 and December 31, 2017

(632,194)

(632,194)

Additional paid-in-capital

4,023,769

4,011,530

Retained earnings (deficit)

98,795

(114,240)

Accumulated other comprehensive loss

(37,111)

(48,061)

Total Tribune Media Company shareholders’ equity

3,453,361

3,217,136

Noncontrolling interests

5,197

44

Total shareholders’ equity

3,458,558

3,217,180

Total Liabilities and Shareholders’ Equity

$

8,161,493

$

8,169,328

TRIBUNE MEDIA COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands of dollars)

(Unaudited)

Nine Months Ended

September 30,
2018

September 30,
2017

Operating Activities

Net income (loss)

$

279,697

$

(134,683)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Stock-based compensation

16,104

27,432

Pension credit and contributions

(75,790)

(16,535)

Depreciation

40,557

41,761

Amortization of contract intangible assets and liabilities

661

649

Amortization of other intangible assets

125,043

125,001

Income on equity investments, net

(124,086)

(98,856)

Distributions from equity investments

158,926

177,953

Non-cash loss on extinguishments and modification of debt

8,258

Original issue discount payments

(7,360)

Write-downs of investment

180,800

Amortization of debt issuance costs and original issue discount

5,612

5,990

Gain on sales of spectrum

(133,197)

Gain on sale of business

(34,510)

Loss (gain) on investment transactions, net

1,113

(10,617)

Gain on sales of real estate, net

(365)

Other non-operating gain, net

(53)

(45)

Changes in working capital items:

Accounts receivable, net

25,264

39,192

Prepaid expenses and other current assets

(246)

13,219

Accounts payable

(2,960)

(12,001)

Employee compensation and benefits, accrued expenses and other current liabilities

(19,481)

(43,415)

Deferred revenue

2,055

(1,801)

Income taxes

(66,713)

44,710

Change in broadcast rights, net of liabilities

15,090

61,642

Deferred income taxes

68,441

(219,236)

Other, net

(9,188)

24,311

Net cash provided by operating activities

306,849

171,494

TRIBUNE MEDIA COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of dollars)
(Unaudited)

Nine Months Ended

September 30, 2018

September 30, 2017

Investing Activities

Capital expenditures

(47,452)

(41,423)

Spectrum repack reimbursements

6,967

Net proceeds from the sale of business

554,487

Proceeds from FCC spectrum auction

172,102

Proceeds from sales of real estate and other assets

66

61,240

Proceeds from the sales of investments

15,232

148,321

Distribution from equity investment

4,608

Other, net

1,529

780

Net cash (used in) provided by investing activities

(23,658)

900,115

Financing Activities

Long-term borrowings

202,694

Repayments of long-term debt

(703,527)

Long-term debt issuance costs

(1,689)

Payments of dividends

(65,776)

(564,499)

Tax withholdings related to net share settlements of share-based awards

(5,765)

(8,030)

Proceeds from stock option exercises

982

11,231

Contributions from noncontrolling interests, net

475

1,318

Net cash used in financing activities

(70,084)

(1,062,502)

Net Increase in Cash, Cash Equivalents and Restricted Cash

213,107

9,107

Cash, cash equivalents and restricted cash, beginning of period (1)

691,251

611,198

Cash, cash equivalents and restricted cash, end of period

$

904,358

$

620,305

Cash, Cash Equivalents and Restricted Cash are Comprised of:

Cash and cash equivalents

$

887,751

$

602,739

Restricted cash

16,607

17,566

Total cash, cash equivalents and restricted cash

$

904,358

$

620,305

Supplemental Schedule of Cash Flow Information

Cash paid during the period for:

   Interest

$

135,810

$

130,694

   Income taxes, net

$

66,642

$

105,678

(1)

Cash, cash equivalents and restricted cash at the beginning of the nine months ended September 30, 2017 of $611 million are comprised of $595 million of cash, cash equivalents and restricted cash from continuing operations as reflected in the Company’s unaudited Condensed Consolidated Balance Sheets and $16 million of cash, cash equivalents and restricted cash reflected in total assets of discontinued operations.

