Media General Reports Third-Quarter 2008 Results

Media General Reports Third-Quarter 2008 Results

RICHMOND, Va., Oct. 16 /PRNewswire-FirstCall/ -- Media General, Inc. (NYSE:MEG) today reported net income in the third quarter of 2008 of $6.1 million, or 28 cents per diluted share, compared with net income in the 2007 third quarter of $2.5 million, or 11 cents per diluted share. Excluding discontinued operations, consisting of five television stations that have been or will be sold, income from continuing operations was $5.8 million, or 26 cents per diluted share. This compares with income from continuing operations of $1.6 million, or 7 cents per diluted share, from the same period in 2007. Total company revenues of $193.7 million in the third quarter of 2008 decreased 10.9 percent from the same period in 2007.

Media General's higher third-quarter results primarily reflected a 24.5 percent increase in Broadcast Division profits, lower interest expense and the absence this year of operating losses from SP Newsprint, which was divested on March 31, 2008. The 2008 quarter also reflected improved results from the Interactive Media Division. Included in the third quarter was the reversal of approximately $5 million of pretax profit-sharing expense accrued earlier in 2008. This action was based on actual results for the first nine months and the company's projections for the remaining three months. The reversal was spread across all three operating segments and corporate expense. Total operating costs in the third quarter decreased 9.5 percent compared with the prior year, reflecting the benefit of aggressive actions to reduce workforce and cut other costs. In 2008, the company had $2 million more of fixed asset gains in selling, general and administrative expense than in 2007.

"The prolonged weakened economy and unfavorable business climate have created far more challenges than we anticipated and continued to deeply impact our operating results in the third quarter, particularly the Publishing Division," said Marshall N. Morton, president and chief executive officer. "In reaction, we have accelerated our response to a changing marketplace through product innovation and aggressive expense management.

"In the third quarter, our Broadcast Division generated Political revenues of $7.5 million, an amount that reflected stronger spending by presidential and U.S. Congressional campaigns," Mr. Morton said. "We also generated $12.5 million in Summer Olympics advertising, which partially offset a decline in Local and National time sales.

"The Interactive Media Division reported a 9 percent increase in revenues, which was driven by a strong performance by DealTaker.com, and a 29 percent increase in Local advertising. The partnership with Yahoo!HotJobs generated $1.7 million in revenues in the quarter, helping to mitigate a 12 percent decrease in Classified revenues. Our online audience growth continued in the third quarter, driven significantly by our continuous news offerings on all sites. Page views were up 14.5 percent, visitor sessions increased 23.9 percent and unique visitors rose 30.8 percent," Mr. Morton said.

Publishing Division

Publishing Division profit for the quarter was $10.3 million compared with $22 million in the 2007 third quarter. Total revenues decreased 18.2 percent, and newspaper advertising revenues declined 21.5 percent.

Excluding Florida, where Publishing revenues were down 28.3 percent in the quarter, total Publishing revenues decreased 13.6 percent. Revenues declined 16.4 percent in Virginia and 11.4 percent in North Carolina. The opening of several new department stores in Alabama in 2008 helped to hold the overall decline in this market to 4.3 percent. In South Carolina, where revenues declined just 2.9 percent, advertising from a weekly newspaper acquired earlier this year helped to partially offset the total spending decline.

Classified advertising revenues in the third quarter were below last year's quarter by $14.8 million, or 33.1 percent, driven by shortfalls in all markets, particularly Tampa. For the company's three metro markets, employment revenues decreased 47.4 percent, real estate revenues were down 46.4 percent, and automotive revenues declined 42.7 percent.

Retail advertising revenues declined $6.7 million, or 12.5 percent, primarily due to lower spending in the Tampa market in the department store, home furnishings, and entertainment categories. National revenues decreased $1.8 million, or 20.1 percent, as a result of lower spending in the telecommunications and automotive categories in the Tampa market. Circulation revenues were even for the quarter, reflecting Daily single-copy price increases in most markets on September 1 and home-delivery rate increases earlier in the year in some markets.

Excluding severance from both years, Publishing Division expenses declined 9.9 percent for the quarter driven by an 11 percent decline in salaries, reflecting savings from staff reductions, benefits and profit sharing. Newsprint expense decreased 3.9 percent as a result of lower consumption, which was down 21.4 percent. The average price per ton increased $117, or 22.2 percent, from the 2007 third quarter.

