MCA Profit Dips 7% in 1st Quarter : But Revenue Jumps 15% to Record High on Broad Gains

Despite setting a record for first-quarter revenue, MCA reported a 7% decline in net income to $26.9 million from $28.8 million a year ago. The most recent results reflect a $10.5-million net tax credit. Income before taxes was about $23 million, compared to $40.3 million in the first quarter last year.

Revenue climbed 15% to $611.2 million, spurred by gains in the theatrical, music entertainment, book publishing and toy units as well as the contribution of New Jersey television station WWOR-TV, which was acquired in mid-1987.

Four of MCA’s seven business groups reported improved results in operating income, with book publishing posting the most dramatic gain. The publishing unit generated operating income of $9.8 million--more than double the $4.2 million reported a year ago.

Interest expense jumped to $15.5 million, compared to $3.7 million a year ago, due largely to the sums borrowed to acquire WWOR-TV and to repurchase stock in late 1987.

Although three films were released to theaters during the first quarter, and none were released in the same quarter a year ago, the operating income of the filmed entertainment unit declined 41% to $21.2 million. The company noted that, in the first quarter last year, MCA received a significant boost from pay-television revenue generated by two earlier hit films, “Back to the Future” and “Out of Africa.”

Pay-television and home-video revenue declined 27% in the first quarter to $73.1 million. Commercial television revenue declined 5%, but MCA said its television business actually improved its operating income. The company, however, does not disclose its operating income for television, theatrical, pay television and home video, or its studio tour, preferring to consolidate those results under filmed entertainment.

Music entertainment revenue--which includes fees for the domestic distribution of home videocassettes--rose 36% to $135 million, while operating income rose 16% to nearly $12 million.

Losses in retail and mail order widened to $7.6 million, compared to $5.6 million a year ago. But losses in the toy products unit were reduced to $2.4 million, down from $6.2 million a year ago.

Other operations generated $14.3 million in operating income, compared to $2.7 million a year ago. The biggest contributors were MCA’s partially owned Discovision Associates and USA Network.