Media General Reports Third-Quarter Results

Media General Reports Third-Quarter Results

RICHMOND, Va., Oct. 12 /PRNewswire-FirstCall/ -- Media General, Inc. (NYSE:MEG) today reported third-quarter net income of $9.8 million, or 41 cents per diluted share, compared with $15.7 million, or 66 cents per diluted share, in the third quarter of 2004.

The year-over-year results for the quarter primarily reflect lower segment operating income in the Publishing and Broadcast divisions partially offset by improved performance in the Interactive Media Division, higher equity income from the company's investment in SP Newsprint, and lower interest expense.

"In our Publishing Division, we were pleased with advertising revenue growth of 5 percent for the quarter, driven mostly by continued strong Classified advertising, especially help-wanted. Publishing's profit decline principally reflects higher expenses for newsprint, employee benefits and energy," said Marshall N. Morton, president and chief executive officer. "In our Broadcast Division, a nearly 13 percent increase in Local time sales was not enough to offset a decline of $8.1 million in Political revenues and the absence of $5 million in revenues from the Summer Olympics last year. In addition, Broadcast expenses were higher for employee benefits, sales commissions associated with new revenues, new business development programs and hurricane-related costs," said Morton.

"We are proud that the advertising revenue growth in both our Publishing and Broadcast divisions continues to be at the top of their respective industry peer groups," Morton said.

Media General's total revenues for the third quarter of 2005 were up 1.5 percent to $220.8 million.

Publishing Division profit for the quarter was $27 million, compared with $29.6 million last year. Publishing revenues of $142.1 million increased 3.2 percent, led by 7.6 percent growth at The Tampa Tribune. Including online revenues from newspaper Web sites, total Publishing revenues increased 3.9 percent and newspaper advertising revenues rose 5.8 percent.

Classified revenues increased $4.6 million, or 9.4 percent, driven by consistent strength in employment advertising in nearly all markets. Including online advertising, total Classified advertising rose 11.1 percent from last year, despite continued softness in automotive classifieds. At The Tampa Tribune, Classified revenues increased by 16.2 percent, led by help- wanted advertising, up 33 percent, while real estate advertising increased 41 percent, and automotive advertising declined 9 percent. At the Richmond Times-Dispatch, Classified revenues increased 5.5 percent, led by a 28.7 percent increase in real estate advertising and a 6.1 percent increase in help-wanted revenues, which helped to offset a decline in automotive advertising revenues. At the Winston-Salem Journal, Classified revenues rose 3 percent, with real estate up 18.5 percent and help-wanted up 9.1 percent partially offset by a 15 percent decline in automotive. Media General's Community Newspapers reported a 5.1 percent increase primarily due to solid gains in help-wanted advertising, led by Northern Virginia.

At the three metro newspapers, help-wanted linage was up 13 percent in the aggregate. The Tampa Tribune increased 21 percent, the Richmond Times- Dispatch was up 9 percent and the Winston-Salem Journal was up 8 percent. Automotive linage was down 13 percent for the three metros.

Retail revenues increased $700,000, or 1.4 percent in the third quarter. The improvement came primarily from The Tampa Tribune, which was up 3.1 percent, and reflected increases in the entertainment and medical categories, preprints and color revenues. At the Richmond Times-Dispatch, Retail revenues declined 1.5 percent, due primarily to reductions in the department store and furniture categories. At the Winston-Salem Journal, Retail revenues declined 5.8 percent due to decreased department store advertising and the absence of revenues from businesses that have left the market. The company's Community Newspapers reported a 1 percent increase in Retail advertising.

National advertising revenue increased $90,000, or 0.9 percent, for the quarter. National advertising was on par with last year at The Tampa Tribune, as increases from the national automotive and telecommunications categories partially offset declines in several other categories. The Winston-Salem Journal was also even with last year, as an increase in telecommunications spending mostly offset a decline in automotive advertising. The Richmond Times-Dispatch was down 1.8 percent mainly due to reduced telecommunications advertising. The Community Newspapers experienced a 7.1 percent increase principally the result of preprints.

Due primarily to a change in wholesale rates to independent carriers in some markets, for which there was a corresponding expense decrease, Circulation revenues declined $1.2 million, or 5.5 percent.

Publishing expenses increased 6.3 percent over the third quarter of 2004. Newsprint expense for the quarter increased 14 percent and mostly reflected higher newsprint prices. The average price per ton increased $66 from the year-ago quarter.

