FOR IMMEDIATE RELEASE
Thursday, Jan. 31, 2002
Media General Reports 2001 Fourth-Quarter and Full-Year Earnings
RICHMOND, Va. — Media General (NYSE:MEG) today announced fourth-quarter earnings of 34 cents per diluted share from continuing operations, compared with 91 cents in the fourth quarter of 2000, which included an additional week.
Net income from continuing operations was $7.9 million, down from $20.8 million in the fourth quarter of 2000. Revenues for the fourth quarter were $209.5 million, compared with $245 million in the fourth quarter of 2000.
"Media General's 2001 results reflect the impact of one of the most challenging years in our industry's history," said J. Stewart Bryan III, Media General's chairman and chief executive. "In the face of these difficult times, we are pleased that our fourth-quarter results were better than we had anticipated. The performance of our Broadcast and Interactive Media divisions exceeded expectations, and the termination of our newsprint swap agreement in late November 2001 resulted in lower newsprint expense.
"In addition, our results reflect the benefit of stringent cost controls that we implemented early in 2001. The full impact of our cost-saving measures became stronger as the year unfolded and is most evident in our fourth-quarter results. Total operating expenses were down 13.5 percent for the Publishing Division and 6.4 percent for the Broadcast Division, and corporate expense declined 4.2 percent. We have 5 percent fewer employees than we did at the end of 2000, due to a hiring freeze.
"Our better-than-expected performance is also due to the outstanding efforts of Media General employees who worked very hard last year to provide excellent journalism to our communities, not only during the tragic events of September 11, but all year long. They were resourceful in managing expenses, while still delivering high-quality products and services to our customers. Media General is well positioned to deliver improved results when the economy rebounds, as we expect it will by the second half of 2002."
EBITDA (earnings before interest, taxes, depreciation and amortization) from continuing operations for the fourth quarter was $54.9 million, compared with $78.8 million in the 2000 period. After-tax cash flow from continuing operations (income from continuing operations plus depreciation and amortization) was $35.3 million, down from $49.6 million in the fourth quarter of 2000. Free cash flow (after-tax cash flow minus capital expenditures) from continuing operations was $20.5 million, compared with $40.9 million in the 2000 period.
Publishing
Total Publishing Division revenues were $137.8 million in the fourth quarter of 2001, compared with $160.6 million in the fourth quarter of 2000, as every advertising category was affected by the ongoing advertising recession. Classified revenues were $38.2 million, down from $47 million, mostly because of weak employment advertising. Retail revenues were $40.2 million, compared with $46.8 million. National revenues were $9 million, compared with $9.9 million, while preprint revenues were $20.3 million, compared with $22.2 million.
Operating income was $37.2 million in the fourth quarter, compared with $44.8 million a year ago, while segment operating cash flow was $44 million, compared with $51.8 million.
Broadcast
Total Broadcast Division revenues were $69.9 million in the fourth quarter of 2001, compared with $82.4 million in the fourth quarter of 2000. Total time sales were $68.3 million, down from $83.1 million, mostly due to a substantial decrease in political advertising. Local revenues were $42.6 million, compared with $43.7 million, while national revenues were $25 million, compared with $26.5 million a year ago.
Operating income in the Broadcast Division was $16.8 million in the fourth quarter, compared with $25.9 million a year earlier, while segment operating cash flow was $21.5 million, compared with $30.7 million.
Interactive Media
Total Interactive Media Division revenues of $2.1 million were about even with the fourth quarter of 2000. The division's operating loss of $697,000 improved from a loss of $2.3 million in the 2000 quarter. The improvement was largely attributable to the absence of the prior-year write-off of a $1.3 million investment in Zatso.
Full-Year Results
For the full year 2001, earnings from continuing operations were 78 cents per diluted share, compared with $2.63 in the full year 2000. Income from continuing operations was $17.9 million, down from $63.6 million in 2000. Revenues were $807.2 million, compared with $830.6 million.
Capital spending totaled $54.4 million. Debt at the end of the year was $778 million, about 40 percent of total capital.
Had Statement of Financial Accounting Standards No. 142 "Goodwill and other Intangible Assets" been in effect, the company's amortization expense would have been lower by $43 million to $49 million for the year. The after-tax effect would have been at least $1.35 per share.
Outlook
The Publishing Division expects revenues in the first quarter to fall below last year's first quarter by 5 percent to 6 percent. The Broadcast Division expects time sales to increase 3 percent to 4 percent, partially due to advertising related to the Winter Olympics.
"While our cost-containment efforts will continue, we also will incur some higher expenses, such as our 3 percent salary increase and significantly higher costs for health insurance and other benefits," Bryan said. "Currently our forecast for the first quarter is less than 10 cents per share."
The company continues to expect all three of its operating divisions to have stronger years in 2002, with most of that improvement coming in the second half of the year. The Publishing Division should benefit from increased retail revenues and decreased newsprint expense. The Broadcast Division should see greater political revenues and more local advertising, while the Interactive Media Division anticipates higher revenues in all categories.
The company projects a $43 million to $49 million decrease in acquisition intangibles amortization due to the implementation of SFAS 142. Interest expense is expected to remain about the same. Investment income from the company's share of SP Newsprint is expected to decline by $16 million.
Media General expects earnings of just over $2 per share for 2002.
Conference Call
Media General will discuss its fourth-quarter and full-year 2001 results during a conference call and webcast today at 2:30 p.m. EST. To listen to the call, dial 1-877-310-1537. 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 Web replay will be available beginning at 5 p.m. today 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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