TRIBUNE MEDIA COMPANY – CONSOLIDATED

RECONCILIATION OF CONSOLIDATED ADJUSTED EBITDA

(in thousands of dollars)

(Unaudited)

Three Months Ended

Nine Months Ended

September 30, 2018

September 30, 2017

September 30, 2018

September 30, 2017

Revenue

$

498,008

$

450,533

$

1,431,001

$

1,359,960

Net Income (Loss) attributable to Tribune Media Company

$

54,099

$

(18,687)

$

279,730

$

(134,683)

Net loss from continuing operations attributable to noncontrolling interests

23

33

Net Income (Loss)

54,076

(18,687)

279,697

(134,683)

Income from discontinued operations, net of taxes

15,039

Income (Loss) from Continuing Operations

$

54,076

$

(18,687)

$

279,697

$

(149,722)

Income tax (benefit) expense

(22,422)

(20,087)

67,096

(81,606)

Reorganization items, net

244

753

1,822

1,452

Other non-operating loss (gain), net

38

(53)

(45)

Write-downs of investment

180,800

Loss (gain) on investment transactions, net

5,001

(5,667)

1,113

(10,617)

Loss on extinguishments and modification of debt

1,435

20,487

Pension and other postretirement periodic benefit credit, net

(7,035)

(5,703)

(21,104)

(17,111)

Interest expense

42,842

40,389

125,463

119,332

Interest and dividend income

(3,239)

(827)

(7,473)

(1,880)

Income on equity investments, net

(32,381)

(21,058)

(124,086)

(98,856)

Operating Profit (Loss)

$

37,124

$

(29,452)

$

322,475

$

(37,766)

Depreciation

13,501

14,263

40,557

41,761

Amortization

41,675

41,678

125,043

125,001

Stock-based compensation

5,593

5,339

16,104

25,440

Impairments of broadcast rights

28,380

79,823

28,380

79,823

Severance and related charges

1,977

111

1,242

10,905

Transaction-related costs

13,987

8,109

23,952

27,136

Gain on sales of spectrum

(133,197)

Spectrum repack reimbursements

(5,269)

(6,967)

Other

(421)

(197)

(785)

(72)

Pension expense

234

192

701

576

Adjusted EBITDA

$

136,781

$

119,866

$

417,505

$

272,804

TRIBUNE MEDIA COMPANY – TELEVISION AND ENTERTAINMENT

RECONCILIATION OF OPERATING PROFIT (LOSS) TO ADJUSTED EBITDA AND BROADCAST CASH FLOW

(in thousands of dollars)

(Unaudited)

Three Months Ended

Nine Months Ended

September 30, 2018

September 30, 2017

September 30, 2018

September 30, 2017

Advertising

$

327,248

$

295,130

$

909,118

$

899,701

Retransmission revenues

116,625

104,587

351,952

303,800

Carriage fees

40,069

30,930

122,546

96,407

Barter/trade (1)

2,660

9,559

7,142

28,052

Other

8,017

7,101

30,980

21,441

Total Revenues

$

494,619

$

447,307

$

1,421,738

$

1,349,401

Operating Profit (Loss)

$

67,295

$

(1,357)

$

398,914

$

68,875

Depreciation

11,313

10,844

33,124

31,413

Amortization

41,675

41,678

125,043

125,001

Stock-based compensation

3,917

3,659

11,608

12,896

Impairments of broadcast rights

28,380

79,823

28,380

79,823

Severance and related charges

1,977

78

1,863

4,413

Transaction-related costs

4,220

912

4,232

1,335

Gain on sales of spectrum

(133,197)

Spectrum repack reimbursements

(5,269)

(6,967)

Other

(471)

(513)

(1,043)

(1,753)

Adjusted EBITDA

$

153,037

$

135,124

$

461,957

$

322,003

Broadcast rights – Amortization

$

125,587

$

104,886

$

321,765

$

368,495

Broadcast rights – Cash Payments

(108,006)

(110,287)

(336,509)

(368,863)

Broadcast Cash Flow

$

170,618

$

129,723

$

447,213

$

321,635

(1)

Barter revenues and related expenses are no longer recognized under the new revenue guidance. For the three and nine months ended September 30, 2017, barter revenue totaled $7 million and $21 million, respectively.