Broadcast Division profit of $12.4 million for the third quarter declined $7.8 million from the prior year. Total Broadcast revenues were down $2.6 million, or 3.4 percent, and reflected lower Political and National advertising revenues partially offset by increased Local time sales.

Local time sales increased $5.5 million, or 12.7 percent, as a result of new business development initiatives. Local categories showing increases included financial, fast food, heath care, furniture and automotive.

National time sales declined $1.4 million, or 5.4 percent, mostly reflecting lower spending in the automotive and fast food categories.

Political revenues of $445,000 in 2005 contrasted with $8.5 million generated during last year's presidential and congressional election campaigns. Political revenues in this year's quarter primarily arose from a local election in Mobile, Ala., and a gubernatorial race in Virginia.

Broadcast expenses for the quarter increased 9 percent from the same 2004 period. Excluding cost of goods sold for its equipment subsidiary, Broadcast expenses for the quarter increased 7.7 percent. The increase was attributable largely to higher employee benefits, sales commissions on new business, the costs associated with programs to spur business development, and hurricane- related costs.

Interactive Media Division revenues were up 49.3 percent over 2004 to a quarterly record of $5.3 million. The growth was due to continued strong Classified advertising, up 50.1 percent, and higher Local advertising revenues, which rose nearly 26 percent. The division's total revenues include advergaming and advertising revenues from Blockdot, Inc., which was acquired on July 18, 2005. The division's third-quarter loss of $918,000 represented a nearly 40 percent improvement from the third quarter of 2004.

Interest expense decreased 7.1 percent from the third quarter of 2004 due to lower average debt levels, which more than compensated for higher interest rates.

Equity income from the company's share of SP Newsprint was $888,000 in the quarter, an improvement from last year's same-quarter income of $316,000, but lower than expected due to increased energy costs that were only partially offset by higher newsprint selling prices.

Acquisition intangibles amortization was $778,000 more than last year's third quarter due to the shortening of the estimated lives of network affiliation intangible assets and the acquisition of Blockdot, Inc.

EBITDA (income before accounting change, interest, taxes, depreciation and amortization) in the third quarter of 2005 was $39.9 million, compared with $48.3 million in the 2004 period. Free cash flow for the quarter (after-tax cash flow minus capital expenditures) was $10.8 million, compared with $21.5 million in the prior-year period and reflected a higher level of capital expenditures.

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.

Outlook

In the fourth quarter, the Publishing Division expects revenue growth to be similar to the third quarter with strong Classified revenues and some improvement in Retail revenues. For the Broadcast Division, combined Local and National time sales, excluding Political, are expected to increase approximately 12 percent, compared with the same period a year ago. Political revenues in last year's fourth quarter were $20.5 million.

Conference Call and Webcast

Media General's senior management will discuss third-quarter results with financial analysts during a conference call today at 11 a.m. Eastern Time. The call will be available to the media and general public through a limited number of listen-only lines and via simultaneous Webcast. To dial in to the call, listeners may call 1-800-901-5247 about 10 minutes prior to the 11 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 at the top of the homepage about 10 minutes in advance.

A replay of the Webcast will be available online at http://www.mediageneral.com/ beginning at 1 p.m. on October 12. A telephone replay will also be available, beginning at 1 p.m. and ending on October 19 at 12 a.m., by dialing 1-888-286-8010, and using the passcode 99786292.

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 diversified communications company operating leading newspapers, television stations and online enterprises, primarily in the Southeastern United States. The company's publishing assets include three metropolitan newspapers, The Tampa Tribune, Richmond Times-Dispatch, and Winston-Salem Journal; 22 daily community newspapers in Virginia, North Carolina, Florida, Alabama and South Carolina; and more than 100 weekly newspapers and other publications. The company's broadcasting assets include 26 network-affiliated television stations that reach more than 30 percent of the television households in the Southeast and nearly 8 percent of those in the United States. The company's interactive media assets include more than 50 online enterprises that are associated with its newspapers and television stations. Media General also owns a 33 percent interest in SP Newsprint Company.

