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Media General Reports Third-Quarter 2012 Results

Thursday 18. October 2012 - Media General, Inc. (NYSE: MEG), a broadcast television and digital media company, today reported operating income for the third quarter of 2012 of $22.5 million, compared with $4.8 million in the 2011 third quarter. The current quarter included corporate severance expense of $3.3 million, the absence of $1.9 million in expense savings last year from a company-wide furlough program and higher sales costs related to significantly increased revenues this year.

Net loss in the third quarter was $30.3 million, or $1.34 per share, including $17.3 million of debt extinguishment costs and a loss of $11.9 million related to discontinued operations. Net loss in the 2011 third quarter was $29.8 million, or $1.32 per share, including a newspaper impairment writedown reflected in discontinued operations.
Marshall N. Morton, president and chief executive officer of Media General, said, “Operating income was more than four times last year, mostly driven by a nearly 42% increase in revenues. Political revenues totaled nearly $20 million and reflected the strong positions of our television stations in their markets and the presence of six Media General stations in presidential battleground states. Our eight NBC stations generated a record $15.5 million of revenues from the Summer Olympics, capitalizing on record viewership for the London games. Gross time sales, excluding Political revenues, increased 16.8% in the third quarter, reflecting growth in several major advertising categories and the strength of the Olympics advertising.”
Broadcast cash flow more than doubled to $40.8 million in the 2012 third quarter, compared with $19.3 million last year. Broadcast cash flow margin in the current quarter was 43.5%, compared with 29.1% last year.
Total revenues in the third quarter increased approximately $28 million to $93.8 million this year, compared with $66.1 million last year. Local gross time sales increased nearly 16% to $47.4 million. National gross time sales grew 19.2% to nearly $25 million. The largest advertising category, automotive, increased 45% due, in part, to comparisons against last year’s weak spending following Japan’s tsunami and to the strength of Olympic advertising this year. Other key categories growing in the quarter were financial, grocery, travel, telecommunications and medical. Categories that declined included restaurants and department stores.
Cable and satellite retransmission fees rose nearly 80% to $9.4 million in the quarter, as a result of contract renewals that reflected competitive market rates.
TV station websites generated $2.6 million in advertising revenues, up 20.7% from last year, driven primarily by Local advertising, which grew 28%. Total digital audience growth continued, including robust activity from mobile devices. Unique visitors and page views from mobile devices each increased by 68% in the third quarter, while unique visitors from desktops grew 13%.
Station operating costs increased 12.1% in the current quarter, mostly due to higher sales commissions related to increased revenues and the absence of $1.2 million in expense savings from last year’s furlough program. Corporate expense this year was $6.4 million, compared with $7 million last year. The decrease in the current year is primarily due to a corporate staffing reduction that was effectuated progressively through the quarter, offset by the absence of last year’s furlough savings.
Total interest expense in the third quarter was $20.2 million, of which $2.4 million was non-cash, compared with $16 million last year.
Noncash tax expense was $3.4 million in the third quarter, compared with $847,000 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 and extinguishment costs, taxes, and depreciation and amortization) was $28.5 million, compared with$12.1 millionin the 2011 period.
Media General provides the non-GAAP financial metrics: Broadcast cash flow, 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.
Guidance
Media General provided the following guidance:
For the fourth quarter, the company expects total revenues to increase 25-28% over last year.
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 $9 million. The pension contribution is down from our previous guidance of $13 million, due to the relief provided by this year by Congress.