by Marshall N. Morton, President and Chief Executive Officer, Reid Ashe, Executive Vice President and Chief Operating Officer, John Schauss, Vice President-Finance and Chief Financial Officer, and Lou Anne J. Nabhan, Vice President, Corporate Communications

Welcome from Lou Anne Nabhan

Thank you and good morning everyone. Welcome to Media General's Second-Quarter Conference Call and Webcast.

Earlier today, Media General issued two press releases. We announced earnings for the second-quarter of 2005 and revenues for the month of June. Both press releases have been posted on our Web site. The comments from today's conference call also will be posted on our Web site immediately following the call.

Today's presentation contains forward-looking statements, which are subject to various risks and uncertainties. They should be understood in the context of the company's publicly available reports filed with the SEC. Media General's future performance could differ materially from its current expectations.

Our speakers today are Marshall Morton, president and chief executive officer; Reid Ashe, executive vice president and chief operating officer; and John Schauss, vice president-finance and chief financial officer. First up is Marshall.

Remarks from Marshall Morton

Thank you, Lou Anne, and good morning ladies and gentlemen.

Three weeks ago today, Reid, John and I presented at the Mid-Year Media Review in New York and updated investors on Media General’s performance to date and outlook for the year. It was good to see many of you there.

Now bringing up to today, we were pleased with our second-quarter results, which included nearly 3% earnings growth and almost 4% total revenue growth.

Excluding a gain on the sale of our interest in the Denver Post, Media General reported income of $19 million, or 80 cents per share, compared with $18.5 million, or 78 cents per share, in the second quarter of 2004. The after-tax gain on the Denver sale was $19.4 million, or 81 cents per share.

Revenues for the quarter were up 4.2% in the Publishing Division, 2.1% in the Broadcast Division, and 41.5% in the Interactive Media Division.

Slightly lower segment operating income compared to last year mostly reflected the expected lower profit in the Broadcast Division. Our Broadcast team is doing a great job replacing last year’s Political revenues with new revenues, mostly in the Local category. At the same time, as we’ve previously indicated, the division is incurring higher expenses to drive the new revenue growth. National time sales growth has been softer than anticipated this year. As a result, the Broadcast Division implemented a cost savings plan in the second quarter that is designed to restrain discretionary spending for the rest of the year.

The Publishing Division turned in a profit performance for the second quarter that was slightly above last year, and the Interactive Media Division generated a significant improvement to its bottom line.

While we were pleased with Publishing’s overall performance, I would like to comment on their revenue growth, which came in somewhat lower than our original expectations for the quarter. Compared to the other months of this year, Retail revenues slipped a bit in June, and auto Classified revenues were softer in the month as well. Indications are positive, however, in that department stores and other retailers are expected to continue to show modest gains, and advertisers who cut back in June have given no indication that they plan to do so in July. Our efforts to increase advertising with smaller advertisers also continue to yield positive results. We also expect improvement in automotive advertising over what we saw in the second quarter because manufacturers are preparing to introduce the new year’s models.

We’re very pleased that our Interactive Media Division continues to report robust revenue growth, driven by online Classified advertising as well as new products and services. The division also is making significant strides toward becoming cash flow positive.

Also contributing to our earnings growth for the quarter were several below-the-line items. Equity income from our interest in SP Newsprint improved significantly. Corporate expense was lower than last year as a result of the absence of non-recurring amounts in the prior year. Interest expense was down due to lower debt levels that more than offset the impact of higher rates.

I’m sure many of you watched the developments surrounding Hurricane Dennis over the weekend. I’m delighted to report that our properties in Mobile and Dothan, Alabama, and Panama City, Florida, were spared a direct hit or any significant damage. At the same time, they did an excellent job keeping our communities informed during the storm. Reid will discuss this event in more detail.

Let me now ask Reid to discuss our operating performance for the second quarter. John will follow Reid with additional details about the quarter.

Remarks from Reid Ashe

Thank you, Marshall. I’ll start with the Publishing Division. Excluding the sale of our interest in The Denver Post, which was included in our Publishing segment operating profit was $31.9 million, up slightly from last year.

Total revenues were up 4.2%, and newspaper advertising revenues increased 5.7%. Segment operating cash flow was about even with last year.

Let’s look at individual newspaper categories.

Classified advertising revenues increased $3.8 million, or 7.6% for the quarter. In our Tampa market, classified advertising increased 7%. Employment advertising in Tampa was up almost 20%, automotive increased about 1%, and real estate advertising was up 4%. The Richmond Times-Dispatch reported an 8.7% increase in classified advertising for the quarter. In Richmond, strong increases in employment and real estate offset a decline in automotive. The Winston-Salem Journal’s Classified revenues for the quarter increased 3%. Like Richmond, higher employment and real estate advertising offset a decline in automotive classifieds. For the most part, our Community newspapers had solid gains in employment advertising, and real estate and automotive results were mixed across markets.

