Chris-Craft Industries Posts $11-Million Loss

Chris-Craft Industries, which had anticipated second-quarter losses due to its sizable investment in Warner Communications, on Monday reported a net loss of $11.19 million for the three months ended Feb. 28. The New York-based firm attributed $11.11 million--or about all of the loss--to its pro rata portion of Warner’s $225-million loss from discontinued operations reported for the three months ended Dec. 31, 1984.

Chris-Craft said operating revenue for the quarter was $38.32 million, up 9% from the same period last year. But it reported a loss of $80,000 from continuing operations, compared to income of $276,000 last year.

The company attributed the operating loss to expenses incurred in connection with the proposed merger of six TV stations controlled by Chris-Craft subsidiaries and expenses associated with stock appreciation rights due to a 21% increase in the price of Chris-Craft stock that occurred during the second quarter.

Chris-Craft also said that operating income “dropped sharply” for five of its six television station holdings during the second quarter but added that record earnings were reported by its flagship station, KCOP-Channel 13 in Los Angeles.

The decline in operating income for Chris-Craft’s TV stations was “more than offset” by dividends that the company received on Warner preferred stock and a Chris-Craft subsidiary’s equity in Warner’s fourth-quarter income from continuing operations, according to a prepared statement issued by Chris-Craft Chairman Herbert J. Siegel.

Lawrence R. Barnett, a Chris-Craft executive vice president, explained that most of Chris-Craft’s stations experienced a cutback in national advertising during the second quarter. But he said business appeared to be improving this month.

Chris-Craft operates its TV stations through a 57.5% owned subsidiary called BHC, which in turn owns 50.3% of United Television, the holder of four television station licenses. Last November, Chris-Craft proposed a combination of BHC and United, but the deal has not been finalized.

The minority stake in BHC is held by Warner in the form of preferred stock that carries a liquidation value of $276 million.

Chris-Craft noted that, despite Warner’s minority stake, all of the operating results of BHC have been included in Chris-Craft’s results during the last three quarters, since accounting rules prevent reduction of Warner’s interest in BHC’s net assets to an amount lower than the liquidation value of Warner’s BHC stock.

For the six months ended Feb. 28, Chris-Craft reported income from continuing operations of $3.71 million, up 24% from $3 million last year. After recording its equity in Warner’s loss from discontinued operations, Chris-Craft reported a net loss of $7.40 million for the six-month period.

Chris-Craft acquired a 19% stake in Warner last year in exchange for the 42.5% interest in its BHC subsidiary. Through purchases of preferred and common Warner shares, Chris-Craft has increased its stake to 28.7% of Warner’s voting shares.