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Media General Reports First-Quarter 2012 Results

Wednesday, April 18, 2012 9:09 AM


RICHMOND, Va., April 18, 2012 /PRNewswire/ -- Media General, Inc. (NYSE: MEG), a multimedia provider of broadcast television, digital media and print products, today reported $3.2 million of operating income for the first quarter of 2012 compared with an operating loss of $4.2 million in the 2011 first quarter, excluding a noncash impairment charge of $10 million in the current quarter to write-off the remaining goodwill and other intangible assets related to DealTaker.com.

"The operating improvement is primarily the result of increased profits at our Broadcast television stations, as they generated 12 percent revenue growth from increased Political revenues and higher retransmission fees. Broadcast platform cash flow margin increased from 25 percent last year to 32 percent this year. Print cash flow increased nearly 30 percent, as our newspapers offset revenue decreases with expense reductions and we realized a significant benefit from the reengineering we implemented at The Tampa Tribune in late 2011. Total company operating costs, excluding impairment, decreased 4.5 percent, as a result of our continued aggressive cost management," said Marshall N. Morton, president and chief executive officer. "All of our geographic markets generated profit improvements over last year."

Net loss in the first quarter of 2012 was $34 million, or $1.53 per share, compared with a net loss of $26 million, or $1.15 per share, in the 2011 first quarter. First-quarter 2012 results included debt modification costs of $10 million related to the amendment of the company's bank credit facility, including legal, advisory and arrangement fees related to the refinancing. Interest expense in the first quarter of 2012 decreased 8.5 percent from last year.

EBITDA excluding impairment and debt modification costs was $16 million in the 2012 first quarter, compared with $9 million in the same period last year (EBITDA: income before interest, debt modification costs, taxes, depreciation and amortization, and noncash impairment).

Total revenues in the 2012 first quarter of $150 million increased 0.4 percent from last year on the strength of higher Broadcast revenues, partially offset by lower Print and Digital Media revenues. Political revenues were $6.2 million, compared with $188,000 last year. Cable and satellite retransmission fees increased 63 percent to $8.7 million from $5.3 million last year, as the result of rate increases in contract renewals.

"Our local media websites generated $7.8 million in revenues, up 5.4 percent, driven by nearly 13 percent growth in Local online advertising. Revenues from mobile, our fastest growing advertising category, were up nearly threefold, and mobile page views increased 93 percent," Mr. Morton said.

Market Segments

Virginia/Tennessee market profit increased 14 percent to $4.4 million from $3.8 million last year. A 5 percent decrease in expenses offset a 3.3 percent decline in revenues. Local revenues declined 2.8 percent, with increases at the market's websites and two television stations offset by lower Print revenues at the Richmond Times-Dispatch and the Charlottesville group. National revenues increased 1 percent, reflecting Super Bowl advertising on the Roanoke television station. Classified revenues were down 12 percent. Printing and distribution revenues increased 17 percent. Digital media revenues increased 8 percent, driven by Local banner advertising at all Print websites.

Florida market profit was $747,000, compared with a loss of $3.1 million in the prior year, a $3.9 million improvement. Excluding shutdown costs of nearly $1 million for closing a newspaper packaging and distribution center, Florida market operating profit was $1.7 million in the current quarter. Market expenses decreased 16 percent, including lower employee counts across all platforms, but principally at the Tampa newspaper operations. Total revenues decreased 5.8 percent, as an 8.5 percent increase in Broadcast revenues was offset by lower Print and Digital revenues. Political revenues were $709,000 compared with $79,000 in the prior year. Local revenues decreased 12 percent, reflecting weakness across all platforms. National revenues decreased less than 1 percent, reflecting a 13 percent increase in Broadcast advertiser spending offset by Print declines. Classified revenues decreased 14 percent. Circulation revenues grew 8.6 percent, due to higher Sunday and Daily single-copy sales and home delivery price increases.

