Media General, Journal Register Profits Up

By: Dave Carpenter, AP Business Writer

(AP) Media General Inc. reported a profit in the first quarter in contrast to a loss a year earlier despite prewar cutbacks by advertisers. Meanwhile, the Journal Register Co. reported its first-quarter net income increased 6.2%, as sharply lower interest expenses compensated for flat revenue and higher operating expenses.

The Richmond, Va.-based Media General said it earned $7 million, or 30 cents a share. That included an after-tax gain of $3.7 million, or 16 cents per share, from the sale of the company’s interest in Hoover’s, a business information service, to Dun & Bradstreet.

Wall Street had been expecting earnings before one-time items of 10 cents a share, according to Thomson First Call.

In the comparable period a year ago, Media General lost $120.3 million, or $5.21 a share, mostly because of a $126.3 million accounting charge.

Revenue rose 1.5% to $197.4 million from $194.5 million in the first quarter of 2002.

J. Stewart Bryan III, chairman and chief executive, said the quarter started with a sharp rebound in advertising revenue that fizzled in February “as advertisers delayed or canceled spending due to geopolitical concerns and economic uncertainty.”

Bryan noted that the television operations were hit harder than the newspaper division, with “advertising cancellations, spending deferrals, and pre-emptions from network news coverage.”

To compensate for the cutbacks, Bryan said, Media General reinstated some cost-control measures, including a hiring freeze, deferral of spending on property and equipment, and tight control of discretionary spending. Bryan said those measures produced some savings in March and should produce more in the second quarter.

In the second quarter, Bryan said, the company expects to post earnings of 72 to 74 cents a share, slightly higher than the 70 cents the company reported in the same quarter last year.

Media General owns newspapers, television stations and online information services, mainly in the Southeast. Its newspapers include The Tampa (Fla.) Tribune, the Winston-Salem (N.C.) Journal, and the Richmond Times-Dispatch.

The company’s shares rose 85 cents, or 1.6%, to $53.15 in afternoon trading on the NYSE.

Journal Register Co.

The Trenton, N.J.-based publisher of The Trentonian, Connecticut’s New Haven Register, and 255 other publications clustered in the Northeast said its net income for the three months ended March 30 was $9.8 million, or 24 cents per share. That beat by a penny the consensus forecast of analysts surveyed by Thomson First Call.

In the first quarter of 2002, the company earned $9.2 million, or 22 cents per share.

Revenue stayed steady at $96.63 million. A 1.2% increase in advertising revenue, to $69.76 million, offset small declines in revenues from circulation, commercial printing, and other sources. Excluding publications Journal Register did not own in the year-ago quarter, first-quarter ad revenues dipped 0.4% and total revenues decreased 1.5%.

Operating expenses rose 2% on higher costs for items including general insurance, employee health and pension benefits, and sales and administration. Meanwhile, net interest and other expenses fell 38%.

“Lower interest expense contributed positively to our free cash flow and to our increasing earnings in the first quarter, and we expect lower interest expense to continue to positively impact our second quarter and full year 2003 results,” Chief Financial Officer Jean B. Clifton said in a statement.

Robert M. Jelenic, the chairman, president, and chief executive officer, said Journal Register expects earnings per share of 32 cents to 35 cents in the second quarter and $1.14 to $1.21 for all of 2003. Those figures are in line with analysts’ current forecasts.

Jelenic said his projections are based on expