AP reports loss on one-time accounting charges
NEW YORK (AP) — The Associated Press lost $74 million in 2017, mostly due to one-time accounting charges related to the federal tax overhaul passed late last year.
Revenue fell 8 percent to $510.1 million from $556.3 million in 2016, when the company benefited from additional revenue related to U.S. elections, according to the AP’s earnings release.
The revenue decline, reported Wednesday, also reflects a shrinking newspaper industry and consolidation among some major online media companies. This is AP’s first loss since 2012.
The nonprofit cooperative, which had a profit of $1.6 million in 2016, sells content to other media organizations.
The AP said the loss was largely the result of a one-time write-down related to a decline in the value of deferred tax assets under the new tax law. That measure lowered the corporate tax rate to 21 percent from 35 percent as of Jan. 1.
Despite the net loss, AP’s Chief Financial Officer Ken Dale said, on an operating basis the organization performed solidly. Operating income swung to a profit of $5.9 million compared with an operating loss of $6.4 million in 2016.
The bulk of AP’s net loss comes from a $52.9 million charge related to the remeasurement of its net deferred U.S. tax assets. Those are assets a company overpays taxes on, or pays taxes on in advance. Since the tax rate was cut, however, those assets must be revalued. There were several other one-time costs related to the new tax legislation.
The weaker dollar weighed on revenue from overseas clients, the news organization said. The contraction of the newspaper industry played a role in the revenue decline too. So did Verizon’s acquisition of Yahoo, which it consolidated with AOL; both online services were AP clients.
Annual revenue at the AP peaked in 2008 at $748 million and has mostly fallen since. The news agency, which sells other media organizations subscriptions to its print stories, videos and photos, has worked to make up the shortfall in the newspaper business by investing more in video products and cutting expenses.
Expenses fell 10 percent in 2017 to $504.2 million as the organization spent less on compensation, travel and rent.