EX-99.2 4 v120081_ex99-2.htm
 
 
FOR IMMEDIATE RELEASE
 
Thursday, July 17, 2008

Media General Reports Preliminary Second-Quarter 2008 Results; Expects to Record a Non-Cash Impairment Charge
 
RICHMOND, Va. - Media General, Inc. (NYSE: MEG) today reported that preliminary results for the second quarter of 2008, which include severance charges of 14 cents per diluted share, were a loss from continuing operations of $1.4 million, or 6 cents per diluted share, compared with income from continuing operations of $4.3 million, or 19 cents per diluted share, in the second quarter of 2007. Excluding severance charges noted above, income in the second quarter of 2008 was 8 cents per diluted share. The preliminary results do not include an expected non-cash impairment charge, primarily related to goodwill and other intangible assets, as discussed below. Including the severance charges and discontinued operations, consisting of five television stations that have been or will be sold, the net loss for the second quarter of 2008 was $129,000, or 1 cent per diluted share. This compares with net income of $5.1 million, or 22 cents per diluted share, in the 2007 second quarter. Total company revenues of $204.9 million in the second quarter of 2008 decreased 10.2 percent from the same period in 2007.

Media General said that it is completing a process of impairment testing primarily of goodwill and other intangible assets. The non-cash impairment charge in the 2008 second-quarter is expected to be in the range of $500 million to $550 million after tax. Media General plans to report the final amount of the impairment charge when it files its Form 10-Q with the Securities and Exchange Commission on or before August 8, 2008. The impairment charge will reduce the book value of goodwill, identifiable intangible assets, and certain other assets.
 
“We determined that, in view of the continued economic slowdown and the market’s perception of media industry equity valuations, this was the appropriate time to undertake the impairment testing. The charge is non-cash and will not impact our ability to operate, reduce debt or move forward with our ongoing transition to the digital world,” said Marshall N. Morton, president and chief executive officer.
 
“Media General’s lower second-quarter results reflected a weakening economy and a continued challenging business environment in the Publishing Division,” said Mr. Morton. “Partially mitigating lower divisional results compared with last year were lower interest expense and an additional gain related to the Richmond Times-Dispatch fire settlement.
 
“We continue to implement aggressive performance improvement actions, including workforce reductions, to better align expenses with current business conditions. Total operating costs in the second quarter, excluding severance charges, decreased approximately 6 percent,” he said.
 
Publishing Division
 
Publishing Division profit for the quarter of $6.8 million compared with $22.6 million in the 2007 quarter. Total revenues decreased 14.7 percent, and newspaper advertising revenues declined 17.1 percent.
 
Excluding Florida, where Publishing revenues were down 24.7 percent in the quarter, total Publishing revenues decreased less than 10 percent. Revenues declined 12.5 percent in Virginia, 7.3 percent in North Carolina and 3.5 percent in Alabama. In South Carolina, revenues were up nominally, driven by a new weekly newspaper in the greater Florence/Myrtle Beach market.
 
Classified advertising revenues in the second quarter were below last year’s quarter by $14.1 million, or 29.5 percent, driven mostly by shortfalls in the Tampa market. For the company’s three metro markets, employment revenues decreased 42.7 percent, real estate revenues were down 38.9 percent, and automotive revenues declined 38.5 percent.
 
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Retail advertising revenues declined $3.4 million, or 6.3 percent, primarily due to lower spending in Tampa in the department store, home furnishings, and entertainment categories. National revenues decreased $1.8 million, or 19.2 percent, as a result of lower spending in the utilities, travel and automotive categories in the Tampa market. Circulation revenues decreased $490,000, or 3 percent, reflecting Daily and Sunday net-paid volume declines, partially offset by rate increases in several markets.
 
Publishing Division expenses, excluding divisional severance expenses and charges related to the consolidation of newspaper printing, declined 7.2 percent for the quarter. Newsprint expense decreased 12.3 percent as a result of lower consumption, which was down 19.5 percent. The average price per ton increased $49 from the 2007 second quarter. Excluding severance, salaries declined 6.9 percent for the quarter, reflecting savings from staff reductions.
 
Broadcast Division
 
Broadcast Division profit for the quarter of $14.9 million compared with $18 million last year. Weak National and Local time sales were partially offset by $2.8 million in Political revenues. Expenses, excluding severance costs, decreased 4 percent. The division has implemented performance improvement measures as well as new business initiatives.
 
Total Broadcast revenues decreased 5.7 percent. Gross time sales declined $4.5 million, or 5 percent. Local time sales declined $1.2 million, or 2.2 percent. Lower spending in the furniture store and entertainment categories was partially offset by higher automotive and fast food advertising. National time sales decreased $5.3 million, or 15.9 percent. Categories showing decreases for the quarter included automotive and services, while transportation and drug stores increased.
 
