Media General Reports Second-Quarter 2012 Results

Jul 18, 2012, 08:18 ET from Media General, Inc.

RICHMOND, Va., July 18, 2012 /PRNewswire/ -- Media General, Inc. (NYSE: MEG), a local broadcast television and digital media company,  today reported 2012 second-quarter operating income of $16.4 million, compared with $6.2 million in the 2011 second quarter. The increase is mostly due to strong Political advertising and higher retransmission fees at the company's 18 network-affiliated broadcast television stations, and core business displayed good strength as well.

On June 25, 2012, the first day of the third quarter, Media General became a pure-play broadcast television company following the sale of virtually all of its newspapers to a subsidiary of Berkshire Hathaway, World Media Enterprises. Media General is in discussions with prospective buyers for The Tampa Tribune and its associated print and web operations and believes a sale is probable. All Media General newspapers are now shown as discontinued operations, as are Dealtaker.com and Professional Communications Systems, a broadcast equipment business.

Marshall N. Morton, president and chief executive officer of Media General, said, "We are very pleased with our new focus as a TV broadcaster. Our year-over-year operating improvement was driven by a 17.1% increase in Broadcast revenues. Strong Political revenues were generated by the presidential campaigns, Super PACs, the Massachusetts Senate race, and congressional primaries in Virginia and South Carolina. Core time sales, excluding Political revenues, increased 3.9% overall, mostly driven by higher automotive category spending. Retransmission fees increased 80% as a result of contract renewals that reflected competitive market rates. Media General's stations are by and large the number one or two station in their markets. Top-rated newscasts attract Political advertising and our stations have done an excellent job capitalizing on the event-driven revenue opportunities of this year," said Mr. Morton.

Net loss in the second quarter was $146.3 million, or $6.48 per share, including an after-tax loss of $131.7 million related to the divestiture of discontinued operations, compared with a net loss of $15.4 million, or 68 cents per share, in the 2011 second quarter.

Operating Results

Total Broadcast and Digital revenues in the second quarter increased 17.3% to $84.1 million, from $71.7 million last year. Local time sales increased 4.4% to $47 million, from $45 million last year. National time sales increased 2.9% to $23.4 million, from $22.7 million last year. The largest broadcast advertising category, automotive, increased 26.5%. Other key categories delivering increases were financial, grocery, travel, home improvement, professional services and medical.  Categories that declined included department stores, furniture, telecommunications and restaurants.

Political revenues were $7.5 million, compared with $600,000 last year. Cable and satellite retransmission fees increased 80% to $9.6 million, from $5.4 million last year.

Broadcast websites generated $2.5 million in advertising revenues, up 18.6% from last year. Local advertising revenues grew 26%, driven by sales initiatives and new services, including mobile advertising. Total web audience growth continued, including robust activity from mobile devices. Unique visitors to websites from mobile devices nearly quadrupled in the second quarter, while unique visitors were even with last year from desktops.

Total operating costs increased 3.4%. Corporate expense of $8.5 million was about even with last year.

Total interest expense in the second quarter was $21.7 million, of which $3.4 million was non-cash, compared with $17.2 million last year. The increase was due to higher interest rates and discount accretion from a new financing arrangement. Debt modification and extinguishment costs were $7.7 million, primarily due to the write-off of unamortized fees related to the former bank arrangement.

Noncash tax expense was $3.4 million in the second quarter, compared with $2.6 million in the prior year. 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.

EBITDA from continuing operations (income before interest, debt modification costs, taxes, and depreciation and amortization) was $22.7 million, compared with $13.7 million in the 2011 period.

Media General provides the non-GAAP financial metrics EBITDA from continuing operations, After-tax cash flow from continuing operations, and Free cash flow. The company believes these metrics 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.

New Financing Arrangement

Debt at the end of the second quarter was $652 million, compared with $658 million at the end of the first quarter of 2012. In the second quarter of 2012, Media General entered into a new financing arrangement with Berkshire Hathaway that provided the company with a $400 million term loan and a $45 million revolving credit line. The funding of the new term loan and an initial drawing of the revolving credit facility resulted in cash proceeds to the company of approximately $383 million. The proceeds were immediately used to fully repay all amounts outstanding under the then existing credit facility, pay fees and expenses related to the new financing, and fund working capital requirements. In conjunction with the new financing, the company issued Berkshire Hathaway penny warrants for approximately 4.6 million Class A shares.

Sale of Newspapers

After transaction fees, the repayment of funds drawn on the revolving credit facility and a small required paydown on the term loan, Media General is using the remaining net proceeds from the newspaper sale of approximately $112 million to further reduce debt. Media General has repaid $54 million on the Berkshire Hathaway term loan at par and $18 million on the revolver, bringing total debt currently outstanding to $580 million. On June 29, 2012, Media General commenced a cash tender offer to purchase up to $45 million of its 11¾% Senior Secured Notes due 2017. The tender offer is scheduled to expire on July 30, 2012. Media General expects to offer Berkshire Hathaway repayment of any amounts the bondholders elect not to take at par with no prepayment penalty.

