Media General Reports Third-Quarter 2012 Results

RICHMOND, Va., Oct. 17, 2012 /PRNewswire/ -- Media General, Inc. (NYSE: MEG), a broadcast television and digital media company, today reported operating income for the third quarter of 2012 of $22.5 million, compared with $4.8 million in the 2011 third quarter. The current quarter included corporate severance expense of $3.3 million, the absence of $1.9 million in expense savings last year from a company-wide furlough program and higher sales costs related to significantly increased revenues this year.  Net loss in the third quarter was $30.3 million, or $1.34 per share, including $17.3 million of debt extinguishment costs and a loss of $11.9 million related to discontinued operations. Net loss in the 2011 third quarter was $29.8 million, or $1.32 per share, including a newspaper impairment writedown reflected in discontinued operations.

Marshall N. Morton, president and chief executive officer of Media General, said, "Operating income was more than four times last year, mostly driven by a nearly 42% increase in revenues. Political revenues totaled nearly $20 million and reflected the strong positions of our television stations in their markets and the presence of six Media General stations in presidential battleground states.  Our eight NBC stations generated a record $15.5 million of revenues from the Summer Olympics, capitalizing on record viewership for the London games.  Gross time sales, excluding Political revenues, increased 16.8% in the third quarter, reflecting growth in several major advertising categories and the strength of the Olympics advertising."

Broadcast cash flow more than doubled to $40.8 million in the 2012 third quarter, compared with $19.3 million last year. Broadcast cash flow margin in the current quarter was 43.5%, compared with 29.1% last year.

Total revenues in the third quarter increased approximately $28 million to $93.8 million this year, compared with $66.1 million last year.  Local gross time sales increased nearly 16% to $47.4 million. National gross time sales grew 19.2% to nearly $25 million. The largest advertising category, automotive, increased 45% due, in part, to comparisons against last year's weak spending following Japan's tsunami and to the strength of Olympic advertising this year. Other key categories growing in the quarter were financial, grocery, travel, telecommunications and medical. Categories that declined included restaurants and department stores.

Cable and satellite retransmission fees rose nearly 80% to $9.4 million in the quarter, as a result of contract renewals that reflected competitive market rates.

TV station websites generated $2.6 million in advertising revenues, up 20.7% from last year, driven primarily by Local advertising, which grew 28%. Total digital audience growth continued, including robust activity from mobile devices. Unique visitors and page views from mobile devices each increased by 68% in the third quarter, while unique visitors from desktops grew 13%.

Station operating costs increased 12.1% in the current quarter, mostly due to higher sales commissions related to increased revenues and the absence of $1.2 million in expense savings from last year's furlough program. Corporate expense this year was $6.4 million, compared with $7 million last year. The decrease in the current year is primarily due to a corporate staffing reduction that was effectuated progressively through the quarter, offset by the absence of last year's furlough savings.

Total interest expense in the third quarter was $20.2 million, of which $2.4 million was non-cash, compared with $16 million last year.

Noncash tax expense was $3.4 million in the third quarter, compared with $847,000 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 and extinguishment costs, taxes, and depreciation and amortization) was $28.5 million, compared with $12.1 million in the 2011 period.

Media General provides the non-GAAP financial metrics: Broadcast cash flow, 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.

Guidance

Media General provided the following guidance: 

For the fourth quarter, the company expects total revenues to increase 25-28% over last year.

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 $9 million. The pension contribution is down from our previous guidance of $13 million, due to the relief provided by this year by Congress.

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.

Conference Call, Webcast and Financial Statements

The company will hold a conference call with financial analysts today at 11 a.m. ET. To dial in to the call, listeners may call 1-866-788-0539 about 10 minutes prior to the 11 a.m. start. The participant passcode is "Media General."

Listeners may also access a 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 October 25, 2012, by dialing 1-888-286-8010 or 617-801-6888, and using the passcode 57846918.

