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.
Conference Call and Webcast
The company will hold a conference call with financial analysts today at
10 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
1-866-277-1182 about 10 minutes prior to the 10 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 on the homepage about 10
minutes in advance. A replay of the Webcast will be available online at
http://www.mediageneral.com beginning at 12 p.m. today. A telephone replay is
also available, beginning at 12 p.m. today and ending at 12 p.m. on April 24,
2008, by dialing 888-286-8010 or 617-801-6888, and using the passcode
75946294.
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

Investor, Lou Anne Nabhan, +1-804-649-6103; or Media, Ray Kozakewicz,
+1-804-649-6748, both of Media General