Guidance

Media General provided the following guidance: 

Political revenues are expected to be approximately $50 million for the full year 2012.

Summer Olympics revenues are expected to exceed the $12.5 million generated from the 2008 summer games.

Broadcast pacings for the third quarter of 2012, including Political, are approximately 30% ahead of last year.  Core pacings, excluding Political, are approximately 20% ahead of last year. Key categories driving core growth are auto, entertainment, financial, media, professional services, grocery and travel.

The company has a plan, underway now, to reduce corporate expense 35-40%.

For the full year 2012, the company expects that cash provided by operations will be used to make interest payments of $65 million, capital expenditures of $15 million and retirement plan contributions of $13 million

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. 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 1-800-706-7741 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 July 26, 2012, by dialing 1-888-286-8010 or 617-801-6888, and using the passcode 81445264.

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 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.

  

   

Media General, Inc.

CONSOLIDATED STATEMENTS OF OPERATIONS 

Thirteen Weeks Ending

Twenty-Six Weeks Ending

June 24,

June 26,

June 24,

June 26,

(Unaudited, in thousands except per share amounts)

2012

2011

2012

2011

Revenues

Broadcast television

$    80,631

$  68,833

$  152,783

$ 132,778

Digital media and other

3,481

2,889

6,448

6,232

Total revenues

84,112

71,722

159,231

139,010

Operating costs:

Employee compensation

32,302

30,220

69,186

66,738

Production 

18,923

17,779

37,011

34,882

Selling, general and administrative

10,423

10,263

19,189

19,104

Depreciation and amortization

6,110

7,279

13,425

14,497

Total operating costs

67,758

65,541

138,811

135,221

Operating income

16,354

6,181

20,420

3,789

Other income (expense):

Interest expense

(21,657)

(17,190)

(36,808)

(33,753)

Debt modification and extinguishment costs

(7,689)

---

(18,097)

---

Other, net

236

227

421

469

Total other expense

(29,110)

(16,963)

(54,484)

(33,284)

Loss from continuing operations before income taxes

(12,756)

(10,782)

(34,064)

(29,495)

Income tax expense

3,409

2,558

6,817

5,154

Loss from continuing operations

(16,165)

(13,340)

(40,881)

(34,649)

Discontinued operations:

Income (loss) from discontinued operations (net of tax)

1,566

(2,042)

(8,142)

(6,537)

Loss related to divestiture of discontinued operations (net of tax)

(131,697)

---

(131,697)

---

Net loss

$(146,296)

$(15,382)

$(180,720)

$ (41,186)

Net loss per common share:

Loss from continuing operations

$      (0.71)

$    (0.59)

$      (1.81)

$     (1.54)

Discontinued operations

(5.77)

(0.09)

(6.20)

(0.30)

Net loss per common share - basic and diluted

$      (6.48)

$    (0.68)

$      (8.01)

$     (1.84)

Weighted-average common shares outstanding:

Basic and diluted

22,563

22,488

22,559

22,444

  

Media General, Inc.

BUSINESS SEGMENTS

(Unaudited, in thousands)

Revenues

Depreciation & Amortization

Operating Profit (Loss)

Three Months Ending June 24, 2012

Virginia/Tennessee

$     6,736

$               (349)

$              2,011

Florida

15,120

(383)

5,646

Mid-South

36,588

(2,719)

9,457

North Carolina

7,562

(371)

1,790

Ohio/Rhode Island

17,146

(738)

6,603

Advertising Services & Other

1,203

(544)

(977)

Eliminations

(243)

-

32

24,562

Unallocated amounts:

Acquisition intangibles amortization

-

(442)

(442)

Corporate expense

-

(564)

(8,492)

$   84,112

$            (6,110)

Corporate interest expense

(21,641)

Debt modification and extinguishment costs

(7,689)

Other

946

Consolidated loss from continuing operations before income taxes

$           (12,756)

(Unaudited, in thousands)

Revenues

Depreciation & Amortization

Operating Profit (Loss)

Three Months Ending June 26, 2011

Virginia/Tennessee

$     5,653

$               (378)

$              1,039

Florida

12,944

(422)

3,067

Mid-South

32,488

(2,557)

6,567

North Carolina

5,840

(428)

504

Ohio/Rhode Island

14,070

(752)

3,540

Advertising Services & Other

1,009

(722)

(1,033)

Eliminations

(282)

-

43

13,727

Unallocated amounts:

Acquisition intangibles amortization

-

(1,361)

(1,361)

Corporate expense

-

(659)

(8,423)

$   71,722

$            (7,279)

Corporate interest expense

(17,180)

Other

2,455

Consolidated loss from continuing operations before income taxes

$           (10,782)

Media General, Inc.