Broadcast Division

Broadcast Division profit for the quarter of $17.7 million increased 24.5 percent from last year's equivalent period. Political revenues of $7.5 million and Olympics revenues of $12.5 million largely offset weak National transactional sales. Expenses decreased 6.8 percent. The division's significant number of cost reduction measures, along with savings for benefits and profit sharing, led to a 9.9 percent reduction in salary and benefit expenses for the third quarter compared with last year.

Total Broadcast revenues declined $1.3 million, or 1.5 percent. Gross time sales declined $775,000, or less than one percent. Local time sales declined just $210,000, or 0.4 percent. Lower spending in the automotive and furniture store categories was partially offset by higher medical, fast food and telecommunications advertising. National time sales decreased $6.5 million, or 19.7 percent. Categories showing decreases for the quarter included automotive, telecommunications and corporate. Weak economic conditions in the Tampa market continue to hamper WFLA's performance.

Political revenues increased by $5.9 million over the 2007 quarter and were generated from presidential campaign and issue spending in Florida, Ohio, North Carolina, Mississippi, Tennessee and Virginia, and U.S. Congressional races in Ohio, Mississippi, Georgia, Virginia and South Carolina.

Interactive Media Division

The Interactive Media Division had a quarterly loss of $336,000 compared with a loss of $1 million in the 2007 third quarter, excluding a $2.3 million write-down of an investment in 2007. The division generated revenues of $10.4 million, up 9 percent, reflecting a 29 percent increase in Local advertising and strong revenues from DealTaker.com, acquired March 31, 2008.

Local revenues increased as the result of continued focus on direct sales, increased staffing and training. This resulted in a growth in banners and sponsorships. National/Regional revenues decreased 11 percent, due to softer advertising from national agencies, particularly at TBO.com in Tampa.

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.

Other results

Interest expense decreased by $5 million, or 33 percent, due almost equally to lower average interest rates and lower average debt levels. Debt at the end of the third quarter was $750 million, down from $830 million at the end of the second quarter and from $898 million at the beginning of the year. With the current-year sale of SP Newsprint, the $4.9 million of operating losses recorded in 2007 were absent in the current quarter. SP impact in this year's third quarter produced income of $1 million, reflecting favorable adjustment to certain post-closing liabilities.

EBITDA (income from continuing operations before interest, taxes, depreciation and amortization) in the third quarter of 2008 was $36.4 million, compared with $34 million in the 2007 period. After-Tax Cash Flow was $22.6 million compared with $19.5 million in the prior year. Capital expenditures in the third quarter of 2008 were $6.8 million compared with $17.3 million in the prior-year period. Free Cash Flow for the quarter (After-Tax Cash Flow minus capital expenditures) was $15.8 million, up from $2.1 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. To dial in to the call, listeners may call 1-866- 362-5158 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 Webcast" 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 is also available, beginning at 1 p.m. today and ending at 1 p.m. on October 23, 2008, by dialing 888-286-8010 or 617-801- 6888, and using the passcode 61330306.

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 24 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 19 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.

