Media General Reports Second-Quarter 2010 Results, Provides Outlook

Media General Reports Second-Quarter 2010 Results, Provides Outlook

RICHMOND, Va., July 21 /PRNewswire-FirstCall/ -- Media General, Inc. (NYSE:MEG) today reported operating income of $16.3 million in the second quarter of 2010, a 19 percent increase from the second quarter of 2009. The increase mostly reflected the benefit of Political advertising at the company's television stations. A net loss of $4.3 million, or 19 cents per share, reflected higher interest expense related to the company's debt restructuring earlier this year as well as non-cash tax expense. In the 2009 second quarter, net income was $20.6 million, or 90 cents per share, including a tax benefit of $11 million and a gain of $7.1 million from the sale of a television station in Jacksonville, Fla.

Total revenues in the current quarter increased approximately 2 percent to $166.2 million. Total operating expenses were held even with the prior year.

"Media General's second-quarter operating results included $7 million in Political revenues and our television stations also benefited from increased automotive spending, which was up nearly 42 percent compared with last year," said Marshall N. Morton, president and chief executive officer. Total Broadcast revenues in the second quarter increased 13 percent from last year.

"We were pleased to deliver continued moderation in the rate of decline in Publishing revenues, down 7 percent compared with last year. Year-over-year declines in Classified revenues moderated to the mid-to-low single digits in all markets except Florida. Our North Carolina market produced a nearly 3 percent increase in Classified advertising in the quarter.

"We continue to manage expenses aggressively. In the second quarter, our expense performance was somewhat better than expectations, due to lower health care expenses and to intentional delays in hiring for certain open positions," said Mr. Morton. "Lower newsprint expense, which decreased nearly 30 percent in the quarter, also contributed.

"All of our properties are aggressively executing on our Digital Media strategy. Total Digital Media revenues, including our Advertising Services businesses, increased 8 percent compared with last year. Our Web sites alone generated a 16 percent increase in revenues. Local online revenues continued their robust growth and increased 26 percent in the second quarter, a direct result of sales pressure in our markets. Online Classified revenues grew for the second quarter in a row and increased nearly 16 percent. This resulted from our sales initiatives related to our Internet partnerships with Yahoo! and Zillow. We also focused our online content on relevant news and information, and unique visitors increased 19 percent in the second quarter."

Market Segments

Virginia/Tennessee segment profit in the second quarter was $10.5 million, compared to $11.3 million in the 2009 second quarter. Revenues declined 3 percent from last year, while expenses decreased 2 percent. Broadcast revenues were about even with the prior year, despite limited Political advertising at the market's two television stations in 2010 as the Virginia gubernatorial election was held in 2009. Publishing revenues decreased 4.5 percent. Higher third-party printing and distribution revenues partially offset declines in Local, National and Classified advertising. Local revenues decreased 1 percent, and Classified revenues were down 4 percent. National revenues declined 19 percent, due primarily to lower spending by telecommunications advertisers in Richmond. Digital revenues rose 15 percent, reflecting increases in Local and Classified online advertising.

Florida segment profit was $1.5 million, compared with $193,000 a year ago. Expenses decreased 4 percent, offsetting a 1 percent decline in total revenues. Broadcast revenues increased 17 percent, due to strong Political advertising on WFLA, but were more than offset by lower Publishing revenues. Political revenues were $1.6 million compared with essentially none last year, reflecting gubernatorial, U.S. Senate and U.S. House races. Classified and Local revenues decreased 22 percent and 3 percent, respectively. National revenues increased 11 percent, mostly the result of advertising related to the Gulf of Mexico oil spill. Digital revenues increased 25 percent, due to solid growth in Local, National and Classified online advertising.

Mid-South segment profit was $9.6 million, compared with $6 million in the prior year. Total revenues increased 12 percent, and Broadcast revenues increased 17 percent. The Mid-South Market includes 11 television stations and only three community newspapers. Political revenues were $4.4 million, compared with $311,000 in 2009 and included robust spending for primary elections in South Carolina and Alabama. Local revenues increased 4.5 percent, while National and Classified revenues decreased 3 percent and 5 percent, respectively. Digital media revenues rose 11 percent.

North Carolina segment profit was $1.5 million, which was up slightly from last year. Revenues decreased 2 percent, and expenses were down 4 percent from last year. Broadcast revenues increased 10 percent and included Political revenues of approximately $100,000 at the market's two television stations. The Raleigh station also benefited from significantly increased National revenues. Publishing revenues in North Carolina declined 8 percent in the second quarter. National and Classified revenues increased 2 percent and 3 percent, respectively, while Local revenues declined 6 percent. Digital media revenues increased 14 percent.