BUSINESS SEGMENTS

(Unaudited, in thousands)

Revenues

Depreciation & Amortization

Operating Profit (Loss)

Six Months ending June 24, 2012

Virginia/Tennessee

$   12,644

$               (697)

$              3,399

Florida

29,090

(793)

9,996

Mid-South

71,662

(5,435)

18,660

North Carolina

13,547

(742)

2,179

Ohio/Rhode Island

30,476

(1,393)

9,784

Advertising Services & Other

2,276

(1,094)

(1,391)

Eliminations

(464)

-

59

42,686

Unallocated amounts:

Acquisition intangibles amortization

-

(1,773)

(1,773)

Corporate expense

-

(1,498)

(17,359)

$ 159,231

$          (13,425)

Corporate interest expense

(36,777)

Debt modification and extinguishment costs

(18,097)

Other

(2,744)

Consolidated loss from continuing operations before income taxes

$           (34,064)

(Unaudited, in thousands)

Revenues

Depreciation & Amortization

Operating Profit (Loss)

Six Months Ending June 26, 2011

Virginia/Tennessee

$   10,764

$               (760)

$              1,754

Florida

25,826

(851)

6,030

Mid-South

62,581

(5,091)

11,630

North Carolina

11,151

(857)

671

Ohio/Rhode Island

26,428

(1,525)

5,883

Advertising Services & Other

2,738

(1,425)

(1,481)

Eliminations

(478)

-

76

24,563

Unallocated amounts:

Acquisition intangibles amortization

(2,709)

(2,709)

Corporate expense

(1,279)

(17,292)

$ 139,010

$          (14,497)

Corporate interest expense

(33,733)

Other

(324)

Consolidated loss from continuing operations before income taxes

$           (29,495)

  

Media General, Inc.

Selected Revenue Categories

Thirteen Weeks Ending

Twenty-Six Weeks Ending

June  24,

June 26, 

June  24,

June 26, 

(Unaudited, in thousands)

2012

2011

% Change

2012

2011

% Change

Broadcast television revenues (gross)

Local

$          46,992

$         45,008

4.4 %

$         89,320

$         87,548

2.0 %

National

23,400

22,739

2.9 %

44,437

42,928

3.5 %

Political

7,468

591

---

13,656

779

---

Cable/Satellite (retransmission) fees

9,648

5,363

79.9 %

18,362

10,703

71.6 %

Digital media and other revenues

Local website revenues

   Local

$            2,251

$           1,787

26.0 %

$           4,065

$           3,252

25.0 %

   National

214

266

(19.5)%

421

541

(22.2)%

Advertising Services

1,203

1,009

19.2 %

2,276

2,738

(16.9)%

  

Media General, Inc.

CONSOLIDATED BALANCE SHEETS

June 24,

December 25,

(Unaudited, in thousands)

2012

2011

ASSETS

Current assets:

Cash and cash equivalents

$   16,661

$          23,108

Accounts receivable - net

60,702

59,260

Other

18,796

17,513

Assets of discontinued operations

183,615

337,853

Total current assets 

279,774

437,734

Other assets

35,870

28,350

Property, plant and equipment - net

159,408

169,827

Goodwill  and other intangibles - net

448,357

450,130

Total assets

$ 923,409

$     1,086,041

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

Current liabilities:

Accounts payable

$   19,334

$          16,631

Accrued expenses and other liabilities

54,644

46,815

Liabilities of discontinued operations

32,547

38,269

Total current liabilities 

106,525

101,715

Long-term debt

651,911

658,199

Deferred income taxes

52,721

45,954

Other liabilities and deferred credits

241,514

246,220

Stockholders' equity (deficit)

(129,262)

33,953

Total liabilities and stockholders' equity (deficit)

$ 923,409

$     1,086,041

  

SUPPLEMENTAL INFORMATION

Media General, Inc.

EBITDA, After-tax Cash Flow, and Free Cash Flow 

Thirteen Weeks Ending

Twenty-Six Weeks Ending

June 24, 

June 26,

June 24, 

June 26,

(Unaudited, in thousands)

2012

2011

2012

2011

Loss from continuing operations

$(16,165)

$(13,340)

$(40,881)

$(34,649)

Interest

21,657

17,190

36,808

33,753

Debt modification and extinguishment costs

7,689

-

18,097

-

Taxes

3,409

2,558

6,817

5,154

Depreciation and amortization

6,110

7,279

13,425

14,497

EBITDA from continuing operations

$  22,700

$  13,687

$  34,266

$  18,755

Loss from continuing operations

$(16,165)

$(13,340)

$(40,881)

$(34,649)

Taxes *

3,409

2,558

6,817

5,154

Depreciation and amortization

6,110

7,279

13,425

14,497

After-tax cash flow from continuing operations

$   (6,646)

$   (3,503)

$(20,639)

$(14,998)

After-tax cash flow from continuing operations

$   (6,646)

$   (3,503)

$(20,639)

$(14,998)

Capital expenditures

2,737

5,967

4,253

10,579

Free cash flow 

$   (9,383)

$   (9,470)

$(24,892)

$(25,577)

*

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

See 2011 Form 10-K for further discussion.

 

 

SOURCE Media General, Inc.



RELATED LINKS

http://www.mediageneral.com