Benchmark Comments On LIN Television Following Better Than Expected Earnings

LIN TV TVL reported better-than-expected 1Q11 results. Net revenue was $93 million, above consensus of $91 million and guidance of $91- 92 million, driven primarily by strong growth in digital. Adjusted EBITDA of $23 million exceeded Benchmark's $22 million forecast on lower costs, while adjusted diluted EPS of $0.03 was $0.01 ahead of consensus at $0.02. LIN TV's digital revenues, which include retransmission fees, saw accelerating growth, up 31% y/y to $17 million, up from 28% growth in 4Q10. Most of the upside was derived from LIN's subsidiary RMM. Digital reached 19% of total revenues. Benchmark thinks Digital could be a major driver of growth in 2011 as revenues continue to ramp up over the course of the year. For FY 2011, LIN TV's total revenues are now expected to be $418 million, down 1% y/y, as 3% growth in core television advertising revenues, including partial replacement of political advertising and ramping digital revenues, could mostly offset the expected decline in political advertising. Adjusted EBITDA could be $123 million, down 14% y/y, as expenses are reintroduced, leading to EPS of $0.50. Benchmark has a $7 PT and Buy rating on TVL TVL closed Wednesday at $5.35