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.
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.
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.
Media General, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
Thirteen Weeks Ending
----------------------------
(Unaudited, in thousands except March 30, April 1,
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
-------------------------------------------------------------------------
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)
========
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
=========================================================================
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)
==========================================================================
Source: Media General
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