Business News

Media General Reports First-Quarter 2013 Results

Thursday 25. April 2013 - -- Operating income of $5.8 million increased 28% -- Broadcast Cash Flow totaled $19.4 million; up 19% compared with last odd-numbered year 2011 -- Revenues, excluding Political, increased 6% -- Net loss was $17.7 million, or 65 cents per share

Media General, Inc. (NYSE: MEG), a local broadcast television and digital media company, today reported that first-quarter 2013 operating income of $5.8 million increased by 28%, compared with $4.5 million in the first-quarter of 2012. Net loss in the first quarter was $17.7 million, or 65 cents per share, compared with a net loss of $34.4 million, or $1.53 per share, in the prior year.
George L. Mahoney, president and chief executive officer of Media General, said, “The increase in operating income in the first quarter reflected a 35% reduction in corporate and other expenses, as well as disciplined expense management by our stations. After becoming a pure-play broadcaster last year, one of the significant, very early steps we took was to reduce the size of our corporate structure, which had been scaled to serve both newspapers and television stations. On the revenue side, the near absence of last year’s $6.2 million in Political revenues was mostly offset by higher Retransmission revenues, which have increased 55% so far this year, and Digital revenues increased 18%.
“Broadcast cash flow in the current quarter of $19.4 million exceeded by 19% broadcast cash flow in the prior odd-numbered year of 2011 of $16.4 million. Broadcast cash flow margin was 26% in the current quarter, compared with 25% in the 2011 first quarter. We are pleased to report this improved performance on two key metrics that Media General is focused on,” said Mr. Mahoney.
Total revenues in the first quarter of $73.9 million were nearly even with $74.2 million last year. Gross Political revenues in the first quarter totaled $507,000, compared with $6.2 million in the prior year. Cable and satellite retransmission fees in the first quarter of 2013 increased $4.8 million. Excluding Political, revenues increased 6%.
This year’s Political revenues were mainly generated from the congressional race in South Carolina’s 1(st) Congressional District. As the year progresses, Media General expects to also benefit from the Virginia gubernatorial race and issues advertising in many markets. Media General continues to expect that gross Political revenues for the full year 2013 will be approximately $5 million.
Core Local and National revenues, excluding the impact of Super Bowl revenues in both years, increased approximately 1%. Super Bowl revenues on the company’s CBS stations this year were $1.2 million and increased 33%, compared with the last time the Super Bowl aired on CBS in 2010. In 2012, the company’s Super Bowl revenues were $2.8 million on the company’s NBC stations, which are located in larger markets and typically generate higher revenues.
In the first quarter, Local gross time sales were $41.6 million, compared with $42.3 million in the prior year. National gross time sales were $20.6 million, compared with $21 million in the prior year. Media General’s largest advertising category, automotive, increased 2.4% over last year. Other major advertising categories that increased in the current year were restaurants, furniture, home improvement, financial institutions and grocery. Major advertising categories that showed declines in the first quarter included professional services, retail, telecommunications and entertainment. Additionally, the Tampa advertising market showed more softness than other markets in the first quarter.
Total operating costs in the first quarter of $68.2 million decreased 2.2% from the prior year, mainly due to the reduction in corporate expense. Station production expenses increased 6.5%, mainly due to an increase in NBC affiliate fees, while other station operating expenses were mostly flat to down. Station selling, general and administrative expenses increased 9.5%, due to several factors, including merit increases, sales incentive trip expenses, higher benefit costs, and additional revenue-share expense associated with the growth in digital media revenues.
Interest expense in the first quarter totaled $19.2 million, compared with $15.2 million last year. The increase was due to higher rates associated with the Berkshire Hathaway term loan. Debt modification and extinguishment costs of $10.4 million, associated with the company’s March 2012 refinancing, were not present in the first quarter of 2013.
Noncash tax expense of $3.3 million in the first quarter was essentially even with the first quarter of 2012.
EBITDA from continuing operations (income before interest, debt modification and extinguishment costs, taxes, and depreciation and amortization) of $11.8 million was essentially even with the first quarter of 2012.
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 in peer comparison and 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.