Media General Reports Second-Quarter 2012 Results

Media General Reports Second-Quarter 2012 Results

RICHMOND, Va., July 18, 2012 /PRNewswire/ -- Media General, Inc. (NYSE: MEG), a local broadcast television and digital media company, today reported 2012 second-quarter operating income of $16.4 million, compared with $6.2 million in the 2011 second quarter. The increase is mostly due to strong Political advertising and higher retransmission fees at the company's 18 network-affiliated broadcast television stations, and core business displayed good strength as well.

On June 25, 2012, the first day of the third quarter, Media General became a pure-play broadcast television company following the sale of virtually all of its newspapers to a subsidiary of Berkshire Hathaway, World Media Enterprises. Media General is in discussions with prospective buyers for The Tampa Tribune and its associated print and web operations and believes a sale is probable. All Media General newspapers are now shown as discontinued operations, as are Dealtaker.com and Professional Communications Systems, a broadcast equipment business.

Marshall N. Morton, president and chief executive officer of Media General, said, "We are very pleased with our new focus as a TV broadcaster. Our year-over-year operating improvement was driven by a 17.1% increase in Broadcast revenues. Strong Political revenues were generated by the presidential campaigns, Super PACs, the Massachusetts Senate race, and congressional primaries in Virginia and South Carolina. Core time sales, excluding Political revenues, increased 3.9% overall, mostly driven by higher automotive category spending. Retransmission fees increased 80% as a result of contract renewals that reflected competitive market rates. Media General's stations are by and large the number one or two station in their markets. Top-rated newscasts attract Political advertising and our stations have done an excellent job capitalizing on the event-driven revenue opportunities of this year," said Mr. Morton.

Net loss in the second quarter was $146.3 million, or $6.48 per share, including an after-tax loss of $131.7 million related to the divestiture of discontinued operations, compared with a net loss of $15.4 million, or 68 cents per share, in the 2011 second quarter.

Operating Results

Total Broadcast and Digital revenues in the second quarter increased 17.3% to $84.1 million, from $71.7 million last year. Local time sales increased 4.4% to $47 million, from $45 million last year. National time sales increased 2.9% to $23.4 million, from $22.7 million last year. The largest broadcast advertising category, automotive, increased 26.5%. Other key categories delivering increases were financial, grocery, travel, home improvement, professional services and medical. Categories that declined included department stores, furniture, telecommunications and restaurants.

Political revenues were $7.5 million, compared with $600,000 last year. Cable and satellite retransmission fees increased 80% to $9.6 million, from $5.4 million last year.

Broadcast websites generated $2.5 million in advertising revenues, up 18.6% from last year. Local advertising revenues grew 26%, driven by sales initiatives and new services, including mobile advertising. Total web audience growth continued, including robust activity from mobile devices. Unique visitors to websites from mobile devices nearly quadrupled in the second quarter, while unique visitors were even with last year from desktops.

Total operating costs increased 3.4%. Corporate expense of $8.5 million was about even with last year.

Total interest expense in the second quarter was $21.7 million, of which $3.4 million was non-cash, compared with $17.2 million last year. The increase was due to higher interest rates and discount accretion from a new financing arrangement. Debt modification and extinguishment costs were $7.7 million, primarily due to the write-off of unamortized fees related to the former bank arrangement.

Noncash tax expense was $3.4 million in the second quarter, compared with $2.6 million in the prior year. 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.

EBITDA from continuing operations (income before interest, debt modification costs, taxes, and depreciation and amortization) was $22.7 million, compared with$13.7 millionin the 2011 period.

Media General provides the non-GAAP financial metrics EBITDA from continuing operations, After-tax cash flow from continuing operations, and Free cash flow. The company believes these metrics 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.

New Financing Arrangement

Debt at the end of the second quarter was $652 million, compared with $658 million at the end of the first quarter of 2012. In the second quarter of 2012, Media General entered into a new financing arrangement with Berkshire Hathaway that provided the company with a $400 million term loan and a $45 million revolving credit line. The funding of the new term loan and an initial drawing of the revolving credit facility resulted in cash proceeds to the company of approximately $383 million. The proceeds were immediately used to fully repay all amounts outstanding under the then existing credit facility, pay fees and expenses related to the new financing, and fund working capital requirements. In conjunction with the new financing, the company issued Berkshire Hathaway penny warrants for approximately 4.6 million Class A shares.