Ohio/Rhode Island segment profit was $3.7 million, compared with $2.6 million last year, due to strong Political and National revenues from the segment's two television stations. Total revenues increased 10 percent. Political revenues were $708,000 compared with $119,000 in 2009. National advertising increased 20 percent, due to increased automotive, entertainment and health care advertising. Local revenues declined 2 percent. Digital media revenues rose 9.5 percent.

Advertising Services and Other segment profit was $884,000, a 14 percent increase from last year. DealTaker.com, the company's shopping and coupon Web site, drove the improvement. Revenues rose 11 percent and profit increased 7 percent at DealTaker.com.

Other Results

Interest expense was $17.1 million in the second quarter, compared with $11.3 million last year, due to the company's new financing structure. Debt at the end of second quarter of 2010 was $673 million, compared with $693 million at the end of the first quarter of 2010 and $712 million at the beginning of the year. The reduction in the second quarter reflects a tax refund received in April of approximately $26 million that was used to reduce debt.

Acquisition intangibles amortization decreased 12 percent, reflecting the impact of the prior-year's impairment write-downs of network affiliation agreements. Corporate expense increased 17 percent, reflecting the absence in 2010 of employee furlough days and certain other cost containment measures.

The previously estimated second-quarter non-cash tax expense of $7.5 million was partially offset by a $1 million non-cash favorable adjustment related to a court ruling received in connection with a state income tax issue as well as a $2.8 million non-cash tax benefit resulting from the intraperiod allocation of tax to other comprehensive income items. Thus, income tax expense in the second quarter was $3.7 million. Last year's second quarter showed an income tax benefit of $11 million on continuing operations, including $3.6 million from a favorable determination concerning a state tax issue and $7.5 million of tax benefit attributable to first-half results.

EBITDA [income (loss) from continuing operations before interest, taxes, depreciation and amortization] was $30.1 million in the second quarter of 2010, compared with $28.7 million in the 2009 period. After-Tax Cash Flow was $13.1 million, compared with $17.4 million in the prior year's quarter. Capital expenditures in the second quarter of 2010 were $6.7 million, compared with $3.8 million in the prior-year period. Free Cash Flow (After-Tax Cash Flow minus capital expenditures) was $6.4 million, compared with $13.6 million in the prior-year period.

Media General provides the non-GAAP financial metrics EBITDA from continuing operations, 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

For the third quarter of 2010, Media General expects total revenues to increase 6-8 percent, compared with 2009. Broadcast revenues in the third quarter are expected to increase more than 20 percent, mostly reflecting significant Political revenues. Publishing revenue decreases compared with prior year are expected to continue to moderate and the third-quarter decline is expected to be 3-5 percent. Total operating costs are expected to increase 7-8 percent, reflecting the absence in 2010 of furlough days and certain cost containment measures in 2010 as well as increased support of new revenue initiatives. The company continues to expect free cash flow for the full year 2010 of $58-60 million, including the $26 million tax refund.

Conference Call, Webcast and Financial Statements

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 1-800-299-0433 about 10 minutes prior to the 11 a.m. start. The participant passcode is "Media General." 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 2 p.m. today and ending at 2 p.m. on July 28, 2010, by dialing 888-286-8010 or 617-801-6888, and using the passcode 31552116.

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 news, information and entertainment across multiple media platforms, serving consumers and advertisers in strong local markets, primarily in the Southeastern United States. Media General's operations are organized in five geographic market segments and a sixth segment that includes the company's interactive advertising services and certain other operations. The company's operations include 18 network-affiliated television stations and their associated Web sites, three metropolitan and 20 community newspapers and their associated Web sites, and more than 200 specialty publications that include weekly newspapers and niche publications targeted to various demographic, geographic and topical communities of interest. Many of the company's specialty publications have associated Web sites. Media General additionally operates three interactive advertising services companies: Blockdot, which specializes in interactive entertainment and advergaming technologies; DealTaker.com, a coupon and shopping Web site; and NetInformer, a leading provider of wireless media and mobile marketing services.

