Outdoor Channel Holdings Reports Third Quarter 2010 Results

TEMECULA, Calif., Nov. 3, 2010 /PRNewswire-FirstCall/ -- Outdoor Channel Holdings, Inc. (Nasdaq: OUTD) today reported its financial results for the third quarter ended September 30, 2010.

Total revenues for the quarter were $22.9 million, a decrease of 3% compared with $23.6 million in the third quarter of 2009.   Advertising revenue for the quarter increased 14% percent to $11.2 million from $9.9 million in the third quarter of 2009.  Subscriber fees for the quarter were $4.2 million, a 5% decrease compared to subscriber fees of $4.4 million in the prior-year period due to changes in our estimated reserves for potential most-favored nations ("MFN") liabilities with our distributors, and production services revenue totaled $7.5 million for the quarter, a decrease of 20% compared to $9.3 million in the third quarter of 2009 due primarily to the continued reorganization of our Production Services business unit resulting in reduced low-margin and non-renewed projects.

Our operating income for the third quarter 2010 third quarter was $4.5 million compared to $2.0 million in the third quarter of 2009.  The increase in our operating income was all at our Outdoor Channel segment and was driven primarily by increased advertising revenue and a decrease in sales, general and administrative ("SG&A") expense.

Our consolidated net income for the 2010 third quarter was $2.4 million, or $0.10 per diluted share, compared to net income of $1.4 million, or $0.05 per diluted share, in the prior-year period.

"Our strong bottom line results reflect the positive impact of the advertising market recovery and our efforts to reduce our operating costs," said Roger Werner, President & Chief Executive Officer.  "We showed gains in all advertising components except long-form, including a triple digit year-over-year increase in our online advertising sales as we continue to invest in Outdoorchannel.com.  Our Production Services unit generated positive EBITDA, after adjustment for share-based compensation, for the quarter and we believe our earlier cost cuts and reduction in lower-margin business there puts us on more solid footing going forward.  Looking ahead, we have secured multi-year deals for virtually all of our content currently on the air and remain focused on strengthening our leadership position in the outdoor media category."

Review of Segment Operating Results

The Outdoor Channel ("TOC") posted operating income of $4.9 million for the quarter, an increase of 112% compared to operating income of $2.3 million for the third quarter of 2009.  The strong increase in TOC's operating income was driven primarily by an 8% increase in net revenue driven by higher advertising revenues and a 26% decrease in SG&A costs, primarily on lower executive compensation expense and lower professional fees.

Our Production Services unit posted an operating loss for the quarter, before the effect of intercompany eliminations, of $88,000 compared to an operating loss of $60,000 for the third quarter of 2009 – essentially unchanged as a 15% decrease in production revenues was offset by lower costs of service, SG&A and depreciation reflecting management's continued right-sizing of the unit and its infrastructure costs.

Consolidated earnings before interest, taxes, depreciation and amortization (EBITDA), adjusted for the effects of share-based compensation expense and acquisition and integration costs, was $6.0 million for the quarter, compared to $4.2 million in the prior-year period. TOC's earnings before interest, taxes, depreciation and amortization (EBITDA), adjusted for the effects of share-based compensation expense, totaled $5.9 million for the quarter compared to $3.8 million in the prior-year period.  Production Services earnings before interest, taxes, depreciation and amortization (EBITDA), adjusted for the effects of share-based compensation expense, was $115,000 for the quarter compared to $396,000 in the prior-year period.

Investor Conference Call

Outdoor Channel Holdings' management will host an investor conference call on November 3, 2010, at 2:00 p.m. PT (5:00 p.m. ET) to review the company's financials and operations for its third quarter ended September 30, 2010. Investment professionals are invited to participate in the live call by dialing 866-804-6921 (domestic) or 857-350-1667 (international) and using participant passcode 87339014.  The call will be open to all other interested parties through a live, listen-only audio Internet broadcast in the Investor Relations section of the company's Web site, www.outdoorchannel.com.  

For those who are not available to listen to the live broadcast, the call will be archived online for one year. A telephonic playback of the conference call also will be available through Wednesday, November 10, 2010, by calling 888-286-8010 (domestic) or 617-801-6888 (international) and using participant passcode 60687941.

For those who are not able to listen to the live broadcast, the call will be archived on the web site for one year.  

About Outdoor Channel Holdings, Inc.

Outdoor Channel Holdings, Inc. owns and operates Outdoor Channel, America's leader in outdoor TV, and Winnercomm Inc., an Emmy Award winning production and interactive company. Outdoor Channel offers programming that captures the excitement of hunting, fishing, shooting, off-road motorsports, adventure and the Western lifestyle and can be viewed on multiple platforms including high definition, video-on-demand, as well as on a dynamic broadband website. Winnercomm Inc. is one of America's leading and highest quality producers of live sporting events and sports series for cable and broadcast television. Winnercomm also owns and operates the patented Skycam and CableCam aerial camera systems which provide dramatic overhead camera angles for major sports events, including college and NFL football. For more information please visit http://www.outdoorchannel.com.

Nielsen Media Research Universe Estimates for Outdoor Channel

Nielsen Media Research is the leading provider of television audience measurement and advertising information services worldwide.  Nielsen estimated that Outdoor Channel had approximately 35.0 million cable and satellite subscribers for November 2010.  Please note that this estimate regarding Outdoor Channel's subscriber base is made by Nielsen Media Research and is theirs alone and does not represent opinions, forecasts or predictions of Outdoor Channel Holdings, Inc. or its management. Outdoor Channel Holdings, Inc. does not by its reference above or distribution imply its endorsement of or concurrence with such information.

Use of Non-GAAP Financial Information

This press release includes "non-GAAP financial measures" within the meaning of the Securities and Exchange Commission rules.  The company believes that earnings before interest, taxes, depreciation and amortization (EBITDA), adjusted for the effects of share-based compensation expense and acquisition and integration costs, provides greater comparability regarding its ongoing operating performance.  This information is not intended to be considered in isolation or as a substitute for net income (loss) calculated in accordance with U.S. GAAP.  A reconciliation of the company's U.S. GAAP information to EBITDA, adjusted for the effects of share-based compensation expense and acquisition and integration costs is provided in the attached table.

Safe Harbor Statement

Statements in this news release that are not historical are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended, including statements, without limitation, about our expectations, beliefs, intentions, strategies regarding the future long-term value of the company resulting from the company's current actions or strategic initiatives and the future anticipated value of Outdoor Channel to our audience, distributors and advertisers.  The company's actual results could differ materially from those discussed in any forward-looking statements.  The company intends that such forward-looking statements be subject to the safe-harbor provisions contained in those sections.  Such statements involve significant risks and uncertainties and are qualified by important factors that could cause actual results to differ materially from those reflected by the forward-looking statements.  Such factors include but are not limited to: (1) service providers discontinuing or refraining from carrying Outdoor Channel; (2) a decline in the number of viewers from having Outdoor Channel placed in unpopular cable or satellite packages, or increases in subscription fees, established by the service providers; (3) a decrease in advertising revenue as a result of a deterioration in general economic conditions; (4) managing the company's growth and the integration of acquisitions; (5) decreased profitability if we are unable to generate sufficient revenues from our Production Services operations to offset its fixed costs; and other factors which are discussed in the company's filings with the Securities and Exchange Commission.  For these forward-looking statements, the company claims the protection of the safe harbor for forward-looking statements in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.

SOURCE Outdoor Channel Holdings, Inc.