   Media General, Inc.   CONSOLIDATED STATEMENTS OF OPERATIONS                                        Thirteen Weeks     Thirty-Nine Weeks                                           Ending              Ending                                    ------------------- --------------------   (Unaudited, in thousands except  Sept. 28, Sept. 30,  Sept. 28, Sept. 30,   per share amounts)                  2008      2007      2008       2007   -------------------------------------------------------------------------   Revenues                          $193,705  $217,307   $593,049  $663,786    Operating costs:     Production                        90,637    98,929    285,306   306,909     Selling, general and      administrative                   68,806    77,385    233,112   247,232     Depreciation and amortization     16,849    17,825     54,206    56,056     Goodwill and other asset      impairment                          ---       ---    778,318       ---     Gain on insurance recovery          (500)      ---     (3,250)      ---   -------------------------------------------------------------------------       Total operating costs          175,792   194,139  1,347,692   610,197   -------------------------------------------------------------------------    Operating income (loss)             17,913    23,168   (754,643)   53,589   -------------------------------------------------------------------------    Other income (expense):     Interest expense                  (9,962)  (14,942)   (32,799)  (45,102)     Impairment of and net gain      (loss) on investments             1,375    (4,936)    (4,586)   (9,542)     Other, net                           248    (2,052)       761    (1,281)   -------------------------------------------------------------------------       Total other expense             (8,339)  (21,930)   (36,624)  (55,925)   -------------------------------------------------------------------------    Income (loss) from continuing    operations before income taxes      9,574     1,238   (791,267)   (2,336)    Income taxes                         3,800      (389)  (253,772)   (1,722)   -------------------------------------------------------------------------    Income (loss) from continuing    operations                          5,774     1,627   (537,495)     (614)   Discontinued operations:     Income from discontinued      operations (net of tax)             373       855      2,475     1,712     Loss related to divestiture of      operations (net of tax)             ---       ---    (11,300)      ---   -------------------------------------------------------------------------   Net income (loss)                   $6,147    $2,482  $(546,320)   $1,098   =========================================================================   Net income (loss) per common share:     Income (loss) from continuing      operations                        $0.26     $0.07    $(24.33)   $(0.03)     Discontinued operations             0.02      0.04      (0.40)     0.08                                      --------------------------------------   Net income (loss)                    $0.28     $0.11    $(24.73)    $0.05                                      ======================================   Net income (loss) per common    share - assuming dilution:     Income (loss) from continuing      operations                        $0.26     $0.07    $(24.33)   $(0.03)     Discontinued operations             0.02      0.04      (0.40)     0.08                                      --------------------------------------   Net income (loss)                    $0.28     $0.11    $(24.73)    $0.05                                      ======================================   -------------------------------------------------------------------------    Weighted-average common shares    outstanding:     Basic                             22,101    22,165     22,096    22,819     Diluted                           22,182    22,300     22,096    23,004   -------------------------------------------------------------------------      Media General, Inc.   BUSINESS SEGMENTS     (Unaudited, in                             Interactive    thousands)            Publishing Broadcast   Media   Eliminations Total   -------------------------------------------------------------------------   Quarter Ended September    28, 2008   Consolidated revenues    $104,896   $80,065  $10,367   $(1,623)  $193,705                            ================================================   Segment operating cash    flow                     $16,886   $23,872     $111              $40,869   Depreciation and    amortization              (6,550)   (6,194)    (447)             (13,191)                            ------------------------------------------------       Segment profit (loss) $10,336   $17,678    $(336)              27,678                            ============================   Unallocated amounts:     Interest expense                                                 (9,962)     Impairment of and net      gain (loss) on      investments                                                      1,375     Acquisition intangibles      amortization                                                    (2,986)     Corporate expense                                                (8,652)     Gain on insurance      recovery                                                           500     Other                                                             1,621                                                                     -------       Consolidated income        from continuing        operations before        income taxes                                                  $9,574                                                                     =======    Quarter Ended September    30, 2007   Consolidated revenues    $128,287   $81,323   $9,512   $(1,815)  $217,307                            ================================================   Segment operating cash    flow                     $28,164   $20,019    $(527)             $47,656   Write down of investment                      (2,264)              (2,264)   Depreciation and    amortization              (6,162)   (5,823)    (469)             (12,454)                            ------------------------------------------------       Segment profit        $22,002   $14,196  $(3,260)              32,938                            ============================   Unallocated amounts:     Interest expense                                                (14,942)     Equity in net loss of      unconsolidated      affiliates                                                      (4,936)     Acquisition intangibles      amortization                                                    (4,166)     Corporate expense                                                (9,044)     Other                                                             1,388                                                                     -------       Consolidated income        from continuing        operations before        income taxes                                                  $1,238                                                                     =======    Nine Months Ended    September 28, 2008   Consolidated revenues    $332,142  $237,207  $28,599   $(4,899)  $593,049                            ================================================   Segment operating cash    flow                     $46,109   $59,357  $(2,349)            $103,117   Recovery on investment                            10                   10   Depreciation