EX-99.1 2 v110920_ex99-1.htm Unassociated Document

Media General Reports First-Quarter 2008 Results

RICHMOND, Va., April 17 /PRNewswire-FirstCall/ -- Media General, Inc. (NYSE: MEG) today reported a net loss for the first quarter of 2008 of $20.3 million, or 91 cents per diluted share, which included 47 cents per share related to the company's plans to sell five television stations. This compares with a net loss of $6.5 million, or 27 cents per diluted share, in the first quarter of 2007. The loss from continuing operations in the first quarter of 2008 was $9.8 million, or 44 cents per diluted share.
 
The loss from discontinued operations is primarily related to the sale of the company's ABC station in Lexington, Ky., including allocated goodwill, which was announced on March 7. The company expects that loss to be largely offset by an anticipated gain later in the year on the sale of its CW station in Jacksonville, Fla., which is progressing. The sales of the five stations are expected to generate total proceeds of $100 million to $105 million, which will be used to further reduce debt by $60 million to $65 million after considering estimated taxes to be paid.
 
"Media General's lower first-quarter results were largely attributable to continued weak revenues, especially in the Publishing Division, driven substantially by the impact of the deep housing-induced recession in Florida on our Tampa operations," said Marshall N. Morton, president and chief executive officer. "A 9.5 percent reduction in Publishing Division operating expenses in the quarter could not fully offset that division's revenue shortfalls. Consistent with our March 31 announcement, Media General continues to implement aggressive actions to better align expenses at our Florida properties with the current business environment. On April 14, for example, our Florida Communications Group, which includes all of our Tampa properties, announced a voluntary separation program. Approximately one-half of the 1,300 employees there are eligible to consider the opportunity, although fewer than that will act on it. In addition, all of our newspapers continue to make significant efforts to reduce newsprint consumption, which led, in part, to an 18 percent decline in newspaper consumption in the first quarter.
 
"Comparing our Florida results to those of other states where we operate underscores the unfavorable impact of Florida on our overall results," said Mr. Morton. "Revenues in Florida were down 29.5 percent in the first quarter. In contrast, revenues declined 11.1 percent in Virginia, 7.3 percent in North Carolina, and in the other states where we have publishing operations, namely Alabama and South Carolina, revenues were down 4.6 percent. Excluding Florida revenues from the division's first quarter, total Publishing revenues decreased less than 10 percent.
 
"In the Broadcast Division, we generated more than $4 million in Political revenues in the first quarter, partially offsetting lower Local and National transaction time sales. Our television stations are experiencing soft advertiser spending across a number of markets and key categories, including automotive, entertainment and furniture. Also, as announced on March 31, each of our stations is implementing further cost-reduction initiatives and pursuing additional new business development opportunities. The Broadcast Division also is deferring until later in the year all capital expenditures that are not critical to on-air operations," he said.
 
"The Interactive Media Division experienced solid growth in Local and Regional/National advertising, and revenues from the Yahoo!HotJobs partnership helped mitigate the decrease in Classified revenues," Mr. Morton said. "Page views and visitor sessions for the first quarter rose 12.6 percent, and 23.2 percent, respectively, driven in large part by our "Web-First" approach to local news in all markets. Our aggressive "Web-First" initiative is helping drive audience to our Web sites as evidenced by TBO.com in Tampa, which generated a 28 percent increase in page views in the first quarter."

Publishing Division
 
Publishing Division profit for the quarter decreased 56.4 percent, total revenues decreased 16.7 percent, and newspaper advertising revenues declined 19.1 percent. Excluding Florida operations, Publishing Division profit declined 24 percent in the quarter.
 
Classified advertising revenues in the first quarter were below last year's quarter by $13.9 million, or 27.9 percent, driven mostly by shortfalls in the Tampa market. For the company's three metro markets, real estate revenues were down 40 percent, employment revenues decreased 37 percent, and automotive revenues declined 34 percent.
 
