RICHMOND, Va., July 17 VA-Media-Gen-2Q08Ern
RICHMOND, Va., July 17 /PRNewswire-FirstCall/ -- Media General, Inc.
(NYSE: MEG) today reported that preliminary results for the second quarter of
2008, which include severance charges of 14 cents per diluted share, were a
loss from continuing operations of $1.4 million, or 6 cents per diluted share,
compared with income from continuing operations of $4.3 million, or 19 cents
per diluted share, in the second quarter of 2007. Excluding severance charges
noted above, income in the second quarter of 2008 was 8 cents per diluted
share. The preliminary results do not include an expected non-cash impairment
charge, primarily related to goodwill and other intangible assets, as
discussed below. Including the severance charges and discontinued operations,
consisting of five television stations that have been or will be sold, the net
loss for the second quarter of 2008 was $129,000, or 1 cent per diluted share.
This compares with net income of $5.1 million, or 22 cents per diluted share,
in the 2007 second quarter. Total company revenues of $204.9 million in the
second quarter of 2008 decreased 10.2 percent from the same period in 2007.
Media General said that it is completing a process of impairment testing
primarily of goodwill and other intangible assets. The non-cash impairment
charge in the 2008 second-quarter is expected to be in the range of $500
million to $550 million after tax. Media General plans to report the final
amount of the impairment charge when it files its Form 10-Q with the
Securities and Exchange Commission on or before August 8, 2008. The
impairment charge will reduce the book value of goodwill, identifiable
intangible assets, and certain other assets.
"We determined that, in view of the continued economic slowdown and the
market's perception of media industry equity valuations, this was the
appropriate time to undertake the impairment testing. The charge is non-cash
and will not impact our ability to operate, reduce debt or move forward with
our ongoing transition to the digital world," said Marshall N. Morton,
president and chief executive officer.
"Media General's lower second-quarter results reflected a weakening
economy and a continued challenging business environment in the Publishing
Division," said Mr. Morton. "Partially mitigating lower divisional results
compared with last year were lower interest expense and an additional gain
related to the Richmond Times-Dispatch fire settlement.
"We continue to implement aggressive performance improvement actions,
including workforce reductions, to better align expenses with current business
conditions. Total operating costs in the second quarter, excluding severance
charges, decreased approximately 6 percent," he said.
Publishing Division
Publishing Division profit for the quarter of $6.8 million compared with
$22.6 million in the 2007 quarter. Total revenues decreased 14.7 percent, and
newspaper advertising revenues declined 17.1 percent.
Excluding Florida, where Publishing revenues were down 24.7 percent in the
quarter, total Publishing revenues decreased less than 10 percent. Revenues
declined 12.5 percent in Virginia, 7.3 percent in North Carolina and 3.5
percent in Alabama. In South Carolina, revenues were up nominally, driven by
a new weekly newspaper in the greater Florence/Myrtle Beach market.
Classified advertising revenues in the second quarter were below last
year's quarter by $14.1 million, or 29.5 percent, driven mostly by shortfalls
in the Tampa market. For the company's three metro markets, employment
revenues decreased 42.7 percent, real estate revenues were down 38.9 percent,
and automotive revenues declined 38.5 percent.
Retail advertising revenues declined $3.4 million, or 6.3 percent,
primarily due to lower spending in Tampa in the department store, home
furnishings, and entertainment categories. National revenues decreased $1.8
million, or 19.2 percent, as a result of lower spending in the utilities,
travel and automotive categories in the Tampa market. Circulation revenues
decreased $490,000, or 3 percent, reflecting Daily and Sunday net-paid volume
declines, partially offset by rate increases in several markets.
Publishing Division expenses, excluding divisional severance expenses and
charges related to the consolidation of newspaper printing, declined 7.2
percent for the quarter. Newsprint expense decreased 12.3 percent as a result
of lower consumption, which was down 19.5 percent. The average price per ton
increased $49 from the 2007 second quarter. Excluding severance, salaries
declined 6.9 percent for the quarter, reflecting savings from staff
reductions.
Broadcast Division
Broadcast Division profit for the quarter of $14.9 million compared with
$18 million last year. Weak National and Local time sales were partially
offset by $2.8 million in Political revenues. Expenses, excluding severance
costs, decreased 4 percent. The division has implemented performance
improvement measures as well as new business initiatives.
