Newspaper & Mailroom

Media General Reports Third-Quarter 2013 Results

Tuesday 05. November 2013 - -- Core Local and National gross time sales increased 7.6%, excluding the impact of 2012 Summer Olympics revenue

— Political revenue was $1 million this year, compared with a record $19.6 million in the 2012 third quarter
— Special Shareholders Meeting to approve merger with Young Broadcasting set for November 7, 2013
Media General, Inc. (NYSE: MEG), a local broadcast television and digital media company, today reported third-quarter operating income of $8.2 million, compared with $22.5 million in the third quarter of 2012, mostly reflecting the near absence of last year’s record Political and Olympics revenues. The current-quarter operating income also included $1.2 million of merger-related expenses.
A net loss in the third quarter of $14.6 million, or 53 cents per share, compared with a net loss of $30.3 million, or $1.34 per share, last year. The current year net loss included $1.2 million of merger-related expenses, while the prior-year net loss included $17.3 million of debt modification and extinguishment costs and losses totaling $11.9 million, net of tax, related to discontinued newspaper and advertising services operations.
George L. Mahoney, president and chief executive officer of Media General, said, “Consistent with our guidance, Core Local and National gross time sales increased 7.6% in this year’s third quarter, excluding the impact of 2012 Summer Olympics advertising revenue. Digital revenue in the quarter grew 21% this year, an acceleration over the solid growth rates we achieved in the first half of the year.
“Our retransmission revenues in the third quarter were $13.2 million, compared with $9.4 million last year, an increase of 41%,” said Mr. Mahoney. “Although this figure was impacted somewhat as a result of the absence, beginning on July 1, of a planned increase in the rates paid by DISH, we’re very pleased with this growth.
“Moreover, total operating costs decreased by approximately $1 million, or 1.3%, in this year’s third quarter. This decrease reflected a $4.3 million reduction in corporate and other expenses, partially offset by a $2.3 million increase in station operating costs and $1.2 million of merger-related expenses. Broadcast cash flow in the current quarter increased 21% from the preceding odd year of 2011, to $23 million this year, compared with $19 million in the third quarter of 2011, and our broadcast cash flow margin also improved over the same period in 2011,” said Mr. Mahoney.
“Media General looks forward to completing our merger with Young Broadcasting. We’ve worked actively with Young management for the past several months to ensure a smooth transition. On November 7, 2013, we will hold a Special Shareholders Meeting to consider and vote on matters necessary to complete the merger. Assuming the FCC has approved our license transfers before our shareholders meeting, we plan to close the transaction very shortly thereafter,” said Mr. Mahoney.
Station net revenue in the third quarter was $78.5 million, compared to $93.8 million in the prior year. Political revenues in the third quarter were $1 million, compared with $19.6 million in 2012. Gross Olympics revenue in the third quarter of 2012 was $15.5 million, of which $10.3 million was incremental.
Local gross time sales this year were $43.7 million, compared with $47.4 million last year, including the Olympics impact. National gross time sales this year were $22.9 million, compared with $24.9 million last year, including the Olympics impact. Core gross time sales (Local and National combined) were $66.6 million this year, compared with $61.9 million last year, excluding the impact of the incremental 2012 Olympics revenues, representing an increase of 7.6%.
Station production expenses rose 1.6% in the third quarter, due primarily to increased network affiliate fees, including reverse compensation. Station selling, general and administrative expenses increased 8.3% in the third quarter, due to merit increases and to two expenses that had revenue offsets: sales incentive trip expenses and additional revenue-share expense associated with the growth in digital revenues.
Corporate and other expenses decreased by $4.3 million, or 35%, in the third quarter of 2013, mostly due to the absence of a $3.3 million severance charge recorded in the third quarter of 2012 and savings resulting from the elimination of 75 corporate positions in the second half of 2012. The savings were partially offset by the impact of a rising stock price on stock-based compensation plans. Core corporate expenses were $4 million this year, compared to $5.6 million last year, a 28% decrease, attributable to last year’s corporate staff restructuring.
Total interest expense in the third quarter of $20 million was flat to last year. Noncash tax expense of $2.5 million compared with $3.4 million last year.
EBITDA from continuing operations (income before interest, debt modification and extinguishment costs, taxes, and depreciation and amortization), adjusted for merger-related expenses, was $15.4 million compared with $28.5 million in the third quarter of 2012.
Media General provides the non-GAAP financial metrics: Broadcast cash flow, EBITDA from continuing operations, as adjusted for merger-related expenses, 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.