Facing financial goals that appeared challenging even before the terrorist attacks of Sept. 11,
has joined the pack of media companies saying they won't meet expectations for the rest of the year.
The publisher of magazines and online properties said Wednesday morning that it expects earnings before interest, taxes, depreciation and amortization -- a common yardstick for media company performance -- to be less than the $250 million it reported last year. In July, Primedia forecast 2001 EBITDA from continuing businesses of between $280 million and $300 million.
In Wednesday morning trading, Primedia's shares fell 31 cents, or more than 7%, to $3.91.
The company, which has a stable of magazines ranging from
, cited a general weakness in consumer brand advertising and a soft business-to-business market. CEO Tom Rogers said in a statement, "The combination of the advertising market weakening in the third quarter, coupled with further softening from the terrorist attacks, has given us a clear indication that certain business units will beimpacted more than we expected."
Primedia's announcement follows similar warnings from media companies including
AOL Time Warner
, all of which saw expectations for strong second halves of 2001 derailed by a slow-to-recovereconomy and catastrophic news.
But, as discussed in an August
Primedia's projections counted on a major fourth-quarter rebound even before the recent attacks overtook the U.S. and its economy. By
calculations, Primedia was banking on at least a 15% year-over-year EBITDA increase in the fourth quarter, following declines ranging from 4% to 25% in the first three quarters of the year.
calculated in August was expecting third-quarter EBITDA above $50 million, now says it expects EBITDA from continuing businesses to be $33 million to $36 million. If the company's fourth-quarter performance matches last year's fourth-quarter EBITDA of $99 million -- a performance that seems unlikely under the circumstances -- Primedia's full-year EBITDA would amount to no better than $244 million.
The company says it sees no problems with its ability to meet its debt payments and other fixed obligations.
Though the company says the uncertain implications of current events make it impossible to accurately forecast business beyond the very near term, Primedia says it expects improvement in 2002, even without an advertising recovery.
The four key factors the company cites are "dramatically" declining losses in its new media businesses (built on its acquisition of About.com; a "significantly reduced" cost structure at the company's Business Magazines and Media Group; performance up to expectations at the recently acquired Emap USA magazine group; and strength in the special-interest consumer market, which accounts for a vast majority of thecompany's advertising revenue.