Retail advertising revenues declined $5.9 million, or 10.8 percent, primarily due to lower spending in Tampa in the department store, home furnishings, and home improvement categories. National revenues decreased $2.1 million, or 21 percent, as a result of lower spending in the telecommunications, travel and automotive categories in the Tampa market. Circulation revenues decreased $900,000, or 5.1 percent, reflecting Daily and Sunday net-paid circulation volume declines.
 
Publishing Division expenses, excluding severance costs from the first-quarter of 2007, declined $1.1 million, or 9.5 percent for the quarter, reflecting significant decreases in newsprint expense, salaries, and benefits. Newsprint expense decreased 23.3 percent as a result of both lower prices and lower consumption. The average price per ton decreased $36 from the 2007 quarter. Salaries and benefits declined mostly due to actions implemented in 2007 in response to the weakening revenue environment.

1
 
Broadcast Division
 
Broadcast Division profit for the quarter was nominally ahead of the prior-year's same quarter as a result of expenses decreasing 1.4 percent. The expense reduction was achieved mostly through lower spending for discretionary categories, such as promotion, research and travel. Salaries increased only 1.5 percent, primarily the result of keeping open positions unfilled.
 
Total Broadcast revenues decreased 1.2 percent. Gross time sales declined about $2.5 million, or 3.1 percent. Local time sales declined $2.2 million, or 4.4 percent. Lower spending in the furniture store, fast food and automotive categories was partially offset by higher health care advertising. National time sales decreased $4.4 million, or 14.6 percent. Categories showing decreases for the quarter included automotive and entertainment, while drug stores and fast food increased.
 
Total Political revenues of $4.4 million compared with $340,000 in the 2007 quarter. The current quarter's revenues were generated from presidential campaign spending in South Carolina, Florida, Georgia, Alabama, Ohio and Rhode Island, as well as gubernatorial primary spending in North Carolina, U.S. Congressional primary races in Mississippi and Kentucky, and issue spending in Florida and Ohio.

Interactive Media Division
 
Interactive Media Division revenues of $7.7 million decreased $259,000, or 3.3 percent, over the 2007 quarter, due to lower Classified revenues and lower sales in the advergaming business. Local revenues increased 28.5 percent as the result of continued growth in banners and sponsorships and increased direct sales. National/Regional revenues grew 43.2 percent, due to a greater focus on national networks, particularly at TBO.com in Tampa. Classified advertising was down 15.4 percent as lower newspaper advertising volumes, especially help-wanted, had an unfavorable impact on the company's Web sites. The division's quarterly loss of $2.7 million compared with a loss of $630,000 in the 2007 quarter.

Other results
 
Interest expense decreased by $2.7 million, due mainly to lower interest rates, but aided by lower debt levels.
 
EBITDA (income from continuing operations before interest, taxes, depreciation and amortization) in the first quarter of 2008 was $14.2 million, compared with $23.9 million in the 2007 period. After-Tax Cash Flow was $8.5 million compared with $12.7 million in the prior year. Capital expenditures in the first quarter of 2008 were $8 million compared with $19.5 million in the prior-year period. The capital spending plan for 2008 has been reduced from $45 million to $25 million. Free Cash Flow for the quarter (After-Tax Cash Flow minus capital expenditures) was $559,000, compared with a deficit of $6.8 million in the prior-year period.
 
Media General provides the non-GAAP financial metrics EBITDA, After-Tax Cash Flow, and Free Cash Flow. The company believes these metrics are useful in evaluating financial performance and are common alternative measures used by investors, financial analysts and rating agencies. These groups use EBITDA, along with other measures, to evaluate a company's ability to service its debt requirements and to estimate the value of the company. A reconciliation of these metrics to amounts on the GAAP statements has been included in this news release.

Conference Call and Webcast
 
The company will hold a conference call with financial analysts today at 10 a.m. ET. The conference call will be available to the media and general public through a limited number of listen-only dial-in conference lines and via simultaneous Webcast. To dial in to the call, listeners may call 1-866-277-1182 about 10 minutes prior to the 10 a.m. start. Listeners may also access the live Webcast by logging on to http://www.mediageneral.com and clicking on the "Live Earnings Conference" link on the homepage about 10 minutes in advance. A replay of the Webcast will be available online at http://www.mediageneral.com beginning at 12 p.m. today. A telephone replay is also available, beginning at 12 p.m. today and ending at 12 p.m. on April 24, 2008, by dialing 888-286-8010 or 617-801-6888, and using the passcode 75946294.