Sale of Newspapers

After transaction fees, the repayment of funds drawn on the revolving credit facility and a small required paydown on the term loan, Media General is using the remaining net proceeds from the newspaper sale of approximately $112 million to further reduce debt. Media General has repaid $54 million on the Berkshire Hathaway term loan at par and $18 million on the revolver, bringing total debt currently outstanding to $580 million. On June 29, 2012, Media General commenced a cash tender offer to purchase up to $45 million of its 11¾% Senior Secured Notes due 2017. The tender offer is scheduled to expire on July 30, 2012. Media General expects to offer Berkshire Hathaway repayment of any amounts the bondholders elect not to take at par with no prepayment penalty.

Guidance

Media General provided the following guidance:

Political revenues are expected to be approximately $50 million for the full year 2012.

Summer Olympics revenues are expected to exceed the $12.5 million generated from the 2008 summer games.

Broadcast pacings for the third quarter of 2012, including Political, are approximately 30% ahead of last year. Core pacings, excluding Political, are approximately 20% ahead of last year. Key categories driving core growth are auto, entertainment, financial, media, professional services, grocery and travel.

The company has a plan, underway now, to reduce corporate expense 35-40%.

For the full year 2012, the company expects that cash provided by operations will be used to make interest payments of $65 million, capital expenditures of $15 million and retirement plan contributions of $13 million.

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. 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 1-800-706-7741 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 July 26, 2012, by dialing 1-888-286-8010 or 617-801-6888, and using the passcode 81445264.

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 broadcast television, digital media and mobile platforms, serving consumers and advertisers in strong local markets, primarily in the Southeastern United States. The company's broadcast operations include 18 network-affiliated television stations and their associated digital and mobile media services. Media General's network affiliations include eight NBC stations, eight CBS, one ABC and one CW. Six of its stations operate in the Top 40 markets in the United States. Media General's stations reach more than one-third of TV households in the Southeast and more than 8 percent of U.S. TV households. Media General got its start in the television business in 1955 when it launched WFLA-TV in Tampa, Florida, as an NBC affiliate. Today, WFLA is the company's largest TV station, operating in the 14th largest DMA in the United States. Media General continues to own The Tampa Tribune and its associated print properties and expects to enter into a transaction with one of several prospective buyers for the group.










Media General, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS

Thirteen Weeks Ending Twenty-Six Weeks Ending
--------------------- -----------------------
June 24, June 26, June 24, June 26,
(Unaudited, in thousands except per share
amounts) 2012 2011 2012 2011
----------------------------------------- ---- ---- ---- ----

Revenues
Broadcast
television $80,631 $68,833 $152,783 $132,778
Digital media
and other 3,481 2,889 6,448 6,232
Total revenues 84,112 71,722 159,231 139,010
-------------- ------ ------ ------- -------

Operating costs:
Employee
compensation 32,302 30,220 69,186 66,738
Production 18,923 17,779 37,011 34,882
Selling, general
and
administrative 10,423 10,263 19,189 19,104
Depreciation and
amortization 6,110 7,279 13,425 14,497
Total
operating
costs 67,758 65,541 138,811 135,221
---------- ------ ------ ------- -------

Operating income 16,354 6,181 20,420 3,789
---------------- ------ ----- ------ -----

Other income (expense):
Interest expense (21,657) (17,190) (36,808) (33,753)
Debt
modification
and
extinguishment
costs (7,689) --- (18,097) ---
Other, net 236 227 421 469
Total other
expense (29,110) (16,963) (54,484) (33,284)
------------ ------- ------- ------- -------

Loss from continuing operations before income
taxes (12,756) (10,782) (34,064) (29,495)

Income tax expense 3,409 2,558 6,817 5,154
------------------ ----- ----- ----- -----

