Posted by: Jon Fine on September 13, 2006
From the New York Times Co.’s Sept. 12 press release announcing the sale of its nine TV stations:
Last year, the Broadcast Media Group accounted for approximately 4% of the Company’s total revenues. In 2006, the Company expects the Group will have revenues of approximately $150 million and operating profit of about $33 million. Depreciation and amortization is expected to be approximately $10 million for the year.
That gets you to $43 million in EBITDA (earnings before taxes, interest, depreciation and amortization) on revenues of $150 million, for an EBITDA margin of 29%.
To put this as simply as possible, 29% is an extremely low margin for TV. TV stations generally post profit margins in the thirties and forties. If I may toggle to a slightly different profit metric, in 2005 Gannett’s 21 broadcast station posted operating profit margins of 42.2%.
The Times’ projected operating margins for ‘06: 22%.
The first thing any buyer is going to do will be to get the Times stations’ margins to look a lot more like Gannett’s, and fast.