Media General Reports Fourth-Quarter 2009 Results

Jan 28, 2010, 07:35 ET from Media General, Inc.

RICHMOND, Va., Jan. 28 /PRNewswire-FirstCall/ -- Media General, Inc. (NYSE: MEG) today reported net income for the fourth quarter of 2009 of $27.4 million, or $1.18 per diluted share, compared with a net loss of $85.5 million, or $3.86 per diluted share, in the 2008 fourth quarter.  Income from continuing operations before income taxes, and adjusted for severance and impairment in both years, increased 40 percent to $22.9 million, compared with $16.4 million in the 2008 fourth quarter.  

"Media General's fourth-quarter results improved year-over-year and sequentially from the third quarter of 2009.  Total revenues in the fourth quarter decreased 14 percent, a sequential improvement from an 18 percent decrease in the third quarter of 2009.  In addition, the 2009 quarter included only $3.7 million of Political revenues, compared with $23.4 million in the 2008 fourth quarter.  Advertising sales strengthened as the quarter unfolded.  In the month of December, total revenues were essentially even with December 2008," said Marshall N. Morton, president and chief executive officer.

"Total operating expenses decreased 22 percent in the fourth quarter, which reflected the aggressive cost-cutting actions we implemented during the recession.  We had nearly 900 fewer employees at the end of 2009 compared with 2008 year-end, and we implemented a five-day furlough program in the 2009 fourth quarter.  Newsprint expense in the fourth quarter declined 57 percent, reflecting both lower prices and lower consumption," said Mr. Morton.

Publishing revenues in the fourth quarter decreased 14 percent from the prior year, an improvement from an 18.5 percent decline in the third quarter of 2009.  Partially offsetting a decline in local, national and classified revenues were higher circulation revenues and higher printing and distribution revenues.

Broadcast revenues in the fourth quarter declined 17 percent, which was entirely a reflection of lower Political revenues in the current period.  

Digital Media revenues in the fourth quarter increased 11 percent from the prior year.  Local and National digital revenues increased 28 percent and 20 percent, respectively, from a year ago.  Unique visitors increased 43 percent in the fourth quarter, reflecting in part the benefit of our Yahoo! partnership that uses the company's local headlines on Yahoo! pages and drives their audience to our Web sites.  

Market Segments

Virginia/Tennessee segment profits in the fourth quarter increased 67.2 percent from a year ago to $15.6 million.  Segment expenses decreased 20.5 percent and offset a 6.3 percent decline in revenues.  The segment benefited from a 31 percent increase in Political spending at its two television stations, generated by the Virginia gubernatorial election and issues advertising related to health care reform.  Increased circulation revenues and printing and distribution revenues partially offset declines in Local and National advertising.

Florida segment profits were $6.6 million, compared with a loss of $960,000 in the prior year.  Expenses decreased 31 percent from the prior year and offset a 16 percent decline in total revenues.  Political revenues in this segment in 2009 were $226,000 compared with $3.5 million in 2008.  WFLA generated higher Local and National advertising.  A decline in total advertising in the segment was partially offset by increases in circulation, syndication, and printing and distribution revenues.  

Mid-South segment profits were $8.7 million, a 14.5 percent increase from the prior year.  Revenues declined 11.8 percent, while expenses decreased 18 percent.  Political revenues in this segment in 2009 were $391,000 compared with $5.8 million in 2008.  Local revenues declined 2.7 percent and Classified revenues decreased 7.3 percent.

North Carolina segment profits were $3.4 million, a 26.6 percent decrease from the fourth quarter a year ago.  Revenues decreased 25.6 percent, and expenses declined 25.3 percent.  Political revenues in this segment in 2009 were $203,000, compared with $4.3 million in 2008.  This segment's Local and Classified revenues were lower than other segments, due, in part, to Local advertiser cutbacks in the two larger markets of Winston-Salem and Raleigh.  Higher circulation and distribution revenues partially offset the advertising declines.

Ohio/Rhode Island segment profits were $5.3 million, a 23.7 percent decrease from last year.  Total revenues were $14.6 million, a 24.7 percent decrease, and operating expenses decreased 26.2 percent.  Political revenues in this segment in 2009 were $1.2 million compared with $7.9 million in 2008.  The company's Rhode Island television station benefited from Political spending for the recent Massachusetts Senate race.  National advertising increased 27 percent, and Local spending decreased 2.4 percent in this segment.

The Advertising Services and Other segment profits of $1.7 million increased 65 percent from last year.  Most of the improvement was generated by DealTaker.com, the company's shopping and coupon Web site.  DealTaker.com's revenues increased 37 percent, reflecting increased traffic and visitors buying from merchant sites, driven by strong marketing and sales initiatives for the December holidays.  