About Media General

Media General is a leading provider of news, information and entertainment across 18 network-affiliated broadcast television stations and their associated digital media and mobile platforms. The company's stations serve consumers and advertisers in strong local markets, primarily in the Southeast. Media General's network affiliates include eight NBC stations, eight CBS stations, one ABC station and one CW station. Six of the company's 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 entered 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.

Contact Media General

Additional information about Media General is available on its web site www.mediageneral.com or by contacting Lou Anne J. Nabhan, Vice President-Corporate Communications, at (804) 649-6103 or lnabhan@mediageneral.com.

  

Media General, Inc.









CONSOLIDATED STATEMENTS OF OPERATIONS 
























Thirteen Weeks Ending


Thirty-Nine Weeks Ending





September 23,


September 25,


September 23,


September 25,

(Unaudited, in thousands except per share amounts)


2012


2011


2012


2011












Station revenue (less agency commissions)


$           93,752


$           66,076


$         251,064


$         202,730












Operating costs:










Station production expenses


31,458


27,726


92,359


86,103


Station selling, general, and administrative expenses


21,505


19,497


63,473


60,854


Corporate and other expenses


12,093


7,082


31,604


24,070


Depreciation and software amortization


5,533


5,811


17,124


17,399


Amortization of intangible assets


442


1,314


2,196


3,940


(Gain) loss on disposal of assets, net


218


(137)


(32)


236



Total operating costs


71,249


61,293


206,724


192,602












Operating income


22,503


4,783


44,340


10,128












Other income (expense):










Interest expense


(20,220)


(16,034)


(57,028)


(49,787)


Debt modification and extinguishment costs


(17,318)


---


(35,415)


---


Other, net


40


219


452


688



Total other expense


(37,498)


(15,815)


(91,991)


(49,099)












Loss from continuing operations before income taxes


(14,995)


(11,032)


(47,651)


(38,971)












Income tax expense


3,406


847


10,223


6,001












Loss from continuing operations


(18,401)


(11,879)


(57,874)


(44,972)

Discontinued operations:










Loss from discontinued operations (net of tax)


(1,038)


(17,953)


(10,588)


(26,046)


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


(10,894)


---


(142,591)


---

Net loss


$         (30,333)


$         (29,832)


$       (211,053)


$         (71,018)












Net loss per common share - assuming dilution:










Loss from continuing operations


$             (0.81)


$             (0.53)


$             (2.56)


$             (2.00)


Discontinued operations


(0.53)


(0.79)


(6.79)


(1.16)

Net loss per common share - basic and diluted


$             (1.34)


$             (1.32)


$             (9.35)


$             (3.16)












Weighted-average common shares outstanding:










Basic and diluted 1


22,593


22,517


22,570


22,469























1

Subsequent to the end of the third quarter, Berkshire Hathaway exercised warrants to purchase 4,646,220 shares of the Company's Class A common stock.  Consequently, these shares were not included in the determination of basic weighted-average shares for the three-months and nine-months ended September 23, 2012. 

  

Media General, Inc.




CONSOLIDATED BALANCE SHEETS














September 23,

December 25,

(Unaudited, in thousands)


2012

2011







ASSETS










Current assets:





Cash and cash equivalents


$           28,450

$          23,108


Accounts receivable - net


61,595

58,587


Other


26,125

17,424


Assets of discontinued operations


10,552

333,329



Total current assets 


126,722

432,448







Other assets


37,955

28,277







Property, plant and equipment - net


161,445

175,276







Goodwill  and other intangibles - net


447,844

450,040





Total assets


$         773,966

$     1,086,041







LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)










Current liabilities:





Accounts payable


$           14,753

$          16,527


Accrued expenses and other liabilities


66,965

46,472


Liabilities of discontinued operations


9,535

38,716



Total current liabilities 


91,253

101,715







Long-term debt


551,337

658,199







Deferred income taxes


56,241

45,954







Other liabilities and deferred credits


235,046

246,220







Stockholders' equity (deficit)


(159,911)

33,953




Total liabilities and stockholders' equity (deficit)


$         773,966

$     1,086,041

  

SUPPLEMENTAL INFORMATION














Media General, Inc.