Retail revenues for the quarter increased $2.6 million, or 4.8%. ROP accounted for more of the gains than preprints. The increase in Retail came primarily from The Tampa Tribune, where retail revenue increased 12%, and reflected strength in the department store, home furnishings, financial and medical categories. At the Richmond Times-Dispatch, Retail revenue increased 3%, a much stronger performance than in the first quarter. Their increase was the result of strength in the medical, financial and home improvement categories, aided by continued gains in color revenue. The Winston-Salem Journal’s retail revenues declined 1.3% from last year, mostly the result of lower spending by department stores and a furniture store that went out of business. Our Community newspapers saw only small retail increases in the second quarter, after a very strong first quarter. The strongest community markets were Northern Virginia and Charlottesville, Virginia.

National advertising revenues increased 1% over last year. Our Tampa market saw lower national advertising in the second quarter due to softness in the financial and automotive categories. The Winston Salem Journal benefited from higher telecommunications advertising. The Richmond Times-Dispatch had lower telecommunications advertising offset by increases in a variety of other categories.

Mostly as a result of a change in the wholesale rate to carriers in a number of markets, Circulation revenues were down year-over year. There is also a corresponding expense decrease for the change in wholesale rates.

Publishing Division expenses for the second quarter increased at a moderate rate. Total expenses were up 4.6% compared with last year’s second quarter. The most significant increases were newsprint expense, compensation and benefits, and circulation-related items.

Salaries were 2.7% above last year, mostly due to annual increases and higher commissions, partially offset by fewer FTEs.

Employee benefits expense increased 6.7% due to higher retirement expense and health care costs.

Newsprint expense was up 10.2% over the same quarter last year. The average price per ton this year was $510 compared with $467 last year.

Let’s now turn to the Broadcast Division. While total revenues in the quarter grew 2.1%, segment operating profit declined, as expected, as there were higher expenses this year associated with driving new revenue growth to offset the absence of political revenues.

Gross time sales increased $1.8 million, or 2.2%, and reflected growth in Local and National transactional sales that offset the loss of $5 million in Political revenues from last year’s second quarter.

Through May, we continued to exceed the industry’s ad growth rate as reported by TVB’s monthly Group Time Sales survey.

Local time sales, excluding Political, increased $5.5 million, or 11.1%, as our sales development initiatives were successful in driving new advertisers to our stations. Markets where we developed particular strength were Tampa, Spartanburg, Wichita, Mobile, Augusta and Birmingham. Categories showing the largest gains included furniture, entertainment, financial and fast food.

National time sales, excluding political, increased $1.4 million, or 5%, as the result of our sales efforts to grow revenue share. The telecommunications category showed the strongest gain, and the corporate and entertainment categories also had healthy increases.

Broadcast Division expenses for the second quarter rose 4.9%. Major contributors included higher compensation and benefits costs, attributable to merit increases and sales commissions on our revenue development initiatives, and increased sales incentives designed to expand Local and National ad revenues.

Although we achieved revenue growth in the first quarter, it was short of what we had anticipated. Therefore, the Broadcast Division implemented a cost reduction initiative during the second quarter to reduce discretionary spending, and we believe can be accomplished without hurting the quality of our news, syndication products or marketing efforts.

The May ratings books were good for us overall. 17 of our stations gained ground in the ratings, 1 maintained position, and 8 declined a little. Most importantly, 22 of our 26 stations were rated number one or two from sign-on to sign-off. WFLA, our largest station, continues to be Tampa Bay’s #1 television station.

Now, let’s turn to the Interactive Media Division. Its operating loss of $978 thousand was 35% better than the year-ago loss. Revenues of $4.9 million were up 41.5%.

Revenue growth came mainly from online Classified advertising rate increases as well as from new products that boosted both the Classified and Local advertising categories.

Once again, our Interactive group did an outstanding job keeping people informed of the impact of Hurricane Dennis over this past weekend. They were extremely successful in providing streaming video for our audiences. Visitors to our sites on average ran 8 to 10 times normal.

In fact, once again, our shared resources, made possible by our regional focus, enabled Media General to outperform the competition in providing storm coverage. Thankfully, we suffered no significant losses or damages to any of our resources. The storm passed just east of the Alabama/Florida line. While we experienced some heavy rain, the harsh wind and flooding was away from our people and facilities.

Our teams in Mobile and Panama City were a beacon of information for their communities that our competition couldn’t even envision. Our combined resources had us on radio stations, national news outlets across multiple networks and a reach on the Internet that, when we get the final numbers, may equal many national news events.

