Media General Forecasts 2Q and 2008 Results

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Media General Inc., a newspaper publisher and television-station operator, told investors that lower publishing profits are expected to drag on second-quarter performance during a Deutsche Bank Media & Telecom Conference on Tuesday.

Chief Financial Officer John Schauss said the company expects second-quarter earnings from continuing operations of 6 cents to 10 cents per share, excluding about 14 cents per share in severance costs.

Analysts surveyed by Thomson Financial, who generally exclude one-time items, forecast earnings of 6 cents per share.

”Our performance for the quarter is primarily attributable to lower publishing profits.” Schauss said.

For the full year, Media General expects earnings from continuing operations between $1.35 per share and $1.45 per share, also excluding the 14 cents of severance expense. Analysts forecast earnings of 94 cents per share.

Schauss said the forecast assumes no further deterioration in the U.S. or Florida economies.

For the full year, newspaper revenues are expected to drop between 8 percent and 10 percent and broadcast revenues are expected to grow 6 percent to 8 percent, mostly due to political and Olympics advertising.

The company’s interactive media division is expected to swing to a profit of $3 million on revenue growth of about 40 percent, due mainly to advertising services revenue and local advertising increases.

Last month, Media General said it was cutting its work force by 750 positions, or nearly 11 percent, by the third quarter to reduce operating costs.

President and Chief Executive Marshall N. Morton said the company expects to recover the severance expense by the end of the third quarter in salary savings.

He noted that the company is taking other steps to reduce expenses, such as deferring capital spending, consolidating printing sites, centralizing some graphics production and advertising functions and outsourcing customer service.

Morton expressed confidence that the company’s financial results will improve over time, based on the company’s initiatives and on the strength of its assets.

In morning trading, Media General shares fell 25 cents to $13.65. the stock has fallen from a 52-week high of $35.76 last June to a low of $12.96 in April.

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