Media General Presents at Mid-Year Media Review

Media General Presents at Mid-Year Media Review

RICHMOND, Va., June 21 /PRNewswire-FirstCall/ -- Media General, Inc. (NYSE:MEG) senior management today updated investors on the company's performance, business strategy and outlook for 2005 at the Mid-Year Media Review in New York.

Marshall N. Morton, who will become Media General's president and chief executive officer on July 1, 2005, recapped a management succession plan that was announced Jan. 27, 2005. The company's chairman and chief executive, J. Stewart Bryan III, will step down as CEO and remain chairman of the board. O. Reid Ashe, Jr. will continue as chief operating officer. John A. Schauss will continue as the company's treasurer and assume additional duties as vice president-finance and chief financial officer.

In opening remarks, Morton said, "This is an exciting time for Media General. The company is growing and performing well. 2004 was a banner year and Media General started 2005 on a strong basis. Our Publishing and Broadcast divisions both have delivered revenue growth in the upper tier of their respective industry peer groups."

Ashe provided an overview of the company's three operating divisions. "Year-to-date Publishing revenues were up 5.2 percent and newspaper advertising revenues increased 6.8 percent. All advertising categories were up strongly from a year ago, and our two largest markets, Tampa and Richmond, have delivered advertising growth of 9.3 percent and 5.7 percent, respectively," he said.

Strong growth in employment advertising helped drive a 9.1 percent year- to-date rise in Media General's Classified advertising. Recent lower automotive advertising, however, has slowed the momentum. "We believe this trend will improve, as factories kick off more aggressive incentives," he said. "Including online advertising, total Classified revenues increased nearly 11 percent."

Ashe said, "Retail advertising revenues year-to-date were up 4 percent. Most of our growth is among small and midsize advertisers, and, more recently, advertising growth from major accounts has turned positive as well."

Year-to-date National advertising revenues increased 11.9 percent due to strength in the telecommunications and travel categories. In April and May, however, there was lower spending from these categories as well as automotive. "While this category can be volatile, we expect telecommunications advertising to remain solid, national automotive to improve based on new incentives and travel advertising should return as we enter the busy vacation season," he said.

Circulation revenues were down 2.9 percent year-to-date, due mostly to a change in wholesale rates to independent carriers in several markets. Excluding that impact, circulation revenues were down just 0.7 percent. For the March ABC Publisher's Statement, the company's newspapers continued to outperform the industry overall. Three Media General newspapers reported Daily circulation increases and four did so for Sunday. The Tampa Tribune, which reported some of the strongest circulation gains of any newspaper in America for the prior four reporting periods, was even for both Daily and Sunday. "The very good news is that The Tampa Tribune once again far outperformed its leading competitor. Media General has challenged all of our newspapers in 2005 to increase circulation by 1 percent Daily and 0.8 percent Sunday. This is a stretch goal, but we intend to regain momentum," Ashe said.

Broadcast Division total revenues increased 1.4 percent year-to-date. "We have offset the absence of $6 million in Political revenues, and we have done so in a much softer selling environment than we had expected," he said. "Gross time sales increased 0.6 percent through May. While both Local and National sales increased, Local transactional sales led the growth, and new business development has been the key."

Most of Media General's stations are number 1 or 2 in their market. In the February Nielsen rating period, 22 out of 26 stations were rated number 1 or number 2 from sign-on to sign-off. "We do not yet have all of our May ratings books, but we are confident that we will maintain our strong market positions," Ashe said.

Interactive Media Division revenues year-to-date are up nearly 48 percent. Classified advertising accounted for 69 percent of online revenues and were up 52 percent over last year. Local banner and retail advertising increased 73 percent year-to-date. Page views and visits continued their strong growth, Ashe said.

Schauss updated investors on the company's outlook and financial position. He confirmed second-quarter earnings guidance provided by the company on June 15. "Analyst earnings estimates currently range from 77 cents per share to 84 cents per share, and we expect results to be within that range," he said. In the second quarter, the company also will report an expected gain of approximately 78 cents per share from the sale of its 20 percent interest in the Denver Post. The sales price was set at $45.85 million through independent appraisal of Denver's fair market value. Media General earned 78 cents per share in last year's second quarter. The company will release second-quarter earnings on July 12.

"Based on strong growth in the first five months of the year, the Publishing Division has increased its revenue growth projection to a 4.5-to- 5.5 percent increase, up from 4-to-4.5 percent at the beginning of the year," Schauss said. Newspaper advertising growth is projected to be in the range of 6-7 percent. Publishing expenses are projected to increase 5.5-to-6 percent, mostly due to salary increases and higher benefits and newsprint costs.