Other results

Interest expense of $10.3 million was approximately 4 percent lower than the prior year, due primarily to lower average debt levels.  Acquisition intangibles amortization decreased 41.3 percent, as certain intangible assets were written down as part of previous impairment charges.  Corporate expense declined 15.4 percent, reflecting cost containment actions and furlough days.    

Debt at the end of 2009 was $712 million, compared with $730 million at the end of 2008.  

The company recognized a tax benefit in the fourth quarter that came about as a result of a change in federal tax law that allows the company to carry back its 2009 loss into years in which it paid income taxes.  The amount of the tax benefit is approximately $25 million, and a receivable has been established.  The cash is expected in the middle of 2010, and the company will use this tax refund for debt reduction.

The effective tax rate on income or loss from continuing operations was a negative 4.5 percent for the fourth quarter and 39 percent for the full year.  This unusual relationship of tax benefit to pre-tax income for the quarter is due primarily to the NOL carry back benefit as well as limitations imposed by the intra period tax allocation rules.  

EBITDA (income (loss) from continuing operations before interest, taxes, depreciation and amortization) was $46.7 million in the fourth quarter of 2009, compared with a loss of $92 million in the 2008 period, which included an impairment charge.  After-Tax Cash Flow, excluding non-cash items, was $32.6 million, compared with $22.1 million in the prior year's quarter.  Capital expenditures in the fourth quarter of 2009 were $6.8 million, compared with $12.3 million in the prior-year period.  Free Cash Flow (After-Tax Cash Flow minus capital expenditures) was $25.8 million, compared with $9.9 million in the prior-year period.

Media General provides the non-GAAP financial metrics EBITDA from continuing operations, After-Tax Cash Flow, Free Cash Flow and Income from continuing operations before income taxes, adjusted for severance and impairment.  The company believes these metrics are useful in evaluating financial performance and are common alternative measures used by investors, financial analysts and rating agencies.  These groups use EBITDA, along with other measures, 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.

Outlook

"Media General will continue to build on the strength of its reorganized market-based structure, which is enabling us to accelerate our digital strategy, engage more employees in innovation, and get to market faster with customer-focused solutions.  Our lower cost base going into 2010 provides us with significant flexibility.  In 2010, we will benefit from an improving economy, revenues from the Winter Olympics on our eight NBC stations, and Political revenues, which we estimate will be approximately $42 million across all our markets for the year.  For the full year, we expect our total revenues to increase in the mid-single digits.  Total operating expenses are expected to increase in the mid-single digits, in part because we are not planning a furlough program in 2010.  Our current budget estimates free cash flow of approximately $48-50 million for the year," Mr. Morton said.

Conference Call, Webcast and Financial Statements

The company will hold a conference call with financial analysts today at 2 p.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.  To dial in to the call, listeners may call 1-800-659-2037 about 10 minutes prior to the 2 p.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 5 p.m. today.  A telephone replay is also available, beginning at 5 p.m. today and ending at 5 p.m. on February 4, 2010, by dialing 888-286-8010 or 617-801-6888, and using the passcode 72291164.  The company will issue its audited Financial Statements for the three-years ended December 27, 2009, on the home page of Web site following the market close today.

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 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 Web sites, three metropolitan and 20 community newspapers and their associated Web sites, 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 Web sites.  Media General additionally operates three interactive advertising services companies:  Blockdot, which specializes in interactive entertainment and advergaming technologies; DealTaker.com, a coupon and shopping Web site; and NetInformer, a leading provider of wireless media and mobile marketing services.

    
    
    
    
    Media General, Inc.                                                
    CONSOLIDATED STATEMENTS OF OPERATIONS                              
                                                                       
                                                 
                             Thirteen Weeks Ending  Fifty-Two Weeks Ending 
    (Unaudited, in           ---------------------  ----------------------
     thousands except per      Dec. 27,  Dec. 28,   Dec. 27,    Dec. 28,
     share amounts)              2009      2008        2009       2008 
    ---------------------        ----      ----        ----       ---- 
                                                                       
    Revenues                                                           
      Publishing              $94,367  $109,529    $357,502   $436,870 
      Broadcast                71,616    86,632     258,967    322,106 
      Digital media and                                                
       other                   11,101    10,038      41,143     38,399 
      -----------------        ------    ------      ------     ------ 
          Total revenues      177,084   206,199     657,612    797,375 
          --------------      -------   -------     -------    ------- 
                                                                       
