Media General’s Publishing Division operates 21 daily newspapers in Virginia, North Carolina and Florida, with a combined circulation of 802,000 daily and 939,000 Sunday. Additionally, it publishes nearly 100 weekly and related periodicals whose combined weekly circulation approaches one-half million.

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A Certainly strong economic conditions were helpful. Our focus on southeastern markets provides the best regional business climate in the United States. On an internal basis, our costs do not grow as fast as the local economy. Holding costs below revenue growth is a pretty simple formula and one that all of our people understand. We have spent a great deal of time making sure we have the right people in the right places and that these people are properly trained. Training has been a priority this year and it is paying dividends in the operating results of our Division.

Q What specifically are you doing to deliver on Media General’s mission of being a leading provider of information in the southeastern United States?

A First, our acquisitions have dramatically increased our regional presence. While we are the 12th largest public company with significant newspaper holdings in the United States, we are the 3rd largest in the Southeast. Delivering newspapers to over 800,000 households every day spreads our distribution across many markets and moderates the risk of local downturns in our results. None of our larger competitors has this degree of regional focus. Simply put, Media General is uniquely positioned to capitalize on the growth of the nation’s strongest economic region.

Second, our focus on quality products is unrelenting. Last year we rolled out Media General Newsbank. This is an Intranet-based service allowing all of our newspapers to exchange stories, photos and graphics. This has vastly expanded the reach of each market in terms of newsgathering and content creation. This service is unique to our newspapers and makes them strong competitors, providing solid news content from all around the Southeast, regardless of their size.

Third, we’ve continuously improved our newspapers from an operational standpoint. All of our largest markets have undertaken and completed major process reengineering efforts that have significantly added to the bottom line. Successfully integrating our smaller acquired properties has also been a high priority. We’ve clustered 16 smaller newspapers into a single group directed by a senior vice president for community publishing. This allows our smaller properties to exchange best practices and more easily combine production and sales efforts in markets where it is geographically practical.

Q How are you preparing for an increasingly electronic future? Do you see Internet competition as a threat?

A Far from being a threat, the Internet is a proven opportunity. Anything that gets more people interested in local information, whether it is provided on paper or on a computer screen, is good for us.

Creating quality content is labor-intensive regardless of how it is delivered. While some companies have invested heavily in an uncertain electronic future that is at best ancillary to their core business, we’ve taken a more measured approach that directly supports our core products. At the current time, nearly all our newspapers have some type of presence on the World Wide Web. While our Internet revenues are modest so far, they are not out of proportion with expenses.

We are making both local news and classified advertising available on-line and building our system-wide electronic archiving capacity. These steps lay a foundation that fosters brand equity and protects local market share. Regardless of how the future evolves, we are positioned to serve our advertisers and provide quality content to consumers when, how and where they want it.

Q You continued to acquire and dispose of certain newspaper properties in 1998. Are the results what you expected?

AWe’re tracking nicely with our forecast. The Division’s strong cash flow is proof that our regional clustering strategy is succeeding. The main reason for the divestiture of our Kentucky properties was that we could not find appropriate clustering acquisitions nearby. There continue to be such opportunities as the newly acquired Hickory Daily Record in our North Carolina market area.

Our financial results have been very positive. We’ve been able to accomplish what we set out to do: create a regional group of newspapers that offers both short and long-term improvements in content and sales, as well as efficiencies in accounting, training, asset management and long-term capital requirements.

We could not ask for any better region than the southeastern U.S. in which to execute this strategy. Its overall growth, coupled with our experience in understanding the people, lifestyles and communities of this region, is providing the kind of financial results which ensure our newspapers will always remain leading providers of news, information and entertainment in the Southeast.