Total Political revenues of $2.8 million compared with $745,000 in the 2007 quarter. The current quarter’s revenues were generated from presidential campaign spending in Ohio, Florida, North Carolina, and South Carolina, gubernatorial primary spending in North Carolina, U.S. Congressional races in South Carolina, North Carolina, Virginia and Ohio, and issue spending in Ohio, Mississippi, Florida, North Carolina, South Carolina, Virginia, Georgia and Rhode Island.
 
Interactive Media Division
 
The Interactive Media Division had a quarterly loss of $656,000 compared with a profit of $359,000 in the 2007 quarter. The division generated record revenues of $10.6 million, up 13.7 percent, reflecting a 45.7 percent increase in Local advertising and revenues from DealTaker.com, acquired March 31, 2008. The partnership with Yahoo!HotJobs generated $2 million in revenues in the quarter, helping to partially offset a 4 percent decrease in Classified revenues.
 
Local revenues increased as the result of continued growth in banners and sponsorships and direct sales. National/Regional revenues decreased 7.1 percent, due to softer advertising from national agencies, particularly at TBO.com in Tampa.
 
Media General is aggressively harnessing opportunities for rapid growth in the digital world. The addition of the advertising services group, which is comprised of DealTaker.com and Blockdot, increases the company’s focus on new customers. Its newest member, DealTaker.com, is engaged in the fast-growing sector of online coupons and shopping. Dealtaker.com represents an important new cash flow stream for Media General and was profitable during its first full-quarter of ownership. A decline in advergaming revenues in the quarter at Blockdot reflected a slower pace of incoming projects, as a result of the weaker economy, compared with the same 2007 period.
 
Page views and visitor sessions for the second quarter rose 6.1 percent, and 15.5 percent, respectively, driven in large part by a Web-First approach to local news in all markets. TBO.com in Tampa, for
example, generated a nearly 70 percent increase in page views in the second quarter. A number of other Media General newspaper and television Web sites also saw a dramatic growth in visitors.
 
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Other results
 
Interest expense decreased by $4.6 million, due mainly to lower interest rates, and also aided by lower debt levels.
 
Preliminary EBITDA (income from continuing operations before interest, taxes, depreciation and amortization) in the second quarter of 2008 was $26.8 million, compared with $40.9 million in the 2007 period. After-Tax Cash Flow was $17.7 million compared with $23.3 million in the prior year. Capital expenditures in the second quarter of 2008 were $4.5 million compared with $18.3 million in the prior-year period. Free Cash Flow for the quarter (After-Tax Cash Flow minus capital expenditures) was $13.2 million, up from $5 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 11 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. The full text of the release and financials will be available on the company’s Web site, www.mediageneral.com. To dial in to the call, listeners may call 1-866-510-0710 about 10 minutes prior to the 11 a.m. start. Listeners may also access the live Webcast by logging on to 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 www.mediageneral.com beginning at 1 p.m. today. A telephone replay will be also be available, beginning at 1 p.m. today and ending at 1 p.m. on July 24, 2008, by dialing 888-286-8010 or 617-801-6888, and using the passcode 44413520.
 
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 20 network-affiliated television stations that reach approximately 30 percent of the television households in the Southeast and nearly 9 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.
 
Investor Contact:
Media Contact:
Lou Anne Nabhan
Ray Kozakewicz
(804) 649-6103
(804) 649-6748
 
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PRELIMINARY CONSOLIDATED STATEMENTS OF OPERATIONS
 
   
Thirteen Weeks Ending
  
Twenty-Six Weeks Ending
  
(Unaudited, in thousands except per share amounts)
  
June 29,
2008
  
July 1,
2007
  
June 29,
2008
  
July 1,
2007
  
                   
Revenues
  
$
204,880
  
$
228,215
  
$
399,344
  
$
446,479
  
                           
Operating costs:
                          
Production
   
96,621
   
102,661
   
194,669
   
207,980
 
Selling, general and administrative
    
81,873
   
82,713
   
164,306
   
169,847
 
Depreciation and amortization
    
19,027
   
19,028
   
37,357
   
38,231
 
Gain on insurance recovery
    
(2,750
)
  
—
   
(2,750
)
  
—
 
Total operating costs
    
194,771
   
204,402
   
393,582
   
416,058
 
                           
Operating income
    
10,109
   
23,813
   
5,762
   
30,421
 
                           
Other income (expense):
                          
Interest expense
    
(10,548
)
  
(15,186
)
  
(22,837
)
  
(30,160
)
Investment loss - unconsolidated affiliates
    
(18
)
  