Media General, Inc. CONSOLIDATED STATEMENTS OF OPERATIONS

Thirteen Weeks Thirty-nine Weeks Ending Ending --------------------- --------------------- (Unaudited, in thousands, Sept. 25, Sept. 26, Sept. 25, Sept. 26, except per share amounts) 2005 2004 2005 2004 --------------------------------------------------------------------------

Revenues $ 220,801 $ 217,644 $ 672,447 $ 650,690

Operating costs: Production 100,179 94,333 294,024 280,037 Selling, general and administrative 82,368 75,876 248,474 230,757 Depreciation and amortization 17,084 15,709 51,602 49,280 -------------------------------------------------------------------------- Total operating costs 199,631 185,918 594,100 560,074 --------------------------------------------------------------------------

Operating income 21,170 31,726 78,347 90,616 --------------------------------------------------------------------------

Other income (expense): Interest expense (7,097) (7,643) (21,956) (23,171) Investment income - unconsolidated affiliates 891 523 2,329 330 Gain on sale of Denver (3) --- 33,270 --- Other, net 791 335 1,586 1,028 -------------------------------------------------------------------------- Total other income (expense) (5,418) (6,785) 15,229 (21,813) --------------------------------------------------------------------------

Income before income taxes and cumulative effect of change in accounting principle 15,752 24,941 93,576 68,803 Income taxes 5,990 9,228 36,132 25,457 --------------------------------------------------------------------------

Income before cumulative effect of change in accounting principle 9,762 15,713 57,444 43,346 Cumulative effect of change in accounting principle (net of tax) --- --- (325,453) --- -------------------------------------------------------------------------- Net income (loss) $ 9,762 $ 15,713 $(268,009) $ 43,346 ==========================================================================

Net income (loss) per common share: Income before cumulative effect of change in accounting principle $ 0.41 $ 0.67 $ 2.44 $ 1.86 Cumulative effect of change in accounting principle --- --- (13.84) --- ------------------------------------------- Net income (loss) $ 0.41 $ 0.67 $ (11.40) $ 1.86 ===========================================

Net income (loss) per common share - assuming dilution: Income before cumulative effect of change in accounting principle $ 0.41 $ 0.66 $ 2.40 $ 1.83 Cumulative effect of change in accounting principle --- --- (13.62) --- ------------------------------------------- Net income (loss) $ 0.41 $ 0.66 $ (11.22) $ 1.83 ===========================================

-------------------------------------------------------------------------- Weighted-average common shares outstanding: Basic 23,558 23,399 23,511 23,339 Diluted 23,973 23,730 23,886 23,727 --------------------------------------------------------------------------

Media General, Inc. BUSINESS SEGMENTS

(Unaudited, in Interactive thousands) Publishing Broadcast Media Eliminations Total -------------------------------------------------------------------------- Quarter Ended September 25, 2005 Consolidated revenues $142,100 $ 74,689 $ 5,263 $ (1,251) $220,801 ==================================================== Segment operating cash flow $ 32,960 $ 17,163 $ (604) $ 49,519 Allocated amounts: Equity in net income of unconsolidated affiliate 3 3 Gain on sale of Denver (3) (3) Depreciation and amortization (5,942) (4,742) (317) (11,001) ---------------------------------------------------- Segment profit (loss) $ 27,015 $ 12,421 $ (918) 38,518 ==============================

Unallocated amounts: Interest expense (7,097) Investment income- SP Newsprint 888 Acquisition intangibles amortization (4,897) Corporate expense (9,556) Other (2,104) --------- Consolidated income before income taxes $ 15,752 =========

Quarter Ended September 26, 2004 Consolidated revenues $137,659 $ 77,308 $ 3,526 $ (849) $217,644 ==================================================== Segment operating cash flow $ 35,286 $ 24,397 $(1,202) $ 58,481 Allocated amounts: Equity in net income of unconsolidated affiliate 207 207 Depreciation and amortization (5,847) (4,215) (303) (10,365) ---------------------------------------------------- Segment profit (loss) $ 29,646 $ 20,182 $(1,505) 48,323

Unallocated amounts: Interest expense (7,643) Investment income- SP Newsprint 316 Acquisition intangibles amortization (4,109) Corporate expense (9,636) Other (2,310) --------- Consolidated income before income taxes $24,941 =========

Nine Months Ended September 25, 2005 Consolidated revenues $431,993 $229,250 $14,726 $ (3,522) $672,447 ==================================================== Segment operating cash flow $105,635 $ 61,229 $(1,710) $165,154 Allocated amounts: Equity in net income of unconsolidated affiliates 221 162 383 Gain on sale of Denver 33,270 33,270 Depreciation and amortization (17,590) (14,627) (1,174) (33,391) ---------------------------------------------------- Segment profit (loss) $121,536 $ 46,602 $(2,722) 165,416 ==============================