Media General, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS

Thirteen Weeks Twenty-Six Weeks
Ending Ending
-------------- ----------------

June June
27, 28, June 27, June 28,
(Unaudited, in
thousands except
per share
amounts) 2010 2009 2010 2009
----------------- ---- ---- ---- ----

Revenues
Publishing $82,905 $89,305 $164,203 $179,037
Broadcast 72,509 64,124 139,594 123,977
Digital media and
other 10,748 9,958 21,229 19,506
----------------- ------ ----- ------ ------
Total revenues 166,162 163,387 325,026 322,520
-------------- ------- ------- ------- -------

Operating costs:
Employee
compensation 72,445 73,587 148,037 160,151
Production 36,831 39,527 72,364 83,129
Selling, general
and
administrative 26,904 21,559 52,233 46,770
Depreciation and
amortization 13,697 15,057 27,398 30,375
---------------- ------ ------ ------ ------
Total operating
costs 149,877 149,730 300,032 320,425
--------------- ------- ------- ------- -------

Operating income 16,285 13,657 24,994 2,095
---------------- ------ ------ ------ -----

Other income
(expense):
Interest expense (17,089) (11,257) (36,912) (21,229)
Loss on sale of
investments --- (209) --- (209)
Other, net 166 166 541 409
---------- --- --- --- ---
Total other
expense (16,923) (11,300) (36,371) (21,029)
----------- ------- ------- ------- -------

Income (loss) from
continuing
operations before
income taxes (638) 2,357 (11,377) (18,934)

Income tax expense
(benefit) 3,645 (10,955) 9,652 (10,955)
------------------ ----- ------- ----- -------

Income (loss) from
continuing
operations (4,283) 13,312 (21,029) (7,979)
Discontinued
operations:
Income from
discontinued
operations (net
of tax) --- 156 --- 194
Income related to
divestiture of
operations (net
of tax) --- 7,120 --- 7,120
----------------- --- ----- --- -----
Net income (loss) $(4,283) $20,588 $(21,029) $(665)
================= ======= ======= ======== =====

Net income (loss)
per common share:
Income (loss) from
continuing
operations $(0.19) $0.57 $(0.94) $(0.36)
Discontinued
operations --- 0.33 --- 0.33
--- ---- --- ----
Net income (loss)
per common share $(0.19) $0.90 $(0.94) $(0.03)
====== ===== ====== ======

Net income (loss)
per common share
-assuming
dilution:
Income (loss) from
continuing
operations $(0.19) $0.57 $(0.94) $(0.36)
Discontinued
operations --- 0.33 --- 0.33
--- ---- --- ----
Net income (loss)
per common share
-assuming
dilution $(0.19) $0.90 $(0.94) $(0.03)
====== ===== ====== ======

Weighted-average
common shares
outstanding:
Basic and diluted 22,343 22,253 22,316 22,217

Media General, Inc.
BUSINESS SEGMENT

(Unaudited, in Operating
thousands) Revenues Depreciation & Profit
-------------- -------- Amortization (Loss)
------------ ------
Three Months Ending
June 27, 2010
Virginia/Tennessee $48,947 $(3,288) $10,483
Florida 37,393 (1,762) 1,526
Mid-South 41,477 (3,010) 9,563
North Carolina 19,212 (1,557) 1,537
Ohio/Rhode Island 13,826 (835) 3,681
Advertising Services
& Other 5,942 (234) 884
Eliminations (635) - -
---
27,674
Unallocated amounts:
Acquisition
intangibles
amortization - (1,571) (1,571)
Corporate expense - (1,440) (7,756)
$166,162 $(13,697)
======== ========

Corporate interest
expense (17,083)
Other (1,902)

Consolidated loss
from continuing
operations before
income taxes $(638)
=====

Operating
(Unaudited, in thousands) Revenues Depreciation & Profit
------------------------- -------- Amortization (Loss)
------------ ------
Three Months Ending June 28, 2009
Virginia/Tennessee $50,587 $(3,486) $11,324
Florida 37,627 (2,094) 193
Mid-South 36,941 (3,397) 5,971
North Carolina 19,675 (1,696) 1,483
Ohio/Rhode Island 12,614 (847) 2,577
Advertising Services & Other 6,242 (224) 776
Eliminations (299) - (5)
---
22,319
Unallocated amounts:
Acquisition intangibles
amortization - (1,787) (1,787)
Corporate expense - (1,526) (6,629)
$163,387 $(15,057)
======== ========

Interest expense (11,257)
Loss on sale of investments (209)
Other (80)

Consolidated income from
continuing
operations before income taxes $2,357
======

(Unaudited, in Operating
thousands) Revenues Depreciation & Profit
-------------- -------- Amortization (Loss)
------------ ------
Six months ended
June 27, 2010
Virginia/Tennessee $94,798 $(6,577) $18,092
Florida 75,466 (3,525) 2,771
Mid-South 78,062 (6,020) 14,239
North Carolina 38,021 (3,114) 2,648
Ohio/Rhode Island 27,441 (1,669) 6,962
Advertising
Services & Other 12,278 (465) 2,323
Eliminations (1,040) - -
---
47,035
Unallocated
amounts:
Acquisition
intangibles
amortization (3,142) (3,142)
Corporate expense (2,886) (15,712)
$325,026 $(27,398)
======== ========