(2,305
)
  
(39
)
  
(4,606
)
Loss on sale of unconsolidated affiliate
    
(2,602
)
  
—
   
(2,602
)
  
—
 
Other, net
    
305
   
379
   
513
   
771
 
Total other expense
    
(12,863
)
  
(17,112
)
  
(24,965
)
  
(33,995
)
                           
Income (loss) from continuing operations before income taxes
(2,754
)
  
6,701
   
(19,203
)
  
(3,574
)
                           
Income taxes
    
(1,380
)
  
2,389
   
(8,017
)
  
(1,333
)
                           
Income (loss) from continuing operations
    
(1,374
)
  
4,312
   
(11,186
)
  
(2,241
)
Discontinued operations:
                          
Income from discontinued operations (net of tax)
    
1,245
   
808
   
2,102
   
857
 
Loss related to divestiture of operations (net of tax)
    
—
   
—
   
(11,300
)
  
—
 
Net income (loss)
  
$
(129
)
$
5,120
  
$
(20,384
)
$
(1,384
)
                           
Net income (loss) per common share:
                          
Income (loss) from continuing operations
  
$
(0.06
)
$
0.19
  
$
(0.51
)
$
(0.10
)
Discontinued operations
    
0.05
   
0.04
   
(0.41
)
  
0.04
 
Net income (loss)
  
$
(0.01
)
$
0.23
  
$
(0.92
)
$
(0.06
)
                           
Net income (loss) per common share - assuming dilution:
                          
Income (loss) from continuing operations
  
$
(0.06
)
$
0.19
  
$
(0.51
)
$
(0.10
)
Discontinued operations
    
0.05
   
0.03
   
(0.41
)
  
0.04
 
Net income (loss)
  
$
(0.01
)
$
0.22
  
$
(0.92
)
$
(0.06
)
                           
Weighted-average common shares outstanding:
                          
Basic
    
22,074
   
22,637
   
22,093
   
23,146
 
Diluted
    
22,074
   
22,835
   
22,093
   
23,146
 
                     

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Media General, Inc.
PRELIMINARY BUSINESS SEGMENTS
           
Interactive
          
(Unaudited, in thousands)
  
Publishing
  
Broadcast
  
Media
  
Eliminations
  
Total
  
                       
Quarter Ended June 29, 2008
                      
Consolidated revenues
  
$
113,656
  
$
82,411
  
$
10,565
  
$
(1,752
)
$
204,880
  
Segment operating cash flow
  
$
14,201
  
$
21,395
  
$
(151
)
      
$
35,445
  
Depreciation and amortization
    
(7,386
)
  
(6,468
)
  
(505
)
      
(14,359
)
Segment profit (loss)
  
$
6,815
  
$
14,927
  
$
(656
)
        
21,086
 
                                 
Unallocated amounts:
                                
Interest expense
                            
(10,548
)
Equity in net loss of unconsolidated affiliate
                            
(18
)
Loss on sale of unconsolidated affiliate
                            
(2,602
)
Acquisition intangibles amortization
                            
(3,957
)
Corporate expense
                            
(10,143
)
Gain on insurance recovery
                            
2,750
 
Other
                           
678
 
Consolidated loss from continuing operations before income taxes
            
$
(2,754
)
                                 
Quarter Ended July 1, 2007
                                
Consolidated revenues
  
$
133,221
  
$
87,370
  
$
9,292
  
$
(1,668
)
$
228,215
  
Segment operating cash flow
  
$
29,014
  
$
24,621
  
$
585
        
$
54,220
  
Recovery on investment
                
188
         
188
 
Depreciation and amortization
    
(6,438
)
  
(6,584
)
  
(414
)
      
(13,436
)
Segment profit
  
$
22,576
  
$
18,037
  
$
359
          
40,972
 
                                 
Unallocated amounts:
                                
Interest expense
                            
(15,186
)
Equity in net loss of unconsolidated affiliates
                            
(2,305
)
Acquisition intangibles amortization
                            
(4,415
)
Corporate expense
                            
(10,020
)
Other
                           
(2,345
)
Consolidated income from continuing operations before income taxes
        
$
6,701
  
                                 
Six Months Ended June 29, 2008
                                
Consolidated revenues
  
$
227,246
  
$
157,142
  
$
18,232
  
$
(3,276
)
$
399,344
  
Segment operating cash flow
  
$
29,223
  
$
35,485
  
$
(2,460
)
      
$
62,248
  
Recovery on investment
                
10
         
10
 
Depreciation and amortization
    
(14,196
)
  
(13,002
)
  
(952
)
      
(28,150
)
Segment profit (loss)
  
$
15,027
  
$
22,483
  
$
(3,402
)
        