Unallocated amounts: Interest expense (21,956) Investment income- SP Newsprint 1,946 Acquisition intangibles amortization (14,366) Corporate expense (30,497) Other (6,967) --------- Consolidated income before income taxes and cumulative effect of change in accounting principle $ 93,576 =========

Nine Months Ended September 26, 2004 Consolidated revenues $413,893 $229,434 $10,010 $(2,647) $650,690 ==================================================== Segment operating cash flow $105,023 $ 73,175 $(3,625) $174,573 Allocated amounts: Equity in net income of unconsolidated affiliate 355 355 Depreciation and amortization (17,771) (14,183) (1,053) (33,007) ---------------------------------------------------- Segment profit (loss) $ 87,607 $ 58,992 $(4,678) 141,921 ==============================

Unallocated amounts: Interest expense (23,171) Investment loss- SP Newsprint (25) Acquisition intangibles amortization (12,327) Corporate expense (30,994) Other (6,601) --------- Consolidated income before income taxes $ 68,803 =========

Media General, Inc. CONSOLIDATED BALANCE SHEETS

September 25, December 26, (Unaudited, in thousands) 2005 2004 --------------------------------------------------------------------------

ASSETS

Current assets: Cash and cash equivalents $ 9,774 $ 9,823 Accounts receivable - net 110,404 117,177 Inventories 8,732 8,021 Other 46,387 35,826 ------------- ------------- Total current assets 175,297 170,847 ------------- -------------

Investments in unconsolidated affiliates 84,510 93,277

Other assets 59,226 59,676

Property, plant and equipment - net 432,185 422,299

Excess of cost over fair value of net identifiable assets of acquired businesses - net 645,487 641,706

FCC licenses and other intangibles - net 564,391 1,092,530 ------------- -------------

Total assets $ 1,961,096 $ 2,480,335 =========================================================================

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities: Accounts payable $ 22,466 $ 27,000 Accrued expenses and other liabilities 89,021 92,163 Income taxes payable --- 7,708 ------------- ------------- Total current liabilities 111,487 126,871 ------------- -------------

Long-term debt 400,978 437,960

Borrowings of consolidated variable interest entities 95,320 95,320

Deferred income taxes 314,581 501,655

Other liabilities and deferred credits 130,484 134,760

Stockholders' equity 908,246 1,183,769 ------------- -------------

Total liabilities and stockholders' equity $ 1,961,096 $ 2,480,335 =========================================================================

Media General, Inc. EBITDA, AFTER-TAX CASH FLOW AND FREE CASH FLOW

Thirteen Weeks Thirty-nine Weeks Ending Ending --------------------- --------------------- Sept. 25, Sept. 26, Sept. 25, Sept. 26, (Unaudited, in thousands) 2005 2004 2005 2004 --------------------------------------------------------------------------

Income before cumulative effect of change in accounting principle* $ 9,762 $ 15,713 $ 57,444 $ 43,346

Interest 7,097 7,643 21,956 23,171 Taxes 5,990 9,228 36,132 25,457 Depreciation and amortization 17,084 15,709 51,602 49,280 -------------------------------------------

EBITDA before cumulative effect of change in accounting principle* $ 39,933 $ 48,293 $167,134 $141,254 ===========================================

Income before cumulative effect of change in accounting principle* $ 9,762 $ 15,713 $ 57,444 $ 43,346 Depreciation and amortization 17,084 15,709 51,602 49,280 -------------------------------------------

After-tax cash flow* $ 26,846 $ 31,422 $109,046 $ 92,626 ===========================================

After-tax cash flow* $ 26,846 $ 31,422 $109,046 $ 92,626 Capital expenditures 16,084 9,901 48,724 29,505 -------------------------------------------

Free cash flow* $ 10,762 $ 21,521 $ 60,322 $ 63,121 ===========================================

* Includes a $19.4 million gain on the 2005 sale of the Company's investment in the Denver Post Corporation.

Source: Media General

CONTACT: Investors: Lou Anne Nabhan, +1-804-649-6103, or Media: Ray Kozakewicz, +1-804-649-6748, both of Media General

Web site: http://www.mediageneral.com/

------- Profile: Ent