and    amortization             (20,746)  (19,196)  (1,399)             (41,341)                            ------------------------------------------------       Segment profit (loss) $25,363   $40,161  $(3,738)              61,786                            ============================   Unallocated amounts:     Interest expense                                                (32,799)     Impairment of and net      gain (loss) on      investments                                                     (4,586)     Acquisition intangibles      amortization                                                   (10,768)     Corporate expense                                               (29,487)     Gain on insurance      recovery                                                         3,250     Goodwill and other      asset impairment                                              (778,318)     Other                                                              (345)                                                                     -------       Consolidated loss from        continuing operations        before income taxes                                        $(791,267)                                                                     =======    Nine Months Ended    September 30, 2007   Consolidated revenues    $397,843  $244,330  $26,730   $(5,117)  $663,786                            ================================================   Segment operating cash    flow                     $82,483   $58,791    $(127)            $141,147   Net write down of    investment                                   (2,076)              (2,076)   Depreciation and    amortization             (19,051)  (19,009)  (1,328)             (39,388)                            ------------------------------------------------       Segment profit (loss) $63,432   $39,782  $(3,531)              99,683                            ============================   Unallocated amounts:     Interest expense                                                (45,102)     Equity in net loss of      unconsolidated      affiliates                                                      (9,542)     Acquisition intangibles      amortization                                                   (12,989)     Corporate expense                                               (29,319)     Other                                                            (5,067)                                                                     -------       Consolidated loss from        continuing operations        before income taxes                                          $(2,336)                                                                     =======      Media General, Inc.   CONSOLIDATED BALANCE SHEETS                                                  Sept. 28,          Dec. 30,   (Unaudited, in thousands)                        2008              2007   ------------------------------------------------------------------------   ASSETS    Current assets:     Cash and cash equivalents                    $14,100           $14,214     Accounts receivable-net                      100,876           133,863     Inventories                                   10,582             6,676     Other                                         52,193            52,083     Assets of discontinued operations             14,877           106,958                                                 --------          --------       Total current assets                       192,628           313,794                                                 --------          --------   Investments in unconsolidated affiliates             -            52,360    Other assets                                    41,248            65,686    Property, plant and equipment - net            453,719           475,028    Excess of cost over fair value of net    identifiable assets of acquired businesses    421,471           917,521    FCC licenses and other intangibles - net       376,352           646,677                                                 --------          --------   Total assets                                $1,485,418        $2,471,066   ========================================================================    LIABILITIES AND STOCKHOLDERS' EQUITY    Current liabilities:     Accounts payable                             $31,370           $32,676     Accrued expenses and other liabilities       100,582           101,817     Liabilities of discontinued operations         3,596             5,521                                                 --------          --------       Total current liabilities                  135,548           140,014                                                 --------          --------    Long-term debt                                 750,055           897,572    Deferred income taxes                           42,406           311,588    Other liabilities and deferred credits         205,069           208,885    Stockholders' equity                           352,340           913,007                                                 --------          --------   Total liabilities and stockholders' equity  $1,485,418        $2,471,066   ========================================================================      Media General, Inc.   EBITDA, After-tax Cash Flow, and Free Cash Flow                                          Thirteen Weeks   Thirty-Nine Weeks                                             Ending             Ending                                      ------------------  ------------------                                      Sept. 28, Sept. 30, Sept. 28, Sept. 30,   (Unaudited, in thousands)             2008     2007      2008      2007   -------------------------------------------------------------------------   Income (loss) from continuing    operations                           $5,774   $1,627  $(537,495)   $(614)   Interest                               9,962   14,942     32,799   45,102   Taxes                                  3,800     (389)  (253,772)  (1,722)   Depreciation and amortization         16,849   17,825     54,206   56,056   -------------------------------------------------------------------------   EBITDA from continuing operations    $36,385  $34,005  $(704,262) $98,822   =========================================================================    Income (loss) from continuing    operations                           $5,774   $1,627  $(537,495)   $(614)   Non-cash impairment charge                 -        -    532,084        -   Depreciation and amortization         16,849   17,825     54,206   56,056   -------------------------------------------------------------------------   After-tax cash flow excluding non-    cash impairment charge              $22,623  $19,452    $48,795  $55,442   =========================================================================    After-tax cash flow                  $22,623  $19,452    $48,795  $55,442   Capital expenditures                   6,797   17,337     19,243   55,128   -------------------------------------------------------------------------   Free cash flow excluding non-cash    impairment charge                   $15,826   $2,115    $29,552     $314   =========================================================================  

First Call Analyst:
FCMN Contact: mgoodhead@mediageneral.com

Source: Media General, Inc.

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

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

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Profile: International Entertainment