Selected Revenue Categories















Thirteen Weeks Ending


Thirty-Nine Weeks Ending


September  23,

September 25, 



September  23,

September 25, 


(Unaudited, in thousands)

2012

2011

% Change


2012

2011

% Change

Local (gross)

$            47,370

$            40,992

15.6 %


$          136,690

$          128,540

6.3 %

National (gross)

24,872

20,858

19.2 %


69,309

63,786

8.7 %

Political

19,568

1,328

---


33,224

2,107

---

Cable/Satellite (retransmission) fees

9,355

5,268

77.6 %


27,718

15,971

73.6 %

Digital (local website revenues)

2,649

2,195

20.7 %


7,178

6,071

18.2 %









































Broadcast Cash Flow

















Thirteen Weeks Ending



Thirty-Nine Weeks Ending



September  23,

September 25, 



September  23,

September 25, 


(Unaudited, in thousands)

2012

2011



2012

2011










Operating income

22,503

4,783



44,340

10,128


Add:  








  Corporate and other expenses

12,093

7,082



31,604

24,070


  Depreciation and software amortization

5,533

5,811



17,124

17,399


  Amortization of intangible assets

442

1,314



2,196

3,940


  (Gain) loss on disposal of assets, net

218

(137)



(32)

236


  Amortization of broadcast film rights

2,616

4,360



7,754

13,732


Less:  








  Payments for broadcast film rights

2,610

3,961



7,654

13,404


Broadcast cash flow

40,795

19,252



95,332

56,101


  

SUPPLEMENTAL INFORMATION














Media General, Inc.







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
















Thirteen Weeks Ending


Thirty-Nine Weeks Ending



September 23, 

September 25,


September 23, 

September 25,

(Unaudited, in thousands)


2012

2011


2012

2011








Loss from continuing operations


$           (18,401)

$          (11,879)


$           (57,874)

$          (44,972)

Interest


20,220

16,034


57,028

49,787

Debt modification and extinguishment costs


17,318

-


35,415

-

Depreciation and software amortization


5,533

5,811


17,124

17,399

Amortization of intangible assets


442

1,314


2,196

3,940

Taxes


3,406

847


10,223

6,001















EBITDA from continuing operations


$            28,518

$           12,127


$            64,112

$           32,155















Loss from continuing operations


$           (18,401)

$          (11,879)


$           (57,874)

$          (44,972)

Taxes *


3,406

847


10,223

6,001

Depreciation and software amortization


5,533

5,811


17,124

17,399

Amortization of intangible assets


442

1,314


2,196

3,940








After-tax cash flow from continuing operations


$             (9,020)

$            (3,907)


$           (28,331)

$          (17,632)








After-tax cash flow from continuing operations


$             (9,020)

$            (3,907)


$           (28,331)

$          (17,632)

Capital expenditures


3,010

5,102


7,263

15,681








Free cash flow 


$           (12,030)

$            (9,009)


$           (35,594)

$          (33,313)

*

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


See 2011 Form 10-K for further discussion.






















Corporate and other expenses
















Thirteen Weeks Ending


Thirty-Nine Weeks Ending





September 23, 

September 25,


September 23, 

September 25,

(Unaudited, in thousands)


2012

2011


2012

2011

Corporate (excluding depreciation and amortization)


$               6,363

$             6,951


$            22,099

$           22,894

Corporate severance 


3,319

-


3,445

78

Incentive compensation (including stations)


1,505

(427)


4,349

(165)

Other operating expenses


906

558


1,711

1,263

Corporate and other expenses


$            12,093

$             7,082


$            31,604

$           24,070

 

SOURCE Media General, Inc.



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