Young stock takes dive on KCAL ad projection
In heavy trading, Young's stock lost $5 to close at $22.25 on Nasdaq.
Merrill Lynch analyst Jessica Reif said in a research report that national advertising at Young's KCAL-TV is expected to be weak throughout the first half of this year.
The projection was based on a change in the firm used by KCAL to sell national advertising at the independent station, as well as the lack of political advertising during the first six months of the year.
"The change in rep firms coincided with general weakness in national television advertising, especially in the Los Angeles marketplace," Reif wrote.
Nowhere to go
In addition, she said the company has already cut costs at KCAL, leaving it little room to maneuver.
A spokesman for Young did not return a call seeking comment.
Young, which owns 12 TV stations, acquired KCAL last year from the Walt Disney Co. It has cut its work force to 235 employees from 354 and trimmed promotional spending at the station.
Reif said it was expected that the strength of KCAL would offset any drop in Young's third- and fourth-quarter advertising revenues in comparison with 1996, when stations attracted considerable political advertising.
In addition, she said flagging network ratings at Disney's ABC-TV, "continue to have an adverse impact on sales, particularly national spot sales," because several of Young's stations are ABC affiliates.
In 1996, Young brought in about $11 million in net revenues from political advertising, with the bulk of it in the fourth quarter.
