FOR IMMEDIATE RELEASE
Wednesday, April 18, 2001
Media General Reports First-Quarter Results
RICHMOND, Va. — Media General (AMEX: MEG.A) today announced diluted earnings per share of 15 cents for the first quarter of 2001, compared with 55 cents for the first quarter of 2000. Net income was $3.4 million, down from $14.4 million in last year's first quarter.
These earnings exceeded the company's projection from early March that first-quarter earnings would be "only a little better than breakeven." The results, however, include a one-time, after-tax gain of $5.8 million representing the company's share of the Rocky Mountain News' payment to The Denver Post to establish a joint-operating agreement.
Total revenues for the first quarter increased 15 percent to $198.9 million from $172.5 million in the 2000 period. This increase includes the results of 13 television stations and five daily newspapers acquired during 2000. Excluding these acquisitions, total revenues declined approximately 2 percent.
"As expected, our first-quarter results reflect industry-wide decreases in advertising in both publishing and broadcasting plus start-up expenses in our Interactive Media Division," said J. Stewart Bryan III, Media General's chairman and chief executive. "We are responding to these challenges by aggressively managing our operating and capital budgets. We have instituted company-wide cost reductions, including hiring freezes for all but mission-critical positions."
Total segment operating income for the first quarter was $38.8 million, compared with $40.9 million in the 2000 period. Total segment operating cash flow was $48.1 million in the first quarter, compared with $51 million in the first quarter of 2000.
Net income from continuing operations in the first quarter of 2001 was $3.4 million, or 15 cents per share, compared with $17.3 million, or 66 cents per share, in the 2000 period. Continuing operations do not include an after-tax operating loss of $2.9 million in the first quarter of 2000 from Garden State Paper Co., which the company sold in August. The quarterly comparison reflects lower segment operating income, higher interest expense, increased acquisition intangibles amortization, and the absence of interest income that was present in the first quarter of 2000. On the plus side, Media General derived $6.2 million in pretax income from its investment in SP Newsprint Co. The company's 33 percent ownership of SP Newsprint generated a pretax loss of $891,000 in the first quarter of 2000.
EBITDA (earnings before interest, taxes, depreciation and amortization) from continuing operations for the first quarter of 2001 was $49 million, compared with $48.7 million in the 2000 period. Free cash flow (after-tax cash flow from continuing operations minus capital expenditures) was $23.4 million, compared with $27.8 million one year ago.
As a result of share repurchases throughout 2000, average shares outstanding in the first quarter were 22.9 million, compared with 26 million in the prior year. Media General has not repurchased any additional shares so far this year.
Capital expenditures during the quarter were $9.2 million, down from $10.5 million in the first quarter of 2000. The company also reduced its full-year forecast for capital expenditures from $99 million to $69 million.
Publishing
Publishing revenues for the quarter were $137 million, compared with $130.3 million in the first quarter of 2000. Excluding acquisitions and divestitures, revenues decreased 2.5 percent.
First-quarter operating income was $32.6 million vs. $35.1 million in the first quarter of 2000. In this year's first quarter, the company's share of the one-time Denver gain plus $2.9 million from acquired properties partially offset an $11.4 million decline in operating profits from comparable operations.
The division's results reflect profit declines at nearly all of the company's newspapers. It also reflects extremely soft advertising revenues and higher costs, particularly for newsprint, which was priced almost 20 percent higher than in the first quarter of 2000.
Broadcast
Broadcast revenues for the first quarter increased 49 percent including acquisitions. Excluding acquisitions, they were down 1.3 percent.
Aggressive local sales initiatives have been productive, and ratings gains continue to translate into additional revenue shares. These successes, however, have been more than offset by weak national advertising and the virtual absence of political advertising in 2001.
First-quarter operating income for the division increased from $6.2 million a year ago to $7.8 million, including $2.2 million from acquisitions.
Interactive Media
The Interactive Media Division, which was launched Jan. 1, 2001, posted an operating loss of $1.7 million, compared with an operating loss of $350,000 in the first quarter of 2000.
The current-year results include losses of approximately $650,000 and $350,000, respectively, from the company's investments in iPipe, an online distributor of syndicated content and specialty advertising, and AdOne, a national aggregator of classified advertising on the Internet.
Interactive Media revenues of $2.2 million increased 21 percent from $1.8 million in the first quarter of 2000, principally from the growth of Media General Financial Services, the company's financial data subsidiary.
Outlook
Media General expects the challenging advertising environment in the first quarter to continue through the second quarter and possibly into the second half of 2001. The company projects second-quarter earnings from continuing operations to be about 50 cents per share, and it continues to forecast that its earnings per share will not exceed $2 for the full year.
"Despite the current difficulties, there are many positive initiatives under way in all of our businesses," Bryan said. "The Publishing Division is developing regional clusters that will provide significant operational synergies. The Broadcast Division is consolidating its national sales efforts into one dedicated and coordinated team, and the Interactive Media Division is migrating toward subscription models designed to convert anonymous Web visitors into valuable online customers.
"We will do what is necessary to weather this economic slowdown, but we will not lose sight of our long-term goals of creating greater value for our shareholders, new opportunities for our employees, more choices for our customers, and a higher standard of journalism for the communities we serve."
Conference Call
Media General will discuss first-quarter results during a conference call and webcast today at 2 p.m. EST. To listen to the webcast, log on to www.mediageneral.com and click on the "Live Earnings Conference" link at the top of the home page. You will need RealPlayer software, downloadable free from www.real.com/products/player/index.html. A replay will be available from 5 p.m. today until 5 p.m. on Wednesday, April 25, at the same Web address.
About Media General
Media General is an independent, publicly owned communications company situated primarily in the Southeast with interests in newspapers, television stations, interactive media and diversified information services. The company's publishing assets include The Tampa Tribune, the Richmond Times-Dispatch, the Winston-Salem Journal and 22 other daily newspapers in Virginia, North Carolina, Florida, Alabama and South Carolina, as well as nearly 100 other periodicals and a 20 percent interest in The Denver Post. Media General's 26 network-affiliated television stations reach more than 30 percent of the television households in the Southeast, and nearly 8 percent of those in the United States. The company's extensive interactive media offerings include more than 50 online enterprises. Media General also has a 33 percent interest in SP Newsprint Co., which operates newsprint mills in Dublin, Ga., and Newberg, Ore.
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.
See Consolidated Statements of Operations
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