    Operating costs:                                                   
      Employee compensation    70,322    90,820     300,439    380,434 
      Production               34,472    48,171     154,785    193,034 
      Selling, general and                                             
       administrative          25,905    29,404      94,031    111,549 
      Depreciation and                                                 
       amortization            13,923    17,268      59,178     71,464 
      Goodwill and other                                               
       asset impairment           ---   130,383      84,220    908,701 
      Gain on insurance                                                
       recovery                   ---       ---      (1,915)    (3,250)
      -----------------         -----     -----      ------     ------ 
        Total operating                                                
         costs                144,622   316,046     690,738  1,661,932 
        ---------------       -------   -------     -------  --------- 
                                                                       
    Operating income (loss)    32,462  (109,847)    (33,126)  (864,557)
    -----------------------    ------  --------     -------   -------- 
                                                                       
    Other income (expense):                                            
      Interest expense        (10,260)  (10,650)    (41,978)   (43,449)
      Impairment of and                                                
       income (loss) on                                                
       investments                ---       167         701     (4,419)
      Other, net                  351       217         972        979 
      ----------                  ---       ---         ---        --- 
        Total other expense    (9,909)  (10,266)    (40,305)   (46,889)
        -------------------    ------   -------     -------    ------- 
                                                                       
    Income (loss) from                                                 
     continuing operations                                             
     before income taxes       22,553  (120,113)    (73,431)  (911,446)
                                                                       
    Income tax benefit         (1,013)  (34,393)    (28,638)  (288,191)
    ------------------         ------   -------     -------   -------- 
                                                                       
    Income (loss) from                                                 
     continuing operations     23,566   (85,720)    (44,793)  (623,255)
    Discontinued operations:                                           
      Income from                                                      
       discontinued                                                    
       operations (net of                                              
       tax)                        59       186         155      2,701 
      Income (loss)                                                    
       related to                                                      
       divestiture of                                                  
       operations (net of                                              
       tax)                     3,737       ---       8,873    (11,300)
    ---------------------       -----     -----       -----    ------- 
    Net income (loss)         $27,362  $(85,534)   $(35,765) $(631,854)
    =================         =======  ========    ========  ========= 
                                                                       
    Net income (loss)
     per common share:                                
      Income (loss) from                                               
       continuing                                                      
       operations               $1.02    $(3.87)     $(2.01)   $(28.21)
      Discontinued                                                     
       operations                0.17      0.01        0.40      (0.39)
                                 ----      ----        ----      ----- 
    Net income (loss)           $1.19    $(3.86)     $(1.61)   $(28.60)
                                =====    ======      ======    ======= 
                                                                       
    Net income (loss) 
     per common share - 
     assuming dilution:            
      Income (loss) from                                               
       continuing                                                      
       operations               $1.01    $(3.87)     $(2.01)   $(28.21)
      Discontinued                                                     
       operations                0.17      0.01        0.40      (0.39)
                                 ----      ----        ----      ----- 
    Net income (loss)           $1.18    $(3.86)     $(1.61)   $(28.60)
                                =====    ======      ======    ======= 
                                                                       
                                                                       
    Weighted-average 
     common shares 
     outstanding:              ------    ------      ------     ------
      Basic                    22,273    22,166      22,245     22,113 
      Diluted                  22,439    22,166      22,245     22,113 
                               ------    ------      ------     ------
                                                                       
    
    
    
    
    
    Media General, Inc.                                                      
    BUSINESS SEGMENTS                                                        
                                           Depreciation &       Operating    
    (Unaudited, in thousands)   Revenues     Amortization     Profit (Loss)  
    -------------------------   --------   --------------    --------------  
    Quarter ended in December 27, 2009                                       
    Virginia/Tennessee           $53,882           $(3,282)          $15,611 
    Florida                       41,847            (1,845)            6,575 
    Mid-South                     39,369            (3,274)            8,684 
    North Carolina                21,160            (1,707)            3,364 
    Ohio/Rhode Island             14,598              (830)            5,270 
    Advertising Services &                                                   
     Other                         6,720              (227)            1,685 
    Eliminations                    (492)                -                 - 
                                                                      ------ 
                                                                      41,189 
    Unallocated amounts:                                                     
          Acquisition intangibles                                            
           amortization                             (1,703)           (1,703)
          Corporate expense                         (1,055)           (7,053)
                                --------            ------                   
                                $177,084          $(13,923)                  
                                ========          ========                   
                                                                             