Total Broadcast revenues decreased 5.7 percent. Gross time sales declined
$4.5 million, or 5 percent. Local time sales declined $1.2 million, or 2.2
percent. Lower spending in the furniture store and entertainment categories
was partially offset by higher automotive and fast food advertising. National
time sales decreased $5.3 million, or 15.9 percent. Categories showing
decreases for the quarter included automotive and services, while
transportation and drug stores increased.
Total Political revenues of $2.8 million compared with $745,000 in the
2007 quarter. The current quarter's revenues were generated from presidential
campaign spending in Ohio, Florida, North Carolina, and South Carolina,
gubernatorial primary spending in North Carolina, U.S. Congressional races in
South Carolina, North Carolina, Virginia and Ohio, and issue spending in Ohio,
Mississippi, Florida, North Carolina, South Carolina, Virginia, Georgia and
Rhode Island.
Interactive Media Division
The Interactive Media Division had a quarterly loss of $656,000 compared
with a profit of $359,000 in the 2007 quarter. The division generated record
revenues of $10.6 million, up 13.7 percent, reflecting a 45.7 percent increase
in Local advertising and revenues from DealTaker.com, acquired March 31, 2008.
The partnership with Yahoo!HotJobs generated $2 million in revenues in the
quarter, helping to partially offset a 4 percent decrease in Classified
revenues.
Local revenues increased as the result of continued growth in banners and
sponsorships and direct sales. National/Regional revenues decreased 7.1
percent, due to softer advertising from national agencies, particularly at
TBO.com in Tampa.
Media General is aggressively harnessing opportunities for rapid growth in
the digital world. The addition of the advertising services group, which is
comprised of DealTaker.com and Blockdot, increases the company's focus on new
customers. Its newest member, DealTaker.com, is engaged in the fast-growing
sector of online coupons and shopping. Dealtaker.com represents an important
new cash flow stream for Media General and was profitable during its first
full-quarter of ownership. A decline in advergaming revenues in the quarter
at Blockdot reflected a slower pace of incoming projects, as a result of the
weaker economy, compared with the same 2007 period.
Page views and visitor sessions for the second quarter rose 6.1 percent,
and 15.5 percent, respectively, driven in large part by a Web-First approach
to local news in all markets. TBO.com in Tampa, for example, generated a
nearly 70 percent increase in page views in the second quarter. A number of
other Media General newspaper and television Web sites also saw a dramatic
growth in visitors.
Other results
Interest expense decreased by $4.6 million, due mainly to lower interest
rates, and also aided by lower debt levels.
Preliminary EBITDA (income from continuing operations before interest,
taxes, depreciation and amortization) in the second quarter of 2008 was $26.8
million, compared with $40.9 million in the 2007 period. After-Tax Cash Flow
was $17.7 million compared with $23.3 million in the prior year. Capital
expenditures in the second quarter of 2008 were $4.5 million compared with
$18.3 million in the prior-year period. Free Cash Flow for the quarter
(After-Tax Cash Flow minus capital expenditures) was $13.2 million, up from $5
million in the prior-year period.
Media General provides the non-GAAP financial metrics EBITDA, After-Tax
Cash Flow, and Free Cash Flow. 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.
Conference Call and Webcast
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 full text of the release and financials will be
available on the company's Web site, www.mediageneral.com. To dial in to the
call, listeners may call 1-866-510-0710 about 10 minutes prior to the 11 a.m.
start. Listeners may also access the live Webcast by logging on to
www.mediageneral.com and clicking on the "Live Earnings Conference" 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 will be also be available, beginning at 1 p.m. today and
ending at 1 p.m. on July 24, 2008, by dialing 888-286-8010 or 617-801-6888,
and using the passcode 44413520.
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 local news, information and
entertainment over multiple media platforms. The company serves markets
primarily in the Southeastern United States. Media General publishes 25 daily
newspapers, including The Tampa Tribune, Richmond Times-Dispatch, and Winston-
Salem Journal; and community newspapers in Virginia, North Carolina, Florida,
Alabama and South Carolina; plus approximately 275 weekly newspapers and other
targeted publications. The company owns and operates 20 network-affiliated
television stations that reach approximately 30 percent of the television
households in the Southeast and nearly 9 percent of those in the United
States. The company's interactive media operations include Web sites and
portals that are associated with each of its newspapers and television
stations as well as with many specialty publications, and two growing
interactive advertising services companies, Blockdot, Inc. and DealTaker.com.