In addition to the many comments from the members of our communities, we have had many comments from all across the country, even the world, as our troops in Iraq shared their appreciation of knowing what was going on in their home towns. Our teams not only demonstrated the quality and determination of our capabilities, they illustrated to all the spirit of our mission. We’re proud of them, and we thank them for their extra efforts during a challenging time.

I will now turn our presentation over to John.

Remarks from John Schauss

Thank you, Reid. Let me start off with the below-the-line items for the quarter, as shown in the Business Segments table in our press release.

Interest expense decreased $193 thousand, or 2.6%, compared to last year, due to lower average debt levels, which more than compensated for higher interest rates.

Equity income from our share of SP Newsprint improved to a profit of $611 thousand, compared to a loss of $72 thousand a year ago, due mainly to higher newsprint prices offset partially by increases in energy and ONP expense.

An increase in acquisition intangibles amortization was due to the shortening of the estimated lives of network affiliation intangible assets.

Corporate expense was down from last year. This decline mostly reflects non-recurring legal and other consulting costs in the prior-year’s quarter, which were related to initial compliance with Sarbanes-Oxley and other projects. We expect Corporate expense of approximately $10 million in each of the remaining two quarters of 2005.

The effective tax rate for the quarter was 39%, compared with 37% in the prior year. The higher rate is attributable to the taxes associated with the Denver sale.

As announced in January, MediaNews Group exercised its Call Option to purchase our 20% share of the Denver Post. The sale was completed on June 10, and the sales price was set at $45.8 million through independent appraisal of Denver’s fair market value. As Marshall previously reported, for the second quarter, we recognized a gain of 81 cents per share from this sale. Net proceeds, after taxes and expenses were $30 million and used to pay down debt.

Total debt at the end of the second quarter was $487 million and represented 35% of total capital. Our debt outstanding included $192 million in bank debt, $200 million in public debt, and $95 million in consolidated variable interest entity debt.

Capital expenditures for the second quarter were $16.6 million. Of that amount, Publishing Division capital expenditures of $7.1 million were invested mainly in new press control equipment at the Richmond Times-Dispatch, news and computer equipment at The Tampa Tribune, continuation of the new press project at the Bristol Herald Courier, and expenses for a new advertising system that will eventually connect all our newspapers and their web sites. The Broadcast Division spent $8.6 million, mostly for the conversion to high-definition digital television. Expenditures by the Interactive Media Division and Corporate were $1 million. The majority related to corporate IT and new product enhancements in IMD.

As we reported at the Mid-Year Media Review, our capital spending for the year is now projected to be $91 million. This reduction from earlier forecasted amounts mostly reflects spending that will be deferred into next year.

EBITDA for the second quarter of 2005 of $87.9 million, including the Denver gain, compared with $53.3 million in the prior-year period.

After-tax cash flow was $55.7 million, compared with $34.8 million in the year-ago period, again, influenced by Denver.

Free cash flow in the second quarter was $39.1 million, compared with $22.2 million in last year’s second quarter. Denver is included here as well.

And, now, back to Marshall.

Remarks from Marshall Morton

Thank you, John.

We are very pleased that both our Publishing and Broadcast divisions continue to deliver top-of-peer-group revenue growth, and we plan to build on that track record for the future.

Top-line growth is a key strategic priority for us. We have begun our planning for 2006, and, as part of that process, we’ve challenged ourselves to do three things:

- Maintain or increase revenue share every year at each one of our properties,
- Continue to exceed the peer group averages in revenue growth at the division level every year, and
- Derive at least 5% of total revenue profitably from new products and services at the division level.

One of the primary benefits of accomplishing these growth objectives should be to overcome the biennial swing in broadcast results.

Expanding the number of communities where we’re able to practice Convergence also is a strategic priority for us. We think we can move forward in that regard if the FCC, which now is considering media ownership on remand from the Third Circuit Court of Appeals, promptly updates its record and sends a new decision back to the court.

We will continue to actively pursue 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.

Before turning to Q&A, let me comment on our outlook for the third quarter of 2005.

For the Publishing Division, we expect revenue growth of 5-6% for the quarter compared to last year. Classified revenue growth is expected to continue strong, driven mainly by help wanted, but also by some improvement in automotive. We also look for continued Retail revenue growth, especially in Tampa.

For the Broadcast Division, the time sales outlook for the third quarter is mixed. New business development initiatives are expected to continue to drive significant increases in Local transactional sales, while soft market conditions are expected to dampen efforts to increase National spot sales. Overall, we expect broadcast time sales to be 1-to-1.5% below last year’s third quarter. Political revenues in last year’s third quarter were $8.5 million.

As has become our practice, we will provide more definitive earnings guidance as the third quarter unfolds.

That concludes our formal remarks, and, now, we will be pleased to take your questions.

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