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FOR IMMEDIATE RELEASE
Wednesday, October 19, 2011

Media General Reports Third-Quarter 2011 Results

RICHMOND, Va. – Media General, Inc. (NYSE: MEG), a multimedia provider of broadcast television, digital media and print products, today reported operating income for the third quarter of 2011 of $5.7 million, excluding non-cash goodwill impairment, compared with operating income of $11.5 million in the 2010 third quarter. A net loss in the current quarter, including non-cash impairment of $26.6 million, was $29.8 million, or $1.32 per share, compared with a net loss of $10.7 million, or 48 cents per share, last year.

Total operating costs decreased 8.4 percent from last year, excluding impairment, as discussed below. Total revenues were $144.7 million, compared with $163.2 million last year. The 2010 quarter included $9.7 million of Political advertising and $1.2 million of BP image advertising related to the Gulf of Mexico oil spill. The current quarter included $1.3 million of Political revenues.

“Media General’s third-quarter results reflected an expected but significant drop in Political revenues in this off-election year as well as general economic uncertainty. A lack of clarity in the global financial markets, significant uncertainty regarding the U.S. government’s plan of action domestically and a downward turn in the economy all contributed to a further softening of the advertising market,” said Marshall N. Morton, president and chief executive officer. “Excluding Political advertising, broadcast revenues for the quarter decreased 2.4 percent. Broadcast cash flow was $19 million. The overall decline in print revenue improved modestly from the second quarter. Print cash flow of $6 million also improved on a sequential-quarter basis, due to cost savings,” Mr. Morton said.

“We remain committed to strong expense management,” said Mr. Morton. For the full year 2011, Media General continues to expect that total operating expenses, excluding impairment, will decrease by approximately $20 million, or more than 3 percent, compared with total operating costs in 2010 of $605 million. 

“Our local media websites generated more than $8 million in revenues, a 13 percent increase, and they delivered more than $1 million in cash flow. This performance was driven by a 32 percent increase in Local digital advertising,” Mr. Morton said. “Unique visitors to our websites increased 17 percent, reflecting continuing audience growth from new sources such as tablets and social media.  

“Despite a challenging economic environment, Media General has several positive catalysts on the horizon. In the fourth quarter, we are seeing a welcome strengthening in automotive advertising. We may see Political revenues advance into the latter part of this year from early primaries in Florida and South Carolina. Fourth-quarter broadcast pacings are 9-11 percent ahead of last year, excluding Political advertising. Looking to 2012, we expect significant Political revenues as well as advertising from the Summer Olympics and the Super Bowl on our eight NBC stations. This positive outlook notwithstanding, as our properties develop budgets for 2012, core revenue assumptions will be appropriately conservative, and expenses will be scaled to the revenue opportunity a particular market is expected to generate. We continue to accelerate our digital strategy, including new ways to be paid for our content. We have differentiated local content that people need, top-rated local news and strong local advertiser relationships to support our plans to increase cash flow generation,” Mr. Morton said.

Market Segments
Virginia/Tennessee market profit in the third quarter was $6.1 million, compared with a profit of $7.4 million last year. Revenues declined from $46.1 million to $42.8 million, or 7.1 percent, even though digital media revenues increased nearly 14 percent. Broadcast revenues were essentially even with last year; the decline was driven by lower print revenues.  Expenses decreased by 5.1 percent, including severance expense of $535,000 in 2011. Local revenues rose 1.4 percent, driven by increases at the market’s two television stations and a 43 percent jump in local digital advertising, partially offset by declines on the print side. National revenues decreased 8.3 percent, due mostly to declines in Richmond. Classified revenues decreased 26.4 percent, as a result of lower legal, real estate and help-wanted advertising. Printing and distribution revenues increased 26.4 percent, reflecting new outside printing and distribution business.

The Florida market reported a loss of $1.7 million, compared with a profit of $2.1 million in the third quarter a year ago. Last year, Florida’s total revenues of $39 million included $5 million of Political revenues and more than $1 million in revenues from BP image advertising, while this year’s revenues of $30.5 million included only $300,000 of Political revenues and no BP revenues. Florida operating expenses decreased 12.6 percent, including lower compensation and other departmental expense reductions. Local revenues decreased 9.1 percent, reflecting print and broadcast declines, partially offset by Local digital revenues, which increased 41.6 percent. National revenues decreased 31.4 percent, due primarily to the absence of BP revenues and weakness in automotive and telecommunications. Classified revenues decreased 14.5 percent as a result of continued weakness in automotive and employment classifieds, partially offset by moderately increased real estate revenues. Printing and distribution revenues were up 8.6 percent. Digital media revenues grew 8.1 percent.

Mid-South market profit was $6.6 million, compared with $7 million last year. Total revenues were essentially even with last year, which included $1.8 million in Political revenues compared with $600,000 this year. Expenses increased 1.2 percent. Local advertising revenues increased 2.1 percent, as a result of higher broadcast and digital media advertising, partially offset by print declines. National advertising rose 3.1 percent, with six of the 11 television stations generating increases. Classified revenues were down 9.7 percent. Printing and distribution revenues were up 62.5 percent, due to a significant growth in third-party customers at several newspapers. Digital media revenue growth of 29.7 percent was the best performance of the company’s geographic markets and resulted from focused sales pressure for new online advertising products.