Mid-South market profit increased 71 percent to $9.3 million from $5.4 million last year, mostly as a result of increased Political revenues in this Broadcast-intensive market. Total revenues increased 12 percent. Political revenues were $4.5 million, compared with virtually none last year, and were generated from South Carolina, Alabama and Mississippi primaries. Local advertising revenues decreased 2.7 percent, as spending increases at several television stations and higher digital media revenues were offset by lower Print revenues.  National advertising grew 3.7 percent, with six out of 11 television stations generating increases. Classified revenues were down 12 percent. Printing and distribution revenues were up 51 percent. Digital media revenue growth of 23 percent was the best performance of the company's geographic markets and resulted from a local direct sales focus.

North Carolina market profit increased to $313,000 from $127,000 last year. Total market revenues rose 1.6 percent. Local revenues decreased 1.6 percent, primarily reflecting lower spending in Print. National revenues decreased 3.9 percent, as increases at the Raleigh television station were offset by declines at the Greenville station and in Print. Printing and distribution revenues rose 15 percent. Digital media revenues grew 2.6 percent.

Ohio/Rhode Island market profit increased 36 percent to $3.2 million from $2.3 million last year, due to increased Political revenues and higher Super Bowl revenues and new business initiatives. Revenues rose 7.9 percent. Political revenues were $673,000, compared with $98,000 in the prior year. Local revenues increased 11 percent as both Columbus and Providence experienced higher new business growth. National advertising decreased 6 percent, reflecting decreases in most major categories. Digital media revenues grew 2.2 percent.

A loss of $1.2 million in the Advertising Services and Other segment compared with a small loss in the prior year. The decrease was primarily attributable to lower results at DealTaker.com. DealTaker has suffered the adverse effects of a significant change in the way Internet search results are delivered by Google. The company's efforts to adjust its software to address this change have not been successful and further deterioration was experienced in the first quarter, particularly in March.

Other Results

Interest expense was approximately $15 million in the current quarter, down from $17 million last year, due primarily to a lower average rate following the prior-year maturation of interest rate swaps.

Corporate expense decreased 1.2 percent from last year, due to reductions in discretionary spending.

Newsprint expense decreased 8.4 percent from the 2011 first quarter. Consumption decreased 7.8 percent, while the average price per ton this year was flat.

The company recorded noncash income tax expense of $2.2 million in the first quarter, compared with $5.3 million in the 2011 quarter. Both periods reflected noncash tax expense related to the company's "naked credit" issue, as previously discussed in the company's 2011 Form 10-K. The lower tax expense in the current quarter was due primarily to a noncash tax benefit associated with impairment charge recorded in the first quarter.

Media General provides the non-GAAP financial metrics EBITDA excluding impairment, After-tax cash flow excluding impairment, Free cash flow excluding impairment, as well as Operating income adjusted for impairment, Operating costs adjusted for impairment, and Florida market Operating profit adjusted for shutdown costs. The company believes these metrics, along with the supplemental platform results, are alternative measures used by lenders, investors, financial analysts and rating agencies 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, 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 1-866-730-5764 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 1 p.m. today, and ending at 11:59 p.m. on April 25, 2012, by dialing 1-888-286-8010 or 617-801-6888, and using the passcode 66127463.

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. The company is transforming itself over time to a digital media model, while continuing to effectively manage its larger, cash producing broadcast television and print platforms. 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 websites and 23 newspapers and their associated websites. Media General operates three digital media advertising services companies: Blockdot, a specialty digital agency; DealTaker.com, a shopping website; and NetInformer, a wireless marketing services provider.

















Media General, Inc.









