2014

Media General Reports Second-Quarter 2012 Results

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.



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