Loss from continuing operations (16,165) (13,340) (40,881) (34,649)
Discontinued operations:
Income (loss)
from
discontinued
operations (net
of tax) 1,566 (2,042) (8,142) (6,537)
Loss related to
divestiture of
discontinued
operations (net
of tax) (131,697) --- (131,697) ---
Net loss $(146,296) $(15,382) $(180,720) $(41,186)
======== ========= ======== ========= ========

Net loss per common share:
Loss from
continuing
operations $(0.71) $(0.59) $(1.81) $(1.54)
Discontinued
operations (5.77) (0.09) (6.20) (0.30)
Net loss per common share - basic and diluted $(6.48) $(0.68) $(8.01) $(1.84)
============================================= ====== ====== ====== ======

Weighted-average common shares outstanding:
Basic and
diluted 22,563 22,488 22,559 22,444










Media General, Inc.
BUSINESS SEGMENTS
(Unaudited, in thousands) Revenues Depreciation & Operating Profit
Amortization (Loss)
--- ------------ -----
Three Months Ending June 24, 2012
Virginia/Tennessee $6,736 $(349) $2,011
Florida 15,120 (383) 5,646
Mid-South 36,588 (2,719) 9,457
North Carolina 7,562 (371) 1,790
Ohio/Rhode Island 17,146 (738) 6,603
Advertising Services & Other 1,203 (544) (977)
Eliminations (243) - 32
---
24,562
Unallocated amounts:
Acquisition intangibles amortization - (442) (442)
Corporate expense - (564) (8,492)
$84,112 $(6,110)
======= =======

Corporate interest expense (21,641)
Debt modification and extinguishment costs (7,689)
Other 946

Consolidated loss from continuing operations before
income taxes $(12,756)
========

(Unaudited, in thousands) Revenues Depreciation & Amortization Operating Profit
(Loss)
--- -----
Three Months Ending June 26, 2011
Virginia/Tennessee $5,653 $(378) $1,039
Florida 12,944 (422) 3,067
Mid-South 32,488 (2,557) 6,567
North Carolina 5,840 (428) 504
Ohio/Rhode Island 14,070 (752) 3,540
Advertising Services & Other 1,009 (722) (1,033)
Eliminations (282) - 43
---
13,727
Unallocated amounts:
Acquisition intangibles amortization - (1,361) (1,361)
Corporate expense - (659) (8,423)
$71,722 $(7,279)
======= =======

Corporate interest expense (17,180)
Other 2,455

Consolidated loss from continuing operations before
income taxes $(10,782)
========




Media General, Inc.
BUSINESS SEGMENTS
(Unaudited, in thousands) Revenues Depreciation & Amortization Operating Profit
(Loss)
--- -----
Six Months ending June 24, 2012
Virginia/Tennessee $12,644 $(697) $3,399
Florida 29,090 (793) 9,996
Mid-South 71,662 (5,435) 18,660
North Carolina 13,547 (742) 2,179
Ohio/Rhode Island 30,476 (1,393) 9,784
Advertising Services & Other 2,276 (1,094) (1,391)
Eliminations (464) - 59
---
42,686
Unallocated amounts:
Acquisition intangibles amortization - (1,773) (1,773)
Corporate expense - (1,498) (17,359)
$159,231 $(13,425)
======== ========

Corporate interest expense (36,777)
Debt modification and extinguishment costs (18,097)
Other (2,744)

Consolidated loss from continuing operations before
income taxes $(34,064)
========

(Unaudited, in thousands) Revenues Depreciation & Amortization Operating Profit
(Loss)
--- -----
Six Months Ending June 26, 2011
Virginia/Tennessee $10,764 $(760) $1,754
Florida 25,826 (851) 6,030
Mid-South 62,581 (5,091) 11,630
North Carolina 11,151 (857) 671
Ohio/Rhode Island 26,428 (1,525) 5,883
Advertising Services & Other 2,738 (1,425) (1,481)
Eliminations (478) - 76
---
24,563
Unallocated amounts:
Acquisition intangibles amortization (2,709) (2,709)
Corporate expense (1,279) (17,292)
$139,010 $(14,497)
======== ========