Media General, Inc.
PRELIMINARY CONSOLIDATED STATEMENTS OF OPERATIONS
Thirteen Weeks Twenty-Six Weeks
Ending Ending
------------------ -------------------
(Unaudited, in thousands exceptJune 29, July 1, June 29, July 1,
per share amounts) 2008 2007 2008 2007
--------------------------------------------------------------------------
Revenues $204,880 $228,215 $399,344 $446,479
Operating costs:
Production 96,621 102,661 194,669 207,980
Selling, general and
administrative81,87382,713 164,306 169,847
Depreciation and amortization 19,02719,02837,35738,231
Gain on insurance recovery (2,750) ---(2,750) ---
--------------------------------------------------------------------------
Total operating costs 194,771 204,402 393,582 416,058
-------------------------------------------------------------------------
Operating income 10,10923,813 5,76230,421
--------------------------------------------------------------------------
Other income (expense):
Interest expense (10,548) (15,186) (22,837) (30,160)
Investment loss - unconsolidated
affiliates (18) (2,305) (39) (4,606)
Loss on sale of unconsolidated
affiliate (2,602) ---(2,602) ---
Other, net305 379 513 771
--------------------------------------------------------------------------
Total other expense (12,863) (17,112) (24,965) (33,995)
--------------------------------------------------------------------------
Income (loss) from continuing
operations before income taxes (2,754)6,701 (19,203) (3,574)
Income taxes (1,380)2,389(8,017) (1,333)
--------------------------------------------------------------------------
Income (loss) from continuing
operations (1,374)4,312 (11,186) (2,241)
Discontinued operations:
Income from discontinued
operations (net of tax)1,245 808 2,102 857
Loss related to divestiture of
operations (net of tax) --- --- (11,300) ---
--------------------------------------------------------------------------
Net income (loss) $(129) $5,120 $(20,384) $(1,384)
==========================================================================
Net income (loss) per common share:
Income (loss) from continuing
operations$(0.06)$0.19$(0.51) $(0.10)
Discontinued operations 0.05 0.04 (0.41) 0.04
-------------------------------------
Net income (loss)$(0.01)$0.23$(0.92) $(0.06)
=====================================
Net income (loss) per common share
- assuming dilution:
Income (loss) from continuing
operations$(0.06)$0.19$(0.51) $(0.10)
Discontinued operations 0.05 0.03 (0.41) 0.04
-------------------------------------
Net income (loss)$(0.01)$0.22$(0.92) $(0.06)
=====================================
--------------------------------------------------------------------------
Weighted-average common shares
outstanding:
Basic 22,07422,63722,09323,146
Diluted22,07422,83522,09323,146
--------------------------------------------------------------------------
Media General, Inc.
PRELIMINARY BUSINESS SEGMENTS
Inter-
active Elimi-
(Unaudited, in thousands) Publishing Broadcast Media nations Total
--------------------------------------------------------------------------
Quarter Ended
June 29, 2008
Consolidated revenues $113,656$82,411 $10,565 $(1,752) $204,880
===============================================
Segment operating cash
flow $14,201$21,395$(151) $35,445
Depreciation and
amortization(7,386)(6,468)(505) (14,359)
-----------------------------------------------
Segment profit (loss) $6,815$14,927$(656) 21,086
=============================
Unallocated amounts:
Interest expense (10,548)
Equity in net loss of
unconsolidated
affiliate (18)
Loss on sale of
unconsolidated
affiliate(2,602)
Acquisition intangibles
amortization (3,957)
Corporate expense(10,143)
Gain on insurance recovery 2,750
Other678
---------
Consolidated loss from
continuing operations
before income taxes$(2,754)
=========
Quarter Ended
July 1, 2007
Consolidated revenues $133,221$87,370 $9,292 $(1,668) $228,215
==============================================
Segment operating cash
flow $29,014$24,621 $585 $54,220
Recovery on investment 188 188
Depreciation and
amortization(6,438)(6,584)(414) (13,436)
----------------------------------------------
Segment profit$22,576$18,037 $35940,972
============================
Unallocated amounts:
Interest expense (15,186)
Equity in net loss of
unconsolidated
affiliates (2,305)
Acquisition intangibles
amortization (4,415)
Corporate expense(10,020)
Other (2,345)
---------
Consolidated income