Corporate interest
expense (36,897)
Other (2,661)

Consolidated loss
from continuing
operations before
income taxes $(11,377)
========

(Unaudited, in Operating
thousands) Revenues Depreciation & Profit
-------------- -------- Amortization (Loss)
------------ ------
Six months ended
June 28, 2009
Virginia/Tennessee $97,427 $(7,144) $13,360
Florida 79,867 (4,190) (2,837)
Mid-South 70,739 (6,788) 7,037
North Carolina 38,656 (3,392) (76)
Ohio/Rhode Island 23,700 (1,692) 2,737
Advertising
Services & Other 12,804 (449) 1,367
Eliminations (673) 1 (49)
---
21,539
Unallocated
amounts:
Acquisition
intangibles
amortization (3,586) (3,586)
Corporate expense (3,135) (15,263)
$322,520 $(30,375)
======== ========

Interest expense (21,229)
Loss on sale of
investments (209)
Other (186)

Consolidated loss
from continuing
operations before
income taxes $(18,934)
========

Media General, Inc.
CONSOLIDATED BALANCE SHEETS

December
June 27, 27,
(Unaudited, in thousands) 2010 2009
------------------------- ---- ----

ASSETS

Current assets:
Cash and cash equivalents $27,069 $33,232
Accounts receivable - net 89,175 104,405
Inventories 6,898 6,632
Other 24,720 60,786
------ ------
Total current assets 147,862 205,055
------- -------

Other assets 60,792 34,177

Property, plant and equipment
-net 405,154 421,208

FCC licenses and other
intangibles -net 572,466 575,608

Total assets $1,186,274 $1,236,048
============ ========== ==========

LIABILITIES AND STOCKHOLDERS'
EQUITY

Current liabilities:
Accounts payable $24,848 $26,398
Accrued expenses and other
liabilities 86,153 72,174
------ ------
Total current liabilities 111,001 98,572
------- ------

Long-term debt 672,859 711,909

Deferred income taxes 20,489 7,233

Other liabilities and deferred
credits 203,819 226,083

Stockholders' equity 178,106 192,251
Total liabilities and
stockholders' equity $1,186,274 $1,236,048
===================== ========== ==========

Media General, Inc.
REVENUES DETAIL

Thirteen Weeks Ending
---------------------
June 27, June 28,
(Unaudited, in thousands) 2010 2009 % Change
---- ---- --------

Virginia/Tennessee
Publishing $41,191 $43,136 (4.5)%
Broadcast 5,299 5,318 (0.4)%
Digital media 2,457 2,133 15.2 %
Total Virginia/Tennessee revenues 48,947 50,587 (3.2)%
------ ------ -----

Florida
Publishing 21,091 23,830 (11.5)%
Broadcast 14,505 12,361 17.3 %
Digital media 1,797 1,436 25.1 %
Total Florida revenues 37,393 37,627 (0.6)%
------ ------ -----

Mid-South
Publishing 8,192 8,513 (3.8)%
Broadcast 32,113 27,368 17.3 %
Digital media 1,172 1,060 10.6 %
Total Mid-South revenues 41,477 36,941 12.3 %
------ ------ -----

North Carolina
Publishing 12,537 13,644 (8.1)%
Broadcast 5,563 5,058 10.0 %
Digital media 1,112 973 14.3 %
Total North Carolina revenues 19,212 19,675 (2.4)%
------ ------ -----

Ohio/Rhode Island
Broadcast 13,285 12,120 9.6 %
Digital media 541 494 9.5 %
Total Ohio/Rhode Island revenues 13,826 12,614 9.6 %
------ ------ ----

Advertising Services & Other
Publishing (1) --- 297 (100.0)%
Broadcast (production company) 2,036 1,945 4.7 %
Digital media 3,906 4,000 (2.4)%
Total Advertising Services & Other
revenues 5,942 6,242 (4.8)%
----- ----- -----

Eliminations (635) (299) 112.4 %

Total revenues $166,162 $163,387 1.7 %
======== ======== ====

Selected revenue categories
(Unaudited, in thousands)

Publishing revenues
Local $36,595 $40,012 (8.5)%
National 5,799 6,338 (8.5)%
Classified 19,683 21,882 (10.0)%
Circulation 16,758 17,566 (4.6)%
Printing/Distribution 3,359 3,089 8.7 %
----- ----- ----