TRIBUNE MEDIA COMPANY – CORPORATE AND OTHER

RECONCILIATION OF OPERATING LOSS TO ADJUSTED EBITDA

(in thousands of dollars)

(Unaudited)

Three Months Ended

Nine Months Ended

September 30, 2018

September 30, 2017

September 30, 2018

September 30, 2017

Total Revenues

$

3,389

$

3,226

$

9,263

$

10,559

Operating Loss

$

(30,171)

$

(28,095)

$

(76,439)

$

(106,641)

Depreciation

2,188

3,419

7,433

10,348

Stock-based compensation

1,676

1,680

4,496

12,544

Severance and related charges

33

(621)

6,492

Transaction-related costs

9,767

7,197

19,720

25,801

Other

50

316

258

1,681

Pension expense

234

192

701

576

Adjusted EBITDA

$

(16,256)

$

(15,258)

$

(44,452)

$

(49,199)

TRIBUNE MEDIA COMPANY – CONSOLIDATED

RECONCILIATION OF DILUTED EPS TO ADJUSTED EPS

(in thousands of dollars, except per share data)

(Unaudited)

Three Months Ended

September 30, 2018

September 30, 2017

Pre-Tax

After-Tax

Diluted EPS

Pre-Tax

After-Tax

Diluted EPS

Diluted EPS

$

0.61

$

(0.21)

Tax reform

$

$

(24,112)

(0.27)

$

$

Reorganization items, net

244

244

0.00

753

753

0.01

Other non-operating loss, net

38

27

0.00

Write-down of investment

(7,486)

(0.09)

Loss (gain) on investment transactions, net

5,001

3,669

0.04

(5,667)

(3,445)

(0.04)

Loss on extinguishment and modification of debt

1,435

872

0.01

Impairments of broadcast rights

28,380

21,072

0.24

79,823

48,532

0.56

Severance and related charges

1,977

1,468

0.02

111

67

0.00

Transaction-related costs

13,987

3,779

0.04

8,109

6,413

0.07

Spectrum repack reimbursements

(5,269)

(3,912)

(0.04)

Other

(421)

(305)

(0.00)

(197)

(128)

(0.00)

Adjusted EPS (1)

$

0.63

$

0.31

Nine Months Ended

September 30, 2018

September 30, 2017

Pre-Tax

After-Tax

Diluted EPS

Pre-Tax

After-Tax

Diluted EPS

Diluted EPS

$

3.17

$

(1.55)

Income from discontinued operations

(0.17)

Tax reform

$

$

(24,112)

(0.27)

$

$

Reorganization items, net

1,822

1,822

0.02

1,452

1,452

0.02

Other non-operating gain, net

(53)

(39)

(0.00)

(45)

(31)

(0.00)

Write-downs of investment

180,800

117,030

1.35

Loss (gain) on investment transactions, net

1,113

846

0.01

(10,617)

(6,455)

(0.07)

Loss on extinguishments and modification of debt

20,487

12,456

0.14

Impairments of broadcast rights

28,380

21,072

0.24

79,823

48,532

0.56

Severance and related charges

1,242

922

0.01

10,905

6,630

0.08

Transaction-related costs

23,952

12,619

0.14

27,136

22,706

0.26

Gain on sales of spectrum

(133,197)

(98,899)

(1.12)

Spectrum repack reimbursements

(6,967)

(5,173)

(0.06)

Other

(785)

(586)

(0.01)

(72)

(5)

(0.00)

Adjusted EPS (1)

$

2.13

$

0.60

(1) Adjusted EPS totals may not foot due to rounding.

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