          Interest expense                                           (10,260)
          Other                                                          380
                Consolidated income from continuing                  ------- 
                    operations before income taxes                   $22,553 
                                                                     ======= 
                                                                             
                                           Depreciation &       Operating    
    (Unaudited, in thousands)   Revenues     Amortization     Profit (Loss)  
    -------------------------   --------   --------------    --------------  
    Quarter ended in December 28, 2008                                       
    Virginia/Tennessee           $57,493           $(3,709)           $9,338 
    Florida                       49,820            (2,507)             (960)
    Mid-South                     44,648            (3,720)            7,584 
    North Carolina                28,425            (2,035)            4,586 
    Ohio/Rhode Island             19,378              (784)            6,907 
    Advertising Services &                                                   
     Other                         7,375              (209)            1,021 
    Eliminations                    (940)                2              (113)
                                                                        ---- 
                                                                      28,363 
    Unallocated amounts:                                                     
          Acquisition intangibles                                            
           amortization                             (2,902)           (2,902)
          Corporate expense                         (1,404)           (8,338)
                                --------            ------                   
                                $206,199          $(17,268)                  
                                ========          ========                   
                                                                             
          Interest expense                                           (10,650)
          Impairment of and income (loss) on investments                 167 
          Goodwill and other asset impairment                       (130,383)
          Other                                                        3,630 
                                                                   --------- 
                Consolidated loss from continuing                            
                    operations before income taxes                 $(120,113)
                                                                   ========= 
                                                                             
                                                                             
                                           Depreciation &       Operating    
    (Unaudited, in thousands)   Revenues     Amortization     Profit (Loss)  
    -------------------------   --------   --------------    --------------  
    Twelve months ended in 
      December 27, 2009                                 
    Virginia/Tennessee          $199,290          $(13,807)          $39,644 
    Florida                      158,232            (8,111)            4,262 
    Mid-South                    145,621           (13,426)           21,201 
    North Carolina                78,762            (6,801)            4,719 
    Ohio/Rhode Island             50,613            (3,371)           10,514 
    Advertising Services &                                                   
     Other                        26,683              (884)            4,579 
    Eliminations                  (1,589)                2               (46)
                                                                      ------ 
                                                                      84,873 
    Unallocated amounts:                                                     
          Acquisition intangibles                                            
           amortization                             (7,064)           (7,064)
          Corporate expense                         (5,716)          (27,067)
                                --------            ------                   
                                $657,612          $(59,178)                  
                                ========          ========                   
                                                                             
          Interest expense                                           (41,978)
          Impairment of and income (loss) on investments                 701 
          Gain on insurance recovery                                   1,915 
          Goodwill and other asset impairment                        (84,220)
          Other                                                         (591)
                                                                             
                Consolidated loss from continuing                   -------- 
                    operations before income taxes                  $(73,431)
                                                                    ======== 
                                                                             
                                           Depreciation &       Operating    
    (Unaudited, in thousands)   Revenues     Amortization     Profit (Loss)  
    -------------------------   --------   --------------    --------------  
    Twelve months ended in December 28, 2008                                 
    Virginia/Tennessee          $232,465          $(15,244)          $40,609 
    Florida                      201,291            (9,905)           (1,467)
    Mid-South                    171,531           (14,836)           24,967 
    North Carolina               105,372            (7,371)           11,642 
    Ohio/Rhode Island             62,921            (3,869)           13,949 
    Advertising Services &                                                   
     Other                        26,647              (796)            1,495 
    Eliminations                  (2,852)               10            (1,113)
                                                                      ------ 
                                                                      90,082 
    Unallocated amounts:                                                     
          Acquisition intangibles                                            
           amortization                            (13,670)          (13,670)
          Corporate expense                         (5,783)          (38,504)
                                --------            ------                   
                                $797,375          $(71,464)                  
                                ========          ========                   
                                                                             
          Interest expense                                           (43,449)
          Impairment of and income (loss) on investments              (4,419)
          Gain on insurance recovery                                   3,250 
          Goodwill and other asset impairment                       (908,701)
          Other                                                        3,965 
                                                                             
                Consolidated loss from continuing                  --------- 
                    operations before income taxes                 $(911,446)
                                                                   ========= 
    
    
    
    
    
    
    Media General, Inc.                                       
    CONSOLIDATED BALANCE SHEETS                               
                                                              
                                           Dec. 27,     Dec. 28,
    (Unaudited, in thousands)                2009         2008
    -------------------------                ----         ----
                                                              