The North Carolina market improved its profit to $993,000 compared with a loss of $51,000 last year. Revenues of $17.7 million decreased only 2.8 percent. Expenses declined 8.6 percent from last year, including severance costs. Local revenues decreased 3 percent, reflecting lower Local spending on the print side and at the Greenville television station, partially offset by increased Local advertising at the Raleigh television station and higher Local digital spending. National revenues decreased 10.1 percent, due to weakness in certain categories at both stations and the Winston-Salem Journal, partially offset by increased digital spending. Classified revenues decreased 11.1 percent, due to lower real estate and legal advertising. Printing and distribution revenues more than doubled, primarily reflecting printing of USA TODAY in Winston-Salem. Digital media revenues were flat.

Ohio/Rhode Island market profit was $3.5 million compared with $4.4 million last year. Total revenues this year of $12.8 million were down from $14.7 million, due almost entirely to the near absence of last year’s $2 million in Political revenues. Local advertising revenues increased 1.7 percent from last year, while National revenues declined 11.1 percent. Digital media revenues grew 19.8 percent. Expenses decreased 9 percent. 

The Advertising Services and Other segment loss of $1.1 million compared with a profit of $483,000 last year. The decrease was primarily attributable to significantly lower revenues at DealTaker.com, due to issues related to Google search algorithms, which DealTaker is taking aggressive actions to counter.

Other Results
The effects of the weakening economic recovery on certain markets, combined with the market’s perception of the value of media company stocks, including Media General, led the company to perform a third-quarter goodwill impairment test. The test resulted in the non-cash goodwill impairment charge of $26.6 million related to certain print properties in the Virginia/Tennessee market.

Interest expense was approximately $16 million in the current quarter, down from $17 million in the prior-year quarter, due primarily to lower interest rates and the expiration of interest rate swaps in August of 2011.

Corporate expense decreased nearly 10 percent from last year, due to employee furloughs and reductions in discretionary spending.

Newsprint expense in the third quarter increased 19.5 percent from last year’s quarter. Consumption decreased modestly, while the average price per ton this year was $598, which compared with $494 per ton in 2010.

The company recorded an income tax benefit of $6.9 million in the third quarter, compared to a tax expense of $5.3 million in 2010, due primarily to the impairment charge, which more than offset the scheduled non-cash tax expense of $6.2 million related to the “naked” credit issue (as previously discussed in the company’s public filings). Media General continues to expect to pay no cash taxes for the next few years. 

Debt at the end of the third quarter was $665 million. Total indebtedness to EBITDA was 6.62x versus a maximum of 8.00x.

EBITDA excluding impairment (loss/income before interest, taxes, depreciation and amortization, and impairment) was $18.9 million, compared with $24.9 million in the 2010 period. After-Tax Cash Flow was $2.8 million, excluding impairment, compared to $7.8 million in the prior-year. Capital expenditures were $5.1 million this year, compared with $6.8 million in the third quarter last year. Free Cash Flow (After-Tax Cash Flow excluding impairment minus capital expenditures) was a deficit of $2.3 million, compared with Free Cash Flow of $1 million in the prior-year.

Media General provides the non-GAAP financial metrics EBITDA excluding impairment, After-Tax Cash Flow, Free Cash Flow, Operating Income Adjusted for Impairment and Operating Costs Excluding Impairment. The company believes these metrics, along with the supplemental platform results, are common alternative measures used by investors, financial analysts and rating agencies 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, Webcast and Financial Statements
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. To dial in to the call, listeners may call 1-866-203-3436 about 10 minutes prior to the 11 a.m. start. The participant passcode is “Media General.” Listeners may also access the live webcast by logging on to www.mediageneral.com and clicking on the “Live Webcast” link on the homepage about 10 minutes in advance. A replay of the webcast will be available online at www.mediageneral.com beginning at 2 p.m. today. A telephone replay is also available, beginning at 2 p.m. today, and ending at 2 p.m. on October 26, 2011, by dialing 1-888-286-8010 or 617-801-6888, and using the passcode 30816874.

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 news, information and entertainment across multiple media platforms, serving consumers and advertisers in strong local markets, primarily in the Southeastern United States. The company is transforming itself over time to a digital media model, while continuing to effectively manage its larger, cash producing broadcast television and print platforms. Media General’s operations are organized in five geographic market segments and a sixth segment that includes the company’s interactive advertising services and certain other operations. The company’s operations include 18 network-affiliated television stations and their associated websites and 23 newspapers and their associated websites. Media General operates three digital media advertising services companies:  Blockdot, which specializes in interactive entertainment and advergaming technologies; DealTaker.com, a coupon and shopping website; and NetInformer, a leading provider of wireless media and mobile marketing services.


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Investor Contact:
Lou Anne Nabhan
(804) 649-6103

Media Contact:
Ray Kozakewicz
(804) 649-6748