Forward-Looking Statements
 
This news release contains forward-looking statements that are subject to various risks and uncertainties and should be understood in the context of the company's publicly available reports filed with the Securities and Exchange Commission. Media General's future performance could differ materially from its current expectations.

About Media General
 
Media General is a leading provider of local news, information and entertainment over multiple media platforms. The company serves markets primarily in the Southeastern United States. Media General publishes 25 daily newspapers, including The Tampa Tribune, Richmond Times-Dispatch, and Winston-Salem Journal; and community newspapers in Virginia, North Carolina, Florida, Alabama and South Carolina; plus approximately 275 weekly newspapers and other targeted publications. The company owns and operates 23 network-affiliated television stations that reach more than 32 percent of the television households in the Southeast and nearly 9.5 percent of those in the United States. The company's interactive media operations include Web sites and portals that are associated with each of its newspapers and television stations as well as with many specialty publications, and two growing interactive advertising services companies, Blockdot, Inc. and DealTaker.com.

 
2
 
Media General, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
 
           
         
           
   
Thirteen Weeks Ending
  
   
March 30,
 
April 1,
 
(Unaudited, in thousands except per share amounts)
 
 
2008
 
 
2007
  
               
Revenues
  
$
194,464
  
$
218,264
  
               
Operating costs:
              
Production
   
98,048
   
105,319
 
Selling, general and administrative
    
82,433
   
87,134
 
Depreciation and amortization
    
18,330
   
19,203
 
Total operating costs 
    
198,811
   
211,656
 
               
Operating income (loss)
    
(4,347
)
  
6,608
 
               
Other income (expense):
              
Interest expense
    
(12,289
)
  
(14,974
)
Investment loss - unconsolidated affiliates
    
(21
)
  
(2,301
)
Other, net
    
208
   
392
 
Total other expense 
    
(12,102
)
  
(16,883
)
               
Loss from continuing operations before income taxes
    
(16,449
)
  
(10,275
)
               
Income tax benefit
    
(6,637
)
  
(3,722
)
               
Loss from continuing operations
    
(9,812
)
  
(6,553
)
Discontinued operations:
              
Income from discontinued operations (net of tax)
    
857
   
49
 
Loss related to divestiture of operations (net of tax)
    
(11,300
)
  
---
 
Net loss
  
$
(20,255
)
$
(6,504
)
               
Net loss per common share:
              
Loss from continuing operations
  
$
(0.44
)
$
(0.27
)
Discontinued operations
    
(0.47
)
  
---
 
Net loss
  
$
(0.91
)
$
(0.27
)
               
Net loss per common share - assuming dilution:
              
Loss from continuing operations
  
$
(0.44
)
$
(0.27
)
Discontinued operations
    
(0.47
)
  
---
 
Net loss
  
$
(0.91
)
$
(0.27
)
               
               
Weighted-average common shares outstanding:
              
Basic
    
22,112
   
23,655
 
Diluted
    
22,112
   
23,655
 
               
 
 
3
 
Media General, Inc.
BUSINESS SEGMENTS
 
                       
       
 
 
Interactive
 
 
 
 
 
(Unaudited, in thousands)
 
Publishing
 
Broadcast
 
Media
 
Eliminations
 
Total
   
                       
Quarter Ended March 30, 2008
                                
Consolidated revenues
  
$
113,590
  
$
74,731
  
$
7,667
  
$
(1,524
)
$
194,464
  
Segment operating cash flow
  
$
15,022
  
$
14,090
  
$
(2,309
)
      
$
26,803
  
Recovery on investment
                
10
         
10
 
Depreciation and amortization
    
(6,810
)
  
(6,534
)
  
(447
)
        
(13,791
)
Segment profit (loss) 
  
$
8,212
  
$
7,556
  
$
(2,746
)
        