CONSOLIDATED STATEMENTS OF OPERATIONS 




























Thirteen Weeks Ending




















March 25,


March 27,










(Unaudited, in thousands except per share amounts)

2012


2011


























Revenues














Broadcast television

$  73,442


$  65,326











Digital media and other

8,808


10,273











Print

67,264


73,344












      Total revenues


149,514


148,943


























Operating costs:














Employee compensation

73,204


78,219











Production 

35,599


35,756











Selling, general and administrative

25,003


26,196











Depreciation and amortization


12,494


13,019











Goodwill and other asset impairment

10,082


---












Total operating costs

156,382


153,190


























Operating loss

(6,868)


(4,247)


























Other income (expense):














Interest expense

(15,152)


(16,564)











Debt modification costs

(10,408)


---











Other, net

200


265












Total other expense

(25,360)


(16,299)


























Loss before income taxes

(32,228)


(20,546)


























Income tax expense

2,196


5,258










Net loss

$ (34,424)


$ (25,804)


























Net loss per common share - basic and diluted

$     (1.53)


$     (1.15)


























Weighted-average common shares outstanding:














Basic and diluted

22,555


22,400











































  












Media General, Inc.







BUSINESS SEGMENTS







(Unaudited, in thousands)


Revenues


Depreciation &
Amortization


Operating Profit
(Loss)





Thirteen Weeks Ending March 25, 2012











Virginia/Tennessee


$   41,176


$            (2,781)


$              4,359





Florida


31,963


(1,426)


747





Mid-South


42,968


(3,130)


9,262





North Carolina


17,916


(1,341)


313





Ohio/Rhode Island


13,329


(655)


3,181





Advertising Services & Other


2,504


(172)


(1,180)





Eliminations


(342)


-


-











16,682





Unallocated amounts:











Acquisition intangibles amortization


-


(1,426)


(1,426)





Corporate expense


-


(1,563)


(8,171)







$ 149,514


$          (12,494)


















Corporate interest expense






(15,136)





Debt modification costs






(10,408)





Goodwill and other asset impairment






(10,082)





Other






(3,687)
















Loss before income taxes






$           (32,228)
















(Unaudited, in thousands)


Revenues


Depreciation &
Amortization


Operating Profit
(Loss)





Thirteen Weeks Ending March 27, 2011











Virginia/Tennessee


$   42,580


$            (3,177)


$              3,837





Florida


33,945


(1,600)


(3,135)





Mid-South


38,292


(2,957)


5,412





North Carolina


17,629


(1,410)


127





Ohio/Rhode Island


12,357


(773)


2,344





Advertising Services & Other


5,149


(240)


(13)





Eliminations


(1,009)


-


-











8,572





Unallocated amounts:











Acquisition intangibles amortization


-


(1,514)


(1,514)





Corporate expense


-


(1,348)


(8,272)







$ 148,943


$          (13,019)


















Corporate interest expense






(16,553)





Other






(2,779)
















Loss before income taxes






$           (20,546)




























  







Media General, Inc.



REVENUES DETAIL










Thirteen Weeks Ending


March 25,

March 27, 




(Unaudited, in thousands)

2012

2011

% Change









Virginia/Tennessee 






Broadcast television

$                     5,584

$                     4,881

14.4 %



Digital media (local websites and other)

2,932

2,715

8.0 %



Print

32,660

34,984

(6.6)%



Total Virginia/Tennessee revenues

41,176

42,580

(3.3)%









Florida 






Broadcast television

13,970

12,881

8.5 %



Digital media (local websites and other)

1,616

1,758

(8.1)%



Print

16,377

19,306

(15.2)%



Total Florida revenues

31,963

33,945

(5.8)%









Mid-South 






Broadcast television

34,058

29,296

16.3 %



Digital media (local websites and other)

1,551

1,263

22.8 %



Print

7,359

7,733

(4.8)%



Total Mid-South revenues

42,968

38,292

12.2 %









North Carolina 






Broadcast television

5,828

5,117

13.9 %



Digital media (local websites and other)

1,160

1,131

2.6 %



Print

10,928

11,381

(4.0)%



Total North Carolina revenues

17,916

17,629

1.6 %









Ohio/Rhode Island






Broadcast television

12,766

11,806

8.1 %



Digital media (local websites and other)