from continuing
operations before
income taxes$6,701
=========
Six Months Ended
June 29, 2008
Consolidated revenues $227,246 $157,142 $18,232 $(3,276) $399,344
===============================================
Segment operating cash
flow $29,223$35,485 $(2,460) $62,248
Recovery on investment 1010
Depreciation and
amortization (14,196) (13,002)(952) (28,150)
-----------------------------------------------
Segment profit (loss) $15,027$22,483 $(3,402) 34,108
=============================
Unallocated amounts:
Interest expense (22,837)
Equity in net loss of
unconsolidated
affiliate (39)
Loss on sale of
unconsolidated
affiliate(2,602)
Acquisition intangibles
amortization (7,782)
Corporate expense(20,835)
Gain on insurance recovery 2,750
Other (1,966)
---------
Consolidated loss from
continuing operations
before income taxes $(19,203)
=========
Six Months Ended
July 1, 2007
Consolidated revenues $269,556 $163,007 $17,218 $(3,302) $446,479
===============================================
Segment operating cash
flow $54,319$38,772 $400 $93,491
Recovery on investment 188 188
Depreciation and
amortization (12,889) (13,186)(859) (26,934)
-----------------------------------------------
Segment profit (loss) $41,430$25,586$(271) 66,745
=============================
Unallocated amounts:
Interest expense (30,160)
Equity in net loss of
unconsolidated
affiliates (4,606)
Acquisition intangibles
amortization (8,824)
Corporate expense(20,275)
Other (6,454)
--------
Consolidated loss from
continuing operations
before income taxes$(3,574)
========
Media General, Inc.
PRELIMINARY CONSOLIDATED BALANCE SHEETS
June 29, December 30,
(Unaudited, in thousands) 20082007
--------------------------------------------------------------------------
ASSETS
Current assets:
Cash and cash equivalents $16,314 $14,214
Accounts receivable-net 109,735 133,863
Inventories 8,939 6,676
Other 37,27252,083
Assets of discontinued operations 71,862 106,958
----------------------------
Total current assets 244,122 313,794
----------------------------
Investments in unconsolidated affiliates 1,44652,360
Other assets 64,31765,686
Property, plant and equipment - net 460,099 475,028
Excess of cost over fair value of net
identifiable assets of acquired
businesses - net 933,285 917,521
FCC licenses and other intangibles - net644,770 646,677
----------------------------
Total assets $2,348,039$2,471,066
=========================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $31,435 $32,676
Accrued expenses and other liabilities 95,081 101,817
Liabilities of discontinued operations 3,748 5,521
----------------------------
Total current liabilities 130,264 140,014
----------------------------
Long-term debt 830,061 897,572
Deferred income taxes 293,973 311,588
Other liabilities and deferred credits 214,271 208,885
Stockholders' equity879,470 913,007
----------------------------
Total liabilities and stockholders' equity $2,348,039$2,471,066
=========================================================================
Media General, Inc.
Preliminary EBITDA, After-tax Cash Flow, and Free Cash Flow
Thirteen Weeks Twenty-Six Weeks
EndingEnding
----------------- -----------------
June 29, July 1, June 29, July 1,
(Unaudited, in thousands) 2008 2007 2008 2007
-------------------------------------------------------------------------
Income (loss) from continuing
operations $(1,374) $4,312 $(11,186) $(2,241)
Interest 10,548 15,18622,837 30,160
Taxes (1,380) 2,389(8,017) (1,333)
Depreciation and amortization 19,027 19,02837,357 38,231
--------------------------------------------------------------------------
EBITDA from continuing operations $26,821 $40,915 $40,991 $64,817
==========================================================================
Income (loss) from continuing
operations $(1,374) $4,312 $(11,186) $(2,241)
Depreciation and amortization 19,027 19,02837,357 38,231
--------------------------------------------------------------------------
After-tax cash flow $17,653 $23,340 $26,171 $35,990
==========================================================================
After-tax cash flow $17,653 $23,340 $26,171 $35,990
Capital expenditures4,487 18,30012,446 37,791
--------------------------------------------------------------------------
Free cash flow$13,166 $5,040 $13,725 $(1,801)
==========================================================================
SOURCE Media General, Inc.
