Media General loses $16M in second quarter
Media General, Inc., which is in the process of merging with Young Broadcasting, the owner of Nashville ABC affiliate WKRN, today reported second-quarter operating income of $5 million, compared with $17 million in the second quarter of 2012.
The year-over-year decrease was due in large part to two significant expenses in the second quarter: $7.2 million of merger-related expenses and $3.7 million of additional expense, due to the effect of a higher stock price on stock-based compensation plans. Additionally, the current quarter included only $1 million of political revenues, compared with $7.5 million in the same period last year.
Net loss in the second quarter was $16 million, or 59 cents per share, compared with a net loss of $146 million, or $6.48 per share, in the prior year, which included a loss of $132 million related to the divestiture of discontinued operations, mostly newspapers.
Total station revenues in the second quarter were $82 million, compared to $83 million in the prior year, net of agency commissions. As expected, political revenues in this odd-numbered year decreased 86%. Cable and satellite retransmission revenue increased 38%, and Digital revenues grew 17%.
George L. Mahoney, president and CEO of Media General, said, “Our stations are doing a good job this year replacing last year’s robust Political revenues with new revenue initiatives and business development programs. Additionally, our largest category, automotive advertising, grew 5.5% in the second quarter. Station revenues also reflected higher retransmission revenue this year and growth in Digital revenues. Station expenses increased 4.6%, due to additional network affiliation fees and expenses for revenue initiatives. We were especially pleased to see our stations increase broadcast cash flow to 34%, compared to the last odd-numbered year 2011, a key initiative for us. Core corporate expense in the second quarter decreased 41% from last year, reflecting our major corporate restructuring following the sale of our newspapers,” said Mr. Mahoney.
“Our merger with Young Broadcasting is progressing smoothly, and we expect to complete the transaction in the late third or early fourth quarter of this year. We are very happy with the terms of a new credit agreement, announced on August 5, which will be in place following the completion of the merger. We refinanced the combined debt of Media General and Young at a significantly lower cost of capital. Cash interest will be approximately $39 million annually as a result of the new credit agreement, based on current LIBOR rates, a savings of $36 million over the two companies’ current standalone annual cash interest expense of approximately $75 million. The new Media General will be on even stronger footing than anticipated, and we’re delighted with our gathering momentum,” said Mahoney.