563

551

2.2 %



Total Ohio/Rhode Island revenues

13,329

12,357

7.9 %









Advertising Services & Other






Broadcast television (equipment/design company)

1,307

2,046

(36.1)%



Digital media and other

1,197

3,103

(61.4)%



Total Advertising Services & Other revenues

2,504

5,149

(51.4)%









Eliminations

(342)

(1,009)

(66.1)%









Total revenues

$                 149,514

$                 148,943

0.4 %















Selected revenue categories






(Unaudited, in thousands)












Broadcast television revenues (gross)






Local

$                   42,328

$                   42,540

(0.5)%



National

21,036

20,189

4.2 %



Political

6,188

188

---



Cable/Satellite (retransmission) fees

8,714

5,341

63.2 %









Digital media and other revenues






Local website revenues






   Local

$                     4,546

$                     4,037

12.6 %



   National

698

816

(14.5)%



   Classified

2,483

2,480

0.1 %



Advertising Services

1,197

3,101

(61.4)%









Print revenues






Local

$                   29,244

$                   32,382

(9.7)%



National

3,103

3,902

(20.5)%



Classified

13,706

15,614

(12.2)%



Circulation

15,977

16,147

(1.1)%



Printing/Distribution

4,357

3,993

9.1 %










  







Media General, Inc.


CONSOLIDATED BALANCE SHEETS












March 25,

December 25,

(Unaudited, in thousands)

2012

2011







ASSETS









Current assets:




Cash and cash equivalents

$      12,177

$          23,141


Accounts receivable - net

83,263

96,961


Inventories

6,105

5,704


Other

18,953

21,251



Total current assets 


120,498

147,057







Other assets

38,536

33,413







Property, plant and equipment - net

364,724

374,713







Goodwill  and other intangibles - net

519,350

530,858

Total assets

$ 1,043,108

$     1,086,041







LIABILITIES AND STOCKHOLDERS' EQUITY 









Current liabilities:




Accounts payable

$      24,603

$          26,595


Accrued expenses and other liabilities

68,228

74,069



Total current liabilities 

92,831

100,664







Long-term debt

658,444

658,216







Deferred income taxes

46,334

45,954







Other liabilities and deferred credits

245,482

247,254







Stockholders' equity 

17

33,953

Total liabilities and stockholders' equity 

$ 1,043,108

$     1,086,041








  















SUPPLEMENTAL INFORMATION























Media General, Inc.









EBITDA, After-tax Cash Flow, and Free Cash Flow (excluding non-cash impairment charge)
























Thirteen Weeks Ending




















March 25,


March 27,








(Unaudited, in thousands)

2012


2011






















Net loss

$                               (34,424)


$                (25,804)








Interest

15,152


16,564








Debt modification costs

10,408


-








Taxes

2,196


5,258








Depreciation and amortization

12,494


13,019








Non-cash impairment charge

10,082


-




































EBITDA, excluding non-cash impairment charge

$                                 15,908


$                    9,037




































Net loss

$                               (34,424)


$                (25,804)








Taxes *

2,196


5,258








Depreciation and amortization

12,494


13,019








Non-cash impairment charge

10,082


-






















After-tax cash flow, excluding non-cash impairment charge

$                                 (9,652)


$                  (7,527)






















After-tax cash flow, excluding non-cash impairment charge

$                                 (9,652)


$                  (7,527)








Capital expenditures

1,516


4,612






















Free cash flow, excluding non-cash impairment charge

$                               (11,168)


$                (12,139)








* The Company's income taxes are non-cash in nature and have been added back accordingly.





See 2011 Form 10-K for further discussion.















































Operating income adjusted for impairment



















     Thirteen Weeks Ended










(Unaudited, in thousands)

March 25, 2012
























Operating loss

$                                 (6,868)










Non-cash impairment charge

10,082
























Operating income adjusted for impairment

$                                   3,214




















































Operating costs adjusted for impairment



















     Thirteen Weeks Ended


    Thirteen Weeks Ended








(Unaudited, in thousands)

March 25, 2012


March 27, 2011






















Operating costs

$                              156,382


$               153,190








Non-cash impairment charge

(10,082)


-






















Operating costs adjusted for impairment

$                              146,300


$               153,190






















Percentage change from prior-year quarter

(4.5)%




















































Florida market operating profit adjusted for shutdown costs















     Thirteen Weeks Ended










(Unaudited, in thousands)

March 25, 2012
























Florida market operating profit

$                                      747










Shutdown costs

956
























Florida market operating profit adjusted for shutdown costs

$                                   1,703
























  



















SUPPLEMENTAL INFORMATION




























Media General, Inc.












RESULTS BY PLATFORM































The Company manages its operations and financial performance in five geographic market segments and a sixth segment that includes the Company's interactive advertising services and certain other operations. Although the Company is principally managed geographically, its operations generally fall into the following three platforms:  Broadcast Television, Digital Media and Print. The Broadcast Television platform consists of 18 network–affiliated television stations; its tax basis approximates $460 million. The Print platform includes 23 daily newspapers and more than 200 specialty publications including weekly newspapers and niche publications; its tax basis approximates $215 million.  The Digital Media platform consists of all of the websites associated with the Broadcast Television and Print properties along with three advertising services companies:  Blockdot, which specializes in interactive entertainment and advergaming technologies; DealTaker.com, a coupon and shopping website; and NetInformer, a provider of wireless media and mobile marketing services.

Platform revenue, depreciation and amortization, operating profit (loss) and cash flow are presented for informational purposes only and are provided for the benefit of investors, lenders, financial analysts and rating agencies. These groups may use this information, along with other measures, to evaluate the Company's performance in comparison to peers. Consistent with the Company's segment presentation, amortization of acquired intangibles and impairment charges are not allocated to individual platforms. In the presentation by platform, depreciation and amortization of certain corporate assets that relate solely to a particular platform are allocated to the related platform. Additionally, intercompany costs associated with content that was originally developed for Print or Broadcast and also used on the websites, along with certain sales commissions, are not allocated to the Digital Media results. The results by platform exclude intercompany sales.



























(Unaudited, In thousands)

Revenues


Depreciation
and
Amortization


Operating
Profit (Loss)

Platform Cash Flow










Three Months Ended March 25, 2012
















 Broadcast television 

$   73,442


$       (4,940)


$     18,446

$         23,386

(1)









 Digital media and other 

8,808


(176)


(642)

(466)










 Print 

67,264


(5,018)


(1,122)

3,896

















16,682

$         26,816










 Unallocated amounts: 

















Acquisitions intangibles amortization

-


(1,426)


(1,426)












Corporate expense

-


(934)


(8,171)














$ 149,514


$     (12,494)














Corporate interest expense





(15,136)












Debt modification costs





(10,408)












Goodwill and other asset impairment





(10,082)












Other





(3,687)













Loss before income taxes





$    (32,228)















































(Unaudited, In thousands)

Revenues


Depreciation
and
Amortization


Operating
Profit (Loss)

Platform Cash Flow










Three Months Ended March 27, 2011
















 Broadcast television 

$   65,326


$       (5,090)


$     11,496

$         16,586










 Digital media and other 

10,273


(239)


(379)

(140)










 Print 

73,344


(5,556)


(2,545)

3,011

















8,572

$         19,457










 Unallocated amounts: 

















Acquisitions intangibles amortization

-


(1,514)


(1,514)












Corporate expense

-


(620)


(8,272)














$ 148,943


$     (13,019)














Corporate interest expense





(16,553)












Other





(2,779)













Loss before income taxes





$    (20,546)












 

(1) In the first quarter of 2012, 80% of broadcast platform cash flow was generated by 10 television stations.


 

 

 

SOURCE Media General, Inc.

(Source: PR Newswire )
(Source: Quotemedia)

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