13,022
 
                                 
Unallocated amounts:
                                
Interest expense
                            
(12,289
)
Equity in net loss of unconsolidated affiliate
                            
(21
)
Acquisition intangibles amortization
                            
(3,825
)
Corporate expense
                            
(10,692
)
Other
                           
(2,644
)
Consolidated loss from continuing operations before income taxes 
                          
$
(16,449
)
                                 
Quarter Ended April 1, 2007
                                
Consolidated revenues
  
$
136,335
  
$
75,637
  
$
7,926
  
$
(1,634
)
$
218,264
  
Segment operating cash flow
  
$
25,305
  
$
14,151
  
$
(185
)
      
$
39,271
  
Depreciation and amortization
    
(6,451
)
  
(6,602
)
  
(445
)
        
(13,498
)
Segment profit (loss) 
  
$
18,854
  
$
7,549
  
$
(630
)
        
25,773
 
                                 
Unallocated amounts:
                                
Interest expense
                            
(14,974
)
Equity in net loss of unconsolidated affiliates
                            
(2,301
)
Acquisition intangibles amortization
                            
(4,409
)
Corporate expense
                            
(10,255
)
Other
                           
(4,109
)
Consolidated loss from continuing operations before income taxes 
                          
$
(10,275
)
 
 
4

Media General, Inc.
  
CONSOLIDATED BALANCE SHEETS
  
           
   
March 30,
  
December 30,
  
(Unaudited, in thousands)
  
2008
  
2007
  
           
ASSETS
              
               
Current assets:
              
Cash and cash equivalents 
  
$
13,276
  
$
14,214
  
Accounts receivable-net 
    
103,686
   
133,863
 
Inventories 
    
8,848
   
6,676
 
Other 
    
60,448
   
52,083
 
Assets of discontinued operations 
    
88,569
   
106,958
 
 Total current assets
   
274,827
   
313,794
 
               
Investments in unconsolidated affiliates
    
52,527
   
52,360
 
               
Other assets
    
63,239
   
65,686
 
               
Property, plant and equipment - net
    
469,404
   
475,028
 
               
Excess of cost over fair value of net identifiable assets
              
of acquired businesses - net  
    
917,521
   
917,521
 
               
FCC licenses and other intangibles - net
    
642,852
   
646,677
 
Total assets
  
$
2,420,370
  
$
2,471,066
  
               
LIABILITIES AND STOCKHOLDERS' EQUITY
              
               
Current liabilities:
              
Accounts payable 
  
$
35,047
  
$
32,676
  
Accrued expenses and other liabilities 
    
99,449
   
101,817
 
Liabilities of discontinued operations 
    
4,955
   
5,521
 
 Total current liabilities
   
139,451
   
140,014
 
               
Long-term debt
    
874,566
   
897,572
 
               
Deferred income taxes
    
307,717
   
311,588
 
               
Other liabilities and deferred credits
    
216,895
   
208,885
 
               
Stockholders' equity
    
881,741
   
913,007
 
Total liabilities and stockholders' equity
  
$
2,420,370
  
$
2,471,066
  
 
 
5
 
Media General, Inc.
EBITDA, After-tax Cash Flow, and Free Cash Flow
 
   
Thirteen Weeks Ending
  
   
March 30,
  
April 1,
  
(Unaudited, in thousands)
  
2008
  
2007
  
           
Loss from continuing operations
  
$
(9,812
)
$
(6,553
)
Interest
    
12,289
   
14,974
 
Taxes
    
(6,637
)
  
(3,722
)
Depreciation and amortization
    
18,330
   
19,203
 
               
EBITDA from continuing operations
  
$
14,170
  
$
23,902
  
               
Loss from continuing operations
  
$
(9,812
)
$
(6,553
)
Depreciation and amortization
    
18,330
   
19,203
 
               
After-tax cash flow
  
$
8,518
  
$
12,650
  
               
After-tax cash flow
  
$
8,518
  
$
12,650
  
Capital expenditures
    
7,959
   
19,491
 
               
Free cash flow
  
$
559
  
$
(6,841
)
 
 
6