    ASSETS                                                    
                                                              
    Current assets:                                           
      Cash and cash equivalents           $33,232       $7,142
      Accounts receivable - net           104,405      102,174
      Inventories                           6,632       12,035
      Other                                60,786       38,849
      Assets of discontinued                                  
       operations                               -       12,402
                                          -------       ------
        Total current assets              205,055      172,602
                                          -------      -------
                                                              
    Other assets                           34,177       41,287
                                                              
    Property, plant and equipment -                           
     net                                  421,208      453,627
                                                              
    FCC licenses and other                                    
     intangibles - net                    575,608      666,736
                                        ---------    ---------   
    Total assets                       $1,236,048   $1,334,252
    ============                       ==========   ==========
                                                              
    LIABILITIES AND STOCKHOLDERS' EQUITY                      
                                                              
    Current liabilities:                                      
      Accounts payable                    $26,398      $41,365
      Accrued expenses and other                              
       liabilities                         72,174       86,291
      Liabilities of discontinued                             
       operations                               -        3,053
                                           ------        -----
        Total current liabilities          98,572      130,709
                                           ------      -------
    
    Long-term debt                        711,909      730,049
                                                              
    Deferred income taxes                   7,233            -
                                                              
    Other liabilities and deferred                            
     credits                              226,083      318,267
                                                              
    Stockholders' equity                  192,251      155,227
                                          -------      -------
    Total liabilities and                                     
     stockholders' equity              $1,236,048   $1,334,252
    =====================              ==========   ==========
    
    
    
    
    
    
    Media General, Inc.                                                    
    EBITDA, After-tax Cash Flow, and Free Cash Flow                        
                                                                           
                     
                   
                         Thirteen Weeks Ending       Fifty-Two Weeks Ending  
    (Unaudited,        -------------------------   --------------------------
     in                  Dec. 27,      Dec. 28,       Dec. 27,     Dec. 28,
     thousands)            2009          2008           2009          2008 
    -----------            ----          ----           ----          ---- 
                                                                           
    Income                                                                 
     (loss) from                                                           
     continuing                                                            
     operations         $23,566      $(85,720)      $(44,793)    $(623,255)
    Interest             10,260        10,650         41,978        43,449 
    Taxes                (1,013)      (34,393)       (28,638)     (288,191)
    Depreciation                                                           
     and                                                                   
     amortization        13,923        17,268         59,178        71,464 
                         ------        ------         ------        ------ 
                                                                           
    EBITDA from                                                            
     continuing                                                            
     operations         $46,736      $(92,195)       $27,725     $(796,533)
    ===========         =======      ========        =======     ========= 
                                                                           
                                                                           
    Income                                                                 
     (loss) from                                                           
     continuing                                                            
     operations         $23,566      $(85,720)      $(44,793)    $(623,255)
    Non-cash                                                               
     impairment                                                            
     charge, net                                                           
     of tax                                                                
     adjustments        (11,375)       83,054         51,374       615,137 
    Non-cash tax                                                           
     valuation                                                             
     allowance            6,529         7,527          6,529         7,527 
    Depreciation                                                           
     and                                                                   
     amortization        13,923        17,268         59,178        71,464 
                                                                           
    -------------       -------       -------        -------       ------- 
    After-tax                                                              
     cash flow                                                             
     excluding                                                             
     non-cash                                                              
     items              $32,643       $22,129        $72,288       $70,873 
    ==========          =======       =======        =======       ======= 
                                                                           
    After-tax                                                              
     cash flow          $32,643       $22,129        $72,288       $70,873 
    Capital                                                                
     expenditures         6,828        12,274         18,453        31,517 
                                                                           
    -------------       -------        ------        -------       ------- 
    Free cash                                                              
     flow                                                                  
     excluding                                                             
     non-cash                                                             
     items              $25,815        $9,855        $53,835       $39,356 
    ==========          =======        ======        =======       =======
                                                                           
    
                                                                           
    Media General, Inc.                                                    
    Income from continuing operations before income taxes, adjusted for    
     severance and impairment                                              
                                                      Thirteen Weeks Ending
                                                      --------------------- 
                                                      Dec. 27,      Dec. 28,
    (Unaudited, in thousands)                           2009          2008 
    -------------------------                           ----          ---- 
                                                                           
    Income (loss) from continuing operations,                              
     before income taxes                             $22,553     $(120,113)
    Severance                                            345         6,105 
    Non-cash impairment charge                             -       130,383 
                                                                           
                                                                           
    Income from cont. ops. before income                                   
     taxes, adjusted for severance and               -------       ------- 
     impairment                                      $22,898       $16,375 
    ====================================             =======       ======= 
    
    

SOURCE Media General, Inc.



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http://www.mediageneral.com