Media General posts loss; ad sales fall
NEW YORK (Reuters) - Media General Inc (MEG.N) reported a wider net loss on Friday and an 18 percent drop in revenue because of falling newspaper advertising sales, sending its shares down 12 percent.
The publisher of newspapers such as the Richmond Times-Dispatch and Tampa Tribune said its first-quarter net loss was $21.3 million, or 96 cents a share, compared with a loss of $20.3 million, or 92 cents a share, a year earlier. Revenue fell 18 percent to $159.5 million.
Publishing revenue fell on a 25 percent drop in ad revenue. Lower automotive ad spending contributed to a 19 percent drop in revenue at Media General's television stations, a trend that likely will show up at other U.S. TV station owners such as Meredith Corp (MDP.N) and News Corp (NWSA.O).
Media General, like other U.S. newspaper publishers, is grappling with weaker ad sales, especially in its classified ad business, as more people seek news online for free.
The financial crisis in the past year has accelerated an erosion of real estate, job and automotive ad sales.
The Richmond, Virginia-based Media General's results come a day after USA Today Publisher Gannett Co Inc (GCI.N) reported a 60 percent drop in its quarterly profit because of ad revenue declines.
The New York Times Co (NYT.N) and McClatchy Co (MNI.N) likely will report similar results next week.
COST CUTS
Excluding employee severance costs, Media General's loss would have been 77 cents a share. Few analysts offered estimates on the company, making an average expectation difficult to project.
Drake Johnstone of Davenport & Co, predicted a loss of 5 cents a share on revenue of $180 million. Benchmark Co analyst Ed Atorino predicted a 54 cent loss.
Few observers of the U.S. newspaper business expect the advertising market to improve any time soon. Many expect some big U.S. city dailies to die this year. So far EW Scripps Co (SSP.N) has closed the Rocky Mountain News and Hearst Corp has closed the print edition of The Seattle Post-Intelligencer.
The New York Times has threatened to close The Boston Globe.
Media General lowered costs in the first quarter through 300 job cuts and suspending its dividend. It said it would freeze its pension plan, effective May 31. It expects its cost-savings plans to reduce total 2009 operating costs by 15 percent compared with last year.
Classified ad revenue fell, with employment classifieds leading the way with a 67 percent decline. Excluding charges, publishing profit fell 78 percent.
Media General's online operations reported a $1.1 million operating loss, narrower than last year's loss of $2.7 million. Revenue rose 24.5 percent. Continued...