For 2005, newsprint is expected to increase 14-15 percent. A $50 increase on Sept. 1, 2004 settled in at about $30 per short ton during the first quarter. Another $30 per short ton increase in February of this year will mostly factor in sometime in the third quarter. "Vendors have announced another estimated $30 per short ton increase effective June 1. At this point, we have not factored that increase into our numbers until Oct. 1," he said.

"The Broadcast Division has revised its revenue outlook for the year from minus 1 percent to minus 3 percent as a result of softer than expected market conditions so far this year," Schauss said. "This change is due primarily to lower-than-expected spending by automotive, department stores and telecommunications advertisers." The division has introduced an initiative to reduce discretionary spending as a means of partially offsetting the additional revenue decline. Broadcast expenses are expected to increase 5 percent for 2005, down from a forecast of 6 percent at the beginning of the year.

The Interactive Media Division's revenues in 2005 are expected to increase 43 percent over 2004. "As revenues continue to grow, and expense growth flattens out, the division will continue on its mission to become cash flow positive," Schauss said. Site visits are expected to be up 11 percent.

Schauss noted that Media General's forecast of a 6 percent decrease in interest expense in 2005 is a result of lower debt levels, including the recent debt repayment from the proceeds of the sale of Media General's equity in the Denver Post. Corporate expense is projected to increase 6 percent due to higher health and retirement costs, increased legal fees and higher consulting expenses. Income tax rates will decrease to 36.5 percent, compared with 37 percent last year.

He said, "SP Newsprint is projecting two price increases in 2005. If the high end of their expected price realization occurs, our equity income could increase by as much as $6-8 million year-over-year. As a reminder, Media General is a net beneficiary of higher newsprint pricing. A $1 change in the price of newsprint has an after-tax impact to us of approximately $125,000."

Media General's capital spending for this year is now projected to be about $91 million. Publishing and Broadcast plan to spend $45 million and $40 million, respectively, while the Interactive Media Division is expected to spend approximately $3 million. Corporate capital spending is estimated at about $3 million.

On March 14, the company amended its $1 billion revolving credit agreement with a syndicate of banks. The new agreement has a term of 5-1/2 years and provides improved pricing and covenants. Media General also has a universal shelf registration that allows it to issue debt and equity totaling $1.2 billion. Currently, total debt outstanding is approximately $490 million.

Morton concluded the presentation. "Our commitment moving forward is to continue to increase shareholder value. Media General has done a good job demonstrating that it understands its customers and can deliver information and services to them whenever and however they need them," he said.

"Our success resides in being a consequential force in our varied market places. We need to remain the place customers come for the information they need and want. To accomplish this, we have to maintain a close understanding of the needs of our customers -- advertisers, readers and viewers -- and we must evolve with them in the face of rapid change." He said the company's divisions are working under an initiative that requires that 5 percent of their annual revenues be profitably derived from new products, that revenue growth continue to exceed the company's peer group averages, and that local market share be maintained or expanded every year.

Morton said the company is developing innovative new products aimed at young audiences, Spanish language customers and other niche groups. "We intend to continue our growth by serving more people better -- in print, on television and online -- across the Southeast.

"We want to expand the number of communities where we're able to practice Convergence. It will help if the FCC, which now is considering media ownership on remand from the Third Circuit of Appeals, promptly updates its record and sends a new decision back to the court. We will actively pursue the establishment of a new rule. In doing so, we will stress that consumers in markets of all sizes should be allowed to benefit from the better local news and content that already has been shown to flow from the common ownership of television stations and newspapers," he said.

Morton said Media General will continue its focus on growth, combined with its core strategies of Southeast Focus, Clustering and Convergence. "Growth, wherever derived, requires financial resources and financial flexibility. We are in good shape on both fronts. Our cash flow from operations is strong."

The presentation will be available at approximately 4:30 p.m. today in the Investor Relations section of Media General's Web site, http://www.mediageneral.com/. An audio replay also will be available later today, and will remain available for 30 days. Click on the link on the Media General Home Page.

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 diversified communications company operating leading newspapers, television stations and online enterprises, primarily in the Southeastern United States. The company's publishing assets include three metropolitan newspapers, The Tampa Tribune, the Richmond Times-Dispatch, and the Winston-Salem Journal; 22 daily community newspapers in Virginia, North Carolina, Florida, Alabama and South Carolina; and more than 100 weekly newspapers and other publications. The company's broadcasting assets include 26 network-affiliated television stations that 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 interactive media assets include more than 50 online enterprises that are associated with its newspapers and television stations. Media General also owns a 33 percent interest in SP Newsprint Company.

Source: Media General, Inc.

CONTACT: Investors: Lou Anne J. Nabhan, +1-804-649-6103, or Media: Ray
Kozakewicz, +1-804-649-6748, both of Media General

Web site: http://www.mediageneral.com/

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