FOR IMMEDIATE RELEASE
Wednesday, April 18, 2012
Media General Reports First-Quarter 2012 Results
RICHMOND, Va. – Media General, Inc. (NYSE: MEG), a multimedia provider of broadcast television, digital media and print products, today reported $3.2 million of operating income for the first quarter of 2012 compared with an operating loss of $4.2 million in the 2011 first quarter, excluding a noncash impairment charge of $10 million in the current quarter to write-off the remaining goodwill and other intangible assets related to DealTaker.com.
“The operating improvement is primarily the result of increased profits at our Broadcast television stations, as they generated 12 percent revenue growth from increased Political revenues and higher retransmission fees. Broadcast platform cash flow margin increased from 25 percent last year to 32 percent this year. Print cash flow increased nearly 30 percent, as our newspapers offset revenue decreases with expense reductions and we realized a significant benefit from the reengineering we implemented at The Tampa Tribune in late 2011. Total company operating costs, excluding impairment, decreased 4.5 percent, as a result of our continued aggressive cost management,” said Marshall N. Morton, president and chief executive officer. “All of our geographic markets generated profit improvements over last year.”
Net loss in the first quarter of 2012 was $34 million, or $1.53 per share, compared with a net loss of $26 million, or $1.15 per share, in the 2011 first quarter. First-quarter 2012 results included debt modification costs of $10 million related to the amendment of the company’s bank credit facility, including legal, advisory and arrangement fees related to the refinancing. Interest expense in the first quarter of 2012 decreased 8.5 percent from last year.
EBITDA excluding impairment and debt modification costs was $16 million in the 2012 first quarter, compared with $9 million in the same period last year (EBITDA: income before interest, debt modification costs, taxes, depreciation and amortization, and noncash impairment).
Total revenues in the 2012 first quarter of $150 million increased 0.4 percent from last year on the strength of higher Broadcast revenues, partially offset by lower Print and Digital Media revenues. Political revenues were $6.2 million, compared with $188,000 last year. Cable and satellite retransmission fees increased 63 percent to $8.7 million from $5.3 million last year, as the result of rate increases in contract renewals.
“Our local media websites generated $7.8 million in revenues, up 5.4 percent, driven by nearly 13 percent growth in Local online advertising. Revenues from mobile, our fastest growing advertising category, were up nearly threefold, and mobile page views increased 93 percent,” Mr. Morton said.
Virginia/Tennessee market profit increased 14 percent to $4.4 million from $3.8 million last year. A 5 percent decrease in expenses offset a 3.3 percent decline in revenues. Local revenues declined 2.8 percent, with increases at the market’s websites and two television stations offset by lower Print revenues at the Richmond Times-Dispatch and the Charlottesville group. National revenues increased 1 percent, reflecting Super Bowl advertising on the Roanoke television station. Classified revenues were down 12 percent. Printing and distribution revenues increased 17 percent. Digital media revenues increased 8 percent, driven by Local banner advertising at all Print websites.
Florida market profit was $747,000, compared with a loss of $3.1 million in the prior year, a $3.9 million improvement. Excluding shutdown costs of nearly $1 million for closing a newspaper packaging and distribution center, Florida market operating profit was $1.7 million in the current quarter. Market expenses decreased 16 percent, including lower employee counts across all platforms, but principally at the Tampa newspaper operations. Total revenues decreased 5.8 percent, as an 8.5 percent increase in Broadcast revenues was offset by lower Print and Digital revenues. Political revenues were $709,000 compared with $79,000 in the prior year. Local revenues decreased 12 percent, reflecting weakness across all platforms. National revenues decreased less than 1 percent, reflecting a 13 percent increase in Broadcast advertiser spending offset by Print declines. Classified revenues decreased 14 percent. Circulation revenues grew 8.6 percent, due to higher Sunday and Daily single-copy sales and home delivery price increases.
Mid-South market profit increased 71 percent to $9.3 million from $5.4 million last year, mostly as a result of increased Political revenues in this Broadcast-intensive market. Total revenues increased 12 percent. Political revenues were $4.5 million, compared with virtually none last year, and were generated from South Carolina, Alabama and Mississippi primaries. Local advertising revenues decreased 2.7 percent, as spending increases at several television stations and higher digital media revenues were offset by lower Print revenues. National advertising grew 3.7 percent, with six out of 11 television stations generating increases. Classified revenues were down 12 percent. Printing and distribution revenues were up 51 percent. Digital media revenue growth of 23 percent was the best performance of the company’s geographic markets and resulted from a local direct sales focus.
North Carolina market profit increased to $313,000 from $127,000 last year. Total market revenues rose 1.6 percent. Local revenues decreased 1.6 percent, primarily reflecting lower spending in Print. National revenues decreased 3.9 percent, as increases at the Raleigh television station were offset by declines at the Greenville station and in Print. Printing and distribution revenues rose 15 percent. Digital media revenues grew 2.6 percent.
Ohio/Rhode Island market profit increased 36 percent to $3.2 million from $2.3 million last year, due to increased Political revenues and higher Super Bowl revenues and new business initiatives. Revenues rose 7.9 percent. Political revenues were $673,000, compared with $98,000 in the prior year. Local revenues increased 11 percent as both Columbus and Providence experienced higher new business growth. National advertising decreased 6 percent, reflecting decreases in most major categories. Digital media revenues grew 2.2 percent.
A loss of $1.2 million in the Advertising Services and Other segment compared with a small loss in the prior year. The decrease was primarily attributable to lower results at DealTaker.com. DealTaker has suffered the adverse effects of a significant change in the way Internet search results are delivered by Google. The company’s efforts to adjust its software to address this change have not been successful and further deterioration was experienced in the first quarter, particularly in March.
Interest expense was approximately $15 million in the current quarter, down from $17 million last year, due primarily to a lower average rate following the prior-year maturation of interest rate swaps.
Corporate expense decreased 1.2 percent from last year, due to reductions in discretionary spending.
Newsprint expense decreased 8.4 percent from the 2011 first quarter. Consumption decreased 7.8 percent, while the average price per ton this year was flat.
The company recorded noncash income tax expense of $2.2 million in the first quarter, compared with $5.3 million in the 2011 quarter. Both periods reflected noncash tax expense related to the company’s “naked credit” issue, as previously discussed in the company’s 2011 Form 10-K. The lower tax expense in the current quarter was due primarily to a noncash tax benefit associated with impairment charge recorded in the first quarter.
Media General provides the non-GAAP financial metrics EBITDA excluding impairment, After-tax cash flow excluding impairment, Free cash flow excluding impairment, as well as Operating income adjusted for impairment, Operating costs adjusted for impairment, and Florida market Operating profit adjusted for shutdown costs. The company believes these metrics, along with the supplemental platform results, are alternative measures used by lenders, 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 1-866-730-5764 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 1 p.m. today. A telephone replay is also available, beginning at 1 p.m. today, and ending at 11:59 p.m. on April 25, 2012, by dialing 1-888-286-8010 or 617-801-6888, and using the passcode 66127463.
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, a specialty digital agency; DealTaker.com, a shopping website; and NetInformer, a wireless marketing services provider.
Lou Anne Nabhan