Tribune Media’s second-quarter consolidated operating profits took a hit due to additional expenses at WGN America and fell to $18.3 million, down from $56.2 million during the year-ago quarter.
The strategic shift at WGN America, geared toward producing a higher return on original programming, ended up contributing $20 million of additional expenses due to cancellation costs, accelerated amortization of license fees and the write-off of certain other capitalized program development projects, according to a news release.
WGN’s impact on Tribune’s earnings comes on the heels of another programming announcement from the cable network. WGN said it has picked up the U.S. distribution rights for three new crime series: “100 Code” starring Dominic Monaghan, “Shoot the Messenger,” starring Elyse Levesque and “Pure,” starring Ryan Robbins.
Tribune’s total television and entertainment net advertising revenues dropped 7% to $312.9 million, but retransmission revenues rose 26% to $105 million and carriage fee revenues rose 5% to $31.9 million.
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"We saw strong sequential growth in retransmission revenues during the quarter, which helped offset some softness in core advertising at the national level. While our overall performance was significantly affected by non-recurring expenses and accelerated amortization related to the shift in programming strategy at WGN America, those changes are now behind us, and we expect a much more profitable 2018 with more original hours than the network has ever carried. We continue to aggressively manage expenses across the business; adjusted for the non-recurring costs at WGN America, total consolidated cash expenses were flat despite the continuing increases in network affiliate fees and the increased level of original programming amortization,” said Tribune Media CEO Peter Kern in a statement.
Kern added that Tribune continues to divest digital assets like CareerBuilder and remains on track for its potential $4.2 billion acquisition by Sinclair.
Overall, the company’s consolidated operating revenues fell 2% to $469.5 million.