34,108
 
                                 
Unallocated amounts:
                                
Interest expense
                            
(22,837
)
Equity in net loss of unconsolidated affiliate
                            
(39
)
Loss on sale of unconsolidated affiliate
                            
(2,602
)
Acquisition intangibles amortization
                            
(7,782
)
Corporate expense
                            
(20,835
)
Gain on insurance recovery
                            
2,750
 
Other
                           
(1,966
)
Consolidated loss from continuing operations before income taxes
            
$
(19,203
)
                                 
Six Months Ended July 1, 2007
                                
Consolidated revenues
  
$
269,556
  
$
163,007
  
$
17,218
  
$
(3,302
)
$
446,479
  
Segment operating cash flow
  
$
54,319
  
$
38,772
  
$
400
        
$
93,491
  
Recovery on investment
                
188
         
188
 
Depreciation and amortization
    
(12,889
)
  
(13,186
)
  
(859
)
      
(26,934
)
Segment profit (loss)
  
$
41,430
  
$
25,586
  
$
(271
)
        
66,745
 
                                 
Unallocated amounts:
                                
Interest expense
                            
(30,160
)
Equity in net loss of unconsolidated affiliates
                            
(4,606
)
Acquisition intangibles amortization
                            
(8,824
)
Corporate expense
                            
(20,275
)
Other
                           
(6,454
)
Consolidated loss from continuing operations before income taxes
            
$
(3,574
)

(5 of 7)
 
PRELIMINARY CONSOLIDATED BALANCE SHEETS

   
June 29,
  
December 30,
  
(Unaudited, in thousands)
  
2008
  
2007
  
           
ASSETS
          
           
Current assets:
          
Cash and cash equivalents
  
$
16,314
  
$
14,214
  
Accounts receivable-net
    
109,735
   
133,863
 
Inventories
    
8,939
   
6,676
 
Other
    
37,272
   
52,083
 
Assets of discontinued operations
    
71,862
   
106,958
 
Total current assets
   
244,122
   
313,794
 
               
Investments in unconsolidated affiliates
    
1,446
   
52,360
 
               
Other assets
    
64,317
   
65,686
 
               
Property, plant and equipment - net
    
460,099
   
475,028
 
               
Excess of cost over fair value of net identifiable assets
              
of acquired businesses - net
   
933,285
   
917,521
 
               
FCC licenses and other intangibles - net
    
644,770
   
646,677
 
               
Total assets
  
$
2,348,039
  
$
2,471,066
  
               
LIABILITIES AND STOCKHOLDERS' EQUITY
              
               
Current liabilities:
              
Accounts payable
  
$
31,435
  
$
32,676
  
Accrued expenses and other liabilities
    
95,081
   
101,817
 
Liabilities of discontinued operations
    
3,748
   
5,521
 
Total current liabilities
   
130,264
   
140,014
 
               
Long-term debt
    
830,061
   
897,572
 
               
Deferred income taxes
    
293,973
   
311,588
 
               
Other liabilities and deferred credits
    
214,271
   
208,885
 
               
Stockholders' equity
    
879,470
   
913,007
 
               
Total liabilities and stockholders' equity
  
$
2,348,039
  
$
2,471,066
  

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Media General, Inc.
Preliminary EBITDA, After-tax Cash Flow, and Free Cash Flow

   
Thirteen Weeks Ending
  
Twenty-Six Weeks Ending
  
(Unaudited, in thousands)
  
June 29,
2008
  
July 1,
2007
  
June 29,
2008
  
July 1,
2007
  
                   
Income (loss) from continuing operations
  
$
(1,374
)
$
4,312
  
$
(11,186
)
$
(2,241
)
Interest
    
10,548
   
15,186
   
22,837
   
30,160
 
Taxes
    
(1,380
)
  
2,389
   
(8,017
)
  
(1,333
)
Depreciation and amortization
    
19,027
   
19,028
   
37,357
   
38,231
 
                  
EBITDA from continuing operations
  
$
26,821
  
$
40,915
  
$
40,991
  
$
64,817
  
                           
Income (loss) from continuing operations
  
$
(1,374
)
$
4,312
  
$
(11,186
)
$
(2,241
)
Depreciation and amortization
    
19,027
   
19,028
   
37,357
   
38,231
 
                   
After-tax cash flow
  
$
17,653
  
$
23,340
  
$
26,171
  
$
35,990
  
                           
After-tax cash flow
  
$
17,653
  
$
23,340
  
$
26,171
  
$
35,990
  
Capital expenditures
    
4,487
   
18,300
   
12,446
   
37,791
 
                 
Free cash flow
  
$
13,166
  
$
5,040
  
$
13,725
  
$
(1,801
)


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