FOR IMMEDIATE RELEASE
Tuesday, July 17, 2001
Media General Reports Second-Quarter Results
RICHMOND, Va. — Media General (AMEX: MEG.A) today announced net income of $7.7 million, or 33 cents per diluted share, for the second quarter of 2001. In the second quarter of 2000, net income was $9.6 million, or 39 cents per diluted share, including losses related to discontinued operations totaling $7.4 million, or 31 cents per diluted share.
Total revenues for the second quarter were $205.7 million, compared with $211.3 million in the year-ago period. Excluding acquisitions and divestitures, revenues were down 7.6 percent.
"Media General's second-quarter results reflect lower operating income in our Publishing and Broadcast divisions, caused by the most severe advertising downturn in 10 years," said J. Stewart Bryan III, chairman and chief executive. "Results for our new Interactive Media Division were slightly ahead of expectations before a $2.3 million write-off of our investment in KOZ.com. Media General's share of SP Newsprint's income was $8.9 million, which had a positive impact on our results.
"Cost-reduction measures implemented early this year partially offset the impact of lower revenues," Bryan said. "Second-quarter expenses were down 2.6 percent in our Broadcast Division, including lower cost of goods sold by our communications equipment subsidiary. Expenses in our Publishing Division, excluding acquisitions and newsprint expense, were up nominally. We have curtailed discretionary spending and filled only mission-critical positions. As a result of our company-wide hiring freeze, we have 94 fewer employees than we did this time last year and 580 fewer employees, or 7 percent of our total work force, from what we had budgeted."
EBITDA (earnings before interest, taxes, depreciation and amortization) from continuing operations for the second quarter of 2001 was $53 million, compared with $66 million in the 2000 period. Free cash flow (after-tax cash flow from continuing operations minus capital expenditures) was $24 million, compared with $32 million one year ago.
Average shares outstanding in the second quarter were 23 million, compared with 24.5 million in the prior-year period, as a result of share repurchases in 2000. Media General has not repurchased shares in 2001.
Capital expenditures during the second quarter of 2001 were $12 million, compared with $11 million for continuing operations in the second quarter of 2000. Debt at the end of the second quarter was $797 million.
Publishing Division revenues for the quarter were $137.2 million, compared with $135.9 million in the second quarter of 2000. Excluding acquisitions and divestitures, revenues were down 6.8 percent. The division's second-quarter operating income was $29.8 million, compared with $38.9 million in the second quarter of 2000. These reduced results reflect the severe industry-wide downturn in advertising, particularly in classified, which is evident at nearly all of Media General's publications.
Broadcast Division revenues for the second quarter were $66.6 million, compared with $73.4 million in the second quarter of 2000. The division's second-quarter operating income was $15.2 million, compared with $20.8 million a year ago. In addition to the absence of major political campaign advertising this year, the division experienced substantial decreases in national time sales coupled with smaller declines in local advertising.
Interactive Media Division revenues were $2.3 million, compared with $2 million in the second quarter of 2000. Largely due to the write-off of the company's investment in KOZ.com, which has declared bankruptcy, the division posted an operating loss of $4.1 million for the quarter. The division's second-quarter results also include losses from the company's investments in iPipe and AdOne of approximately $565,000 and $300,000, respectively. In the second quarter of 2000, the division had an operating loss of $587,000
Outlook
"At this time, we see no evidence that the weak advertising environment will turn around anytime soon," Bryan said. "All of our business units have been asked to revise their plans and forecasts for the balance of the year to respond to what now appears to be a prolonged advertising downturn. Overseeing this process will be the top priority of our newly elected president, Reid Ashe. Because of the work that is under way with our business units, combined with the uncertain economic and industry outlook, it would not be meaningful to provide definitive earnings guidance today. We can tell you that barring an improvement from current conditions, we are facing financial performance that is below current analyst expectations of 15 cents for the third quarter and $1.28 for the year."
Conference Call
Media General will discuss its second-quarter results during a conference call and webcast today at 11:15 a.m. EDT. 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. A replay will be available from 3 p.m. today until 5 p.m. on Tuesday, July 24, 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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