RICHMOND, Va., Dec. 8, 2010 /PRNewswire-FirstCall/ -- Media General, Inc. (NYSE: MEG) updated investors today on the company's business strategy at the 38th Annual UBS Global Media & Communications Conference in New York.
Company speakers were Marshall N. Morton, president and chief executive officer; Reid Ashe, executive vice president and chief operating officer and John A. Schauss, vice president-finance and chief financial officer.
Mr. Morton said, "Media General has a clear, consistent strategy for increasing long-term shareholder value and it all stems from the fact that we manage ourselves as an information company and draw our cues from the marketplace, just as any good consumer products company would do. The need to deal with the market on its own terms is so important that, a year-and-a-half ago, we moved completely away from the platform-focused structure of the past to the market structure we employ today -- getting us much closer to those who use our products, whether as advertisers or consumers. As a result, our print and broadcast products are evolving in concert with the changing needs and tastes of the marketplace, taking advantage of advances in technology. There's no doubt we're an industry in transformation, particularly as to the ways we package and deliver our products, but the transformation largely permits growth at lower cost and in ways that allow us to develop new revenue streams and new customer bases."
Mr. Morton said, "2010 has been a relatively strong year for us, and not only because of the Political and Olympics advertising revenues that this 'even' year brings. Through the first nine months, total segment operating profits increased 57 percent compared with last year. Each one of our geographic market segments delivered higher profits. While these results included $17.7 million of Political revenues, there were other significant factors that contributed to our improved results. These include aggressive cost reduction and a major internal restructuring, implemented last year, which is enabling us to operate more efficiently and effectively in a changed world.
"We have a sustainably lower cost base as a result of many actions taken over the past few years. The major contributor was a 30 percent reduction in our workforce, while also aggressively managing all discretionary spending. Our restructuring goals were to accelerate our digital strategy, introduce new products and services as changing technology continued to drive massive change in customer preferences, optimize our smaller workforce and preserve product quality," Mr. Morton said.
"We've dramatically increased our digital audience, on our websites, on mobile devices, and on social media platforms. We've generated strong digital media revenues growth as well, especially with particular initiatives that we've focused on. In 2010, Local online revenues will grow 24 percent," Mr. Morton said.
Reid Ashe, executive vice president and chief operating officer, reviewed the company's major initiatives for increasing audience, revenues and cash flow. "In 2010, total digital media revenues are expected to be approximately $44 million, up about 5 percent from last year and accounting for 7.5 percent of total advertising revenues. We've expanded our Yahoo! and Zillow partnerships to include our television markets, a promising new revenue growth opportunity next year. This fall, we launched an aggressive new push to win back even more Classified advertising. We've gained traction bundling online with mobile, video, and other new media," Mr. Ashe said.
Media General also has a new partnership with Groupon with daily advertising deals under local brands. "We're live in Richmond and Columbus, Ohio, and we'll launch in seven more markets in the coming weeks," he said.
The company expects retransmission fees in 2010 will be about $19 million, and are expected to increase 5-6 percent next year. Most of the company's major agreements do not expire until 2012, Mr. Ashe said.
Media General expects revenues from outside printing and distribution to increase to more than $15 million in 2011. In 2010, circulation sales pressure helped drive increases in home delivery in a number of markets, including Tampa, Mr. Ashe said.
The company also is part of a group of local broadcasters, NBC and Fox to provide over-the-air television to mobile devices in several U.S. markets. "We believe Mobile DTV has the potential to greatly expand our broadcast audience and create new revenue streams, including subscription-based and advertising," he said.
John Schauss, vice president-finance and chief financial officer, said, "Our focus is on growing revenues, profit and cash flow. We are aiming for a 2011 that looks a lot like this year in terms of operating profit and EBITDA." Mr. Schauss said the company continues to expect free cash flow for 2010 of $58-60 million.
For 2010, the company expects total Publishing revenues to decline 8-9 percent, including Florida. Excluding Florida, the decline is expected to be 5-6 percent. "In Florida, the rate of decline is moderating, but Florida's real estate market has not yet rebounded, and unemployment is still around 12 percent," Mr. Schauss said.
"Our Broadcast revenue growth this year includes a firming in our underlying transactional businesses, buoyed in particular by significantly increased spending from automotive companies, which we expect to continue into next year. We believe the fourth quarter of this year will equal or exceed the trend that we've seen in the first three quarters of this year," Mr. Schauss said.
In 2011, the company estimates salaries will increase 3 percent, including a 2 percent merit pool. Benefits expense is expected to increase 17 percent, reflecting higher healthcare costs and a phase-in of the company match for its 401(k) Plan, although both amounts could be lower. Corporate expense is expected to rise 4 percent, due mainly to salary increases and the 401(k) match. Interest expense is estimated to decrease 7 percent, to $66 million, because of the absence of fees associated with the restructuring of its bank facility and lower outstanding debt balances. Tax expense will be about $25 million non-cash, related solely to the "naked credit" issue discussed in its public filings.
Media General's newsprint expense for the first nine months of 2010 was 34 percent lower than 2009. Consumption was down 19 percent, due to lower advertising linage, decreased circulation volumes, web-width reductions and conservation efforts. Average cost decreased 18 percent, aided by pricing credits under a purchase agreement related to its former ownership of SP Newsprint. The average price for 2010 will be $520 per short ton, Mr. Schauss said.
In 2011, Media General expects capital expenditures of $25-29 million, compared with about $26 million in 2010. The company also plans to make a $20 million contribution to its retirement plan in 2011, Mr. Schauss said.
A full text and slides from the presentation is available on Media General's website, www.mediageneral.com. An audio replay will be available on Wednesday, December 8, 2010. Click on the link on the Media General home page.
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. 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, three metropolitan and 20 community newspapers and their associated websites, and more than 200 specialty publications that include weekly newspapers and niche publications targeted to various demographic, geographic and topical communities of interest. Many of the company's specialty publications have associated websites. Media General additionally operates three interactive advertising services companies: Blockdot, which specializes in interactive entertainment and advergaming technologies; DealTaker.com, a coupon and shopping website; and NetInformer, a leading provider of wireless media and mobile marketing services.
SOURCE Media General, Inc.