FOR IMMEDIATE RELEASE
Thursday, April 18, 2002
Media General Reports First-Quarter Results
RICHMOND, Va. — Media General (NYSE:MEG) today reported first-quarter earnings of 26 cents per diluted share before the cumulative effect of writing down the value of various intangible assets. This compares with reported earnings of 15 cents per diluted share in the first quarter of 2001.
Media General adopted SFAS 142 at the beginning of 2002, which establishes new accounting for goodwill and intangible assets. Had the statement been in effect last year, first-quarter 2001 earnings would have been 52 cents per diluted share.
In addition to changed amortization rules, SFAS 142 requires companies to reassess the value of existing goodwill and identified intangibles, such as FCC licenses and network affiliation agreements, to ensure that their value has not been impaired. As a result, Media General wrote down some existing intangibles to reflect the lower level of cash flows currently generated by some of its recently acquired broadcast properties. This resulted in an after-tax charge in the first quarter of $126.3 million, or $5.47 per diluted share. Including the one-time charge, Media General reported a net loss of $120.3 million, or $5.21 per diluted share.
While total revenues for the first quarter decreased 2.2 percent to $194.5 million, broadcast revenues increased 5.5 percent compared to the same period in 2001.
"Although we are still concerned about newspaper advertising, we have seen a nice recovery in our broadcast business. In addition, our company-wide cost-cutting has enabled us to maintain segment profit at the same level as the first quarter of 2001 and to generate higher segment operating cash flow," said J. Stewart Bryan III, the company's chairman and chief executive.
Total segment operating cash flow was $52 million in the first quarter, compared with $48.1 million in the first quarter of 2001. Total segment profit for both quarters was about the same, although the 2001 period was boosted by a one-time, pretax gain of $6.1 million from the company's 20 percent investment in The Denver Post.
Due to lower newsprint prices, Media General's one-third ownership share of SP Newsprint Co. resulted in a pretax loss of $1.5 million in the first quarter of 2002, compared with pretax income of $6.2 million in the first quarter of 2001.
EBITDA (earnings before interest, taxes, depreciation and amortization) in the first quarter of 2002 was $40 million, compared with $49 million in the 2001 period. Free cash flow (after-tax cash flow before cumulative effect minus capital expenditures) was $12 million, compared with $23 million one year ago.
Reflecting the adoption of SFAS 142, depreciation and amortization were $16.6 million in the first quarter of 2002, compared with $29.3 million in the first quarter of 2001.
Publishing
Publishing revenues for the quarter were $128.9 million, compared with $137 million in the first quarter of 2001.
Despite the decrease in revenue, operating cash flow increased to $35.8 million from $35.2 million in the first quarter of 2001 due to aggressive expense management and significantly lower newsprint prices.
The average price of newsprint fell from $537 in last year's first quarter to $415 in this year's first quarter producing a $4 million price variance. Lower overall advertising linage and the division's conservation efforts saved the company an additional $1.2 million in newsprint consumption.
Broadcast
Broadcast revenues for the quarter were $63.4 million, compared with $60.1 million in the first quarter of 2001. Both local and national advertising increased substantially.
Olympics-related time sales drove much, but not all, of this improvement. Media General stations also saw a strengthening in several advertising categories including automotive, political, corporate, specialty stores and services.
First-quarter operating cash flow for the division increased to $16.8 million from $13.4 million a year ago.
Interactive Media
Interactive Media revenues from the quarter were $2.6 million, compared with $2.2 million in the first quarter of 2001. Most of this improvement was due to revenue growth initiatives such as up-selling classified ads from several of the company's daily newspapers into its Web sites.
The Interactive Media Division posted an operating loss of $1 million, compared with an operating loss of $1.7 million in the first quarter of 2001. Year-ago results included losses totaling approximately $1 million from the company's equity investments in unconsolidated affiliates. In the first quarter of 2002, the division's loss from unconsolidated affiliates was $32,000.
Outlook
"We remain somewhat cautious in our near-term outlook for our publishing business. While we're pleased with the signs we have seen, it is too early to call a trend," Bryan said. "In our broadcast business, we feel more confident that we are seeing a recovery. Our Publishing Division expects second-quarter revenues to be about 1.5 percent below last year's second quarter, and our Broadcast Division expects an increase of about 8.5 percent. Analyst earnings estimates for the second quarter currently range from 54 cents to 60 cents per share, and we are comfortable with those estimates. For the full year, analyst estimates range from $2.14 to $2.24, and we are comfortable with the lower end of that range."
Conference Call
Media General will discuss first-quarter results during a conference call and webcast today at 11 a.m. EDT. To listen to the webcast, log on to www.mediageneral.com and click on the "Live Earnings Conference" link at the top of the home page. A replay will be available from 3 p.m. today until 5 p.m. on Thursday, April 25, at the same Web address.
About Media General
Media General is an independent, publicly owned communications company situated primarily in the Southeast with interests in newspapers, television stations, interactive media and diversified information services. The company's publishing assets include The Tampa Tribune, the Richmond Times-Dispatch, the Winston-Salem Journal and 22 other daily newspapers in Virginia, North Carolina, Florida, Alabama and South Carolina, as well as nearly 100 other periodicals and a 20 percent interest in The Denver Post. Media General's 26 network-affiliated television stations reach more than 30 percent of the television households in the Southeast, and nearly 8 percent of those in the United States. The company's extensive interactive media offerings include more than 50 online enterprises. Media General also has a 33 percent interest in SP Newsprint Co., which operates newsprint mills in Dublin, Ga., and Newberg, Ore.
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.
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