AP's 2015 profit rises 30 percent on tax benefit, cost cutting
NEW YORK (AP) — The Associated Press' earnings rose 30 percent last year on a large tax gain and cost cutting. Those helped offset a revenue decline stemming from the financial woes at newspapers and other media.
AP's 2015 results, released Wednesday, reflected some complex accounting. The news cooperative recognized a tax benefit of $165 million stemming from a financial blow that its auditors required the cooperative to absorb in 2011 after suffering three straight years of losses.
After three consecutive years of operating profits, the AP was able to reverse the negative effects of 2011's accounting measures, said Ken Dale, the cooperative's chief financial officer.
The benefit is the main reason the AP earned $183.6 million last year, up from $140.9 million in the previous year. The 2014 profit was boosted by a $128 million gain from the sale of AP's stake in Stats LLC and other investments.
Revenue last year fell 6 percent to $568 million. About one-third of the revenue decline was caused by currency fluctuations that worked against the AP, Dale said.
This marks the sixth time in the past seven years that the AP's revenue has dropped since peaking at $748 million in 2008.
The steady erosion since then largely reflects a steep decline in advertising sales at the newspapers and broadcasters that belong to the AP and pay the cooperative for text, photos, video and other services.
As more advertising has shifted to digital networks powered by Google and Facebook, the AP has reduced its fees to help its U.S. members cope with the upheaval. Some newspapers and broadcasters have also curtailed business with the AP as part of their own cost cutting.
The 170-year-old AP has been mining additional revenue from the Internet and overseas customers, but so far it hasn't been nearly enough to spur sustained growth.
With less money coming in, the AP has been spending less, too. Last year, the cooperative's operating expenses decreased 8 percent to $554 million. That compares with expenses of nearly $725 million in the more flush times of 2008.
The not-for-profit cooperative ended 2015 with $50.6 million in cash, down from $61.6 million in 2014.
The AP also held its annual meeting in New York Wednesday. The proceedings included the election of a new director to the AP's 21-member board, Gannett Co. CEO Robert Dickey.
Four incumbent directors whose terms were set to expire also were re-elected. They are: Robert Brown, president of Swift Communications; Michael Golden, vice chairman of The New York Times Co.; William Hoffman, president of Cox Media Group; and Mary Junck, executive chairman of Lee Enterprises.
All the directors were elected to three-year terms except for Junck, who was elected to a one-year term as the AP's chairman.