Corporate interest expense (33,733)
Other (324)

Consolidated loss from continuing operations before
income taxes $(29,495)
========










Media General, Inc.
Selected Revenue Categories

Thirteen Weeks Ending Twenty-Six Weeks Ending
--------------------- -----------------------
June 24, June 26, June 24, June 26,
(Unaudited, in thousands) 2012 2011 % Change 2012 2011 % Change



Broadcast television
revenues (gross)
Local $46,992 $45,008 4.4 % $89,320 $87,548 2.0 %
National 23,400 22,739 2.9 % 44,437 42,928 3.5 %
Political 7,468 591 --- 13,656 779 ---
Cable/Satellite (retransmission) fees 9,648 5,363 79.9 % 18,362 10,703 71.6 %
----- ----- ----- ------ ------ -----

Digital media and other revenues
Local website revenues
Local $2,251 $1,787 26.0 % $4,065 $3,252 25.0 %
National 214 266 (19.5)% 421 541 (22.2)%
Advertising Services 1,203 1,009 19.2 % 2,276 2,738 (16.9)%
----- ----- ----- ----- ----- ------










Media General, Inc.
CONSOLIDATED BALANCE SHEETS

June 24, December 25,
(Unaudited, in thousands) 2012 2011
------------------------ ---- ----

ASSETS

Current assets:
Cash and cash
equivalents $16,661 $23,108
Accounts
receivable -
net 60,702 59,260
Other 18,796 17,513
Assets of
discontinued
operations 183,615 337,853
Total current assets 279,774 437,734
------- -------

Other assets 35,870 28,350

Property, plant and equipment -
net 159,408 169,827

Goodwill and other intangibles
-net 448,357 450,130
Total assets $923,409 $1,086,041
============ ======== ==========

LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT)

Current liabilities:
Accounts
payable $19,334 $16,631
Accrued
expenses and
other
liabilities 54,644 46,815
Liabilities
of
discontinued
operations 32,547 38,269
Total current liabilities 106,525 101,715
------- -------

Long-term debt 651,911 658,199

Deferred income taxes 52,721 45,954

Other liabilities and deferred
credits 241,514 246,220

Stockholders' equity (deficit) (129,262) 33,953
Total liabilities and
stockholders' equity (deficit) $923,409 $1,086,041
=============================== ======== ==========









SUPPLEMENTAL INFORMATION

Media General, Inc.
EBITDA, After-tax Cash Flow, and Free Cash Flow

Thirteen Weeks Ending Twenty-Six Weeks
Ending
--------------------- -----------------
June 24, June 26, June 24, June 26,
(Unaudited, in thousands) 2012 2011 2012 2011
------------------------ ---- ---- ---- ----

Loss from continuing
operations $(16,165) $(13,340) $(40,881) $(34,649)
Interest 21,657 17,190 36,808 33,753
Debt modification and
extinguishment costs 7,689 - 18,097 -
Taxes 3,409 2,558 6,817 5,154
Depreciation and amortization 6,110 7,279 13,425 14,497


EBITDA from continuing
operations $22,700 $13,687 $34,266 $18,755
====================== ======= ======= ======= =======


Loss from continuing
operations $(16,165) $(13,340) $(40,881) $(34,649)
Taxes * 3,409 2,558 6,817 5,154
Depreciation and amortization 6,110 7,279 13,425 14,497

After-tax cash flow from
continuing operations $(6,646) $(3,503) $(20,639) $(14,998)
======================== ======= ======= ======== ========

After-tax cash flow from
continuing operations $(6,646) $(3,503) $(20,639) $(14,998)
Capital expenditures 2,737 5,967 4,253 10,579

Free cash flow $(9,383) $(9,470) $(24,892) $(25,577)
============== ======= ======= ======== ========


The Company's
income taxes
are non-
cash in
nature and
have been
added back
* accordingly.
See 2011 Form
10-K for
further
discussion.







SOURCE Media General, Inc.

Media General, Inc.

CONTACT: Investor Contact: Lou Anne Nabhan, +1-804-649-6103, or Media Contact: Ray Kozakewicz, +1-804-649-6748

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


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