Broadcast revenues (gross)
Local $42,655 $40,897 4.3 %
National 22,224 21,042 5.6 %
Political 7,062 794 789.4 %
Cable/Satellite (retransmission)
fees 4,681 3,899 20.1 %
----- ----- -----

Digital revenues
Local $3,601 $2,848 26.4 %
National 851 804 5.8 %
Classified 2,429 2,097 15.8 %
Advertising Services 3,883 4,009 (3.1)%
----- ----- -----

Twenty-Six Weeks Ending
-----------------------
June 27, June 28,
(Unaudited, in thousands) 2010 2009 % Change
---- ---- --------

Virginia/Tennessee
Publishing $79,933 $83,483 (4.3)%
Broadcast 10,249 9,901 3.5 %
Digital media 4,616 4,043 14.2 %
Total Virginia/Tennessee revenues 94,798 97,427 (2.7)%
------ ------ -----

Florida
Publishing 43,230 51,116 (15.4)%
Broadcast 28,859 25,631 12.6 %
Digital media 3,377 3,120 8.2 %
Total Florida revenues 75,466 79,867 (5.5)%
------ ------ -----

Mid-South
Publishing 16,275 17,140 (5.0)%
Broadcast 59,590 51,631 15.4 %
Digital media 2,197 1,968 11.6 %
Total Mid-South revenues 78,062 70,739 10.4 %
------ ------ -----

North Carolina
Publishing 24,911 26,921 (7.5)%
Broadcast 11,056 9,933 11.3 %
Digital media 2,054 1,802 14.0 %
Total North Carolina revenues 38,021 38,656 (1.6)%
------ ------ -----

Ohio/Rhode Island
Broadcast 26,434 22,768 16.1 %
Digital media 1,007 932 8.0 %
Total Ohio/Rhode Island revenues 27,441 23,700 15.8 %
------ ------ -----

Advertising Services & Other
Publishing (1) 2 509 (99.6)%
Broadcast (production company) 3,873 4,350 (11.0)%
Digital media 8,403 7,945 5.8 %
Total Advertising Services & Other
revenues 12,278 12,804 (4.1)%
------ ------ -----

Eliminations (1,040) (673) 54.5 %

Total revenues $325,026 $322,520 0.8 %
======== ======== ====

Selected revenue categories
(Unaudited, in thousands)

Publishing revenues
Local $71,846 $79,942 (10.1)%
National 11,394 13,369 (14.8)%
Classified 38,669 43,797 (11.7)%
Circulation 34,123 34,611 (1.4)%
Printing/Distribution 6,572 6,135 7.1 %
----- ----- ----

Broadcast revenues (gross)
Local $84,652 $78,290 8.1 %
National 45,343 41,490 9.3 %
Political 8,041 961 736.7 %
Cable/Satellite (retransmission)
fees 9,291 7,514 23.6 %
----- ----- -----

Digital revenues
Local $6,597 $5,279 25.0 %
National 1,674 1,644 1.8 %
Classified 4,589 4,215 8.9 %
Advertising Services 8,362 7,946 5.2 %
----- ----- ----

(1) Starting in 2010, print products formerly within Advertising
Services & Other are being managed in their respective geographic
market or have been discontinued.

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

Thirteen Weeks Twenty-Six Weeks
Ending Ending
-------------- ----------------
June June
27, 28, June 27, June 28,
(Unaudited, in
thousands) 2010 2009 2010 2009
-------------- ---- ---- ---- ----

Income (loss) from
continuing operations $(4,283) $13,312 $(21,029) $(7,979)
Interest 17,089 11,257 36,912 21,229
Taxes 3,645 (10,955) 9,652 (10,955)
Depreciation and
amortization 13,697 15,057 27,398 30,375

EBITDA from continuing
operations $30,148 $28,671 $52,933 $32,670
====================== ======= ======= ======= =======

Income (loss) from
continuing operations $(4,283) $13,312 $(21,029) $(7,979)
Taxes * 3,645 (10,955) 9,652 (10,955)
Depreciation and
amortization 13,697 15,057 27,398 30,375

After-tax cash flow $13,059 $17,414 $16,021 $11,441
=================== ======= ======= ======= =======

After-tax cash flow $13,059 $17,414 $16,021 $11,441
Capital expenditures 6,668 3,845 8,796 7,978

Free cash flow $6,391 $13,569 $7,225 $3,463
============== ====== ======= ====== ======

* The Company's income tax expense in 2010 is non-cash in nature
and has been added back accordingly.
See 2009 Form 10-K for further discussion.

Source: Media General, Inc.

CONTACT: Investors, Lou Anne Nabhan, +1-804-649-6103; Media, Ray
Kozakewicz, +1-804-649-6748

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

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