Media General Completes Sale of Newspapers to Berkshire Hathaway
RICHMOND, Va., June 25, 2012 /PRNewswire/ -- Media General, Inc. (NYSE: MEG) today completed the previously announced sale of 63 daily and weekly newspapers to World Media Enterprises, Inc., a subsidiary of Berkshire Hathaway, Inc. (NYSE: BRK.A and BRK.B), for $142 million in cash, subject to adjustment for working capital and other items. After transaction fees and the repayment of funds drawn on the revolving credit facility, Media General will use the net proceeds from the newspaper sale to offer to repay on a pro rata basis existing senior secured notes at par and a term loan with no prepayment penalty.
Media General is also in discussions with prospective buyers for its Tampa, Florida, print properties and associated websites.
"Selling our newspapers represents a monumental change for us – we've been in the newspaper business for more than 160 years. However, our model has been shifting more toward Broadcast and Digital in recent years," said Marshall N. Morton, president and chief executive officer of Media General. Broadcast television accounted for 77 percent of total Platform Cash Flow for the full year 2011 and for 87 percent in the first quarter of this Political year.
"We will now focus on our higher margin Broadcast television business. We have an attractive economic model, fueled by revenue growth, including Political, Retransmission and Digital revenues. For the second quarter of 2012, we expect to report Political revenues of more than $7 million, reflecting spending by both presidential campaigns, Super PACs, and contested races in our markets, including the Massachusetts Senate race and primaries in Virginia and South Carolina. We now expect Political revenues for the full year 2012 to be at the high end of our previously announced range of $40-45 million," Mr. Morton said.
"Our plans are underway to increase Broadcast cash flow and EBITDA margins. At the market level, we are focused on ratings and share increases as well as expense management. At the corporate level, as previously announced, we are reducing corporate expense from $32 million to $20 million, a run rate we plan to achieve before the end of this year. The increased cash flow will support and accelerate our deleveraging plan and we have good incentive to do so. Our new term loan agreement provides a stepdown in the interest rate from 10.5 percent to 9 percent if leverage were to reach 3.50x," Mr. Morton said.
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 broadcast television, digital media and mobile platforms, serving consumers and advertisers in strong local markets, primarily in the Southeastern United States. The company's broadcast operations include 18 network-affiliated television stations and their associated digital and mobile media services. Media General's network affiliations include eight NBC stations, eight CBS, one ABC and one CW. Six of its stations operate in the Top 40 markets in the United States. Media General's stations reach more than one-third of TV households in the Southeast and more than 8 percent of U.S. TV households. Media General got its start in the television business in 1955 when it launched WFLA-TV in Tampa, Florida, as an NBC affiliate. Today, WFLA is the company's largest TV station, operating in the 14th largest DMA in the United States. Media General continues to own The Tampa Tribune and its associated print properties and expects to enter into a transaction with one of several prospective buyers for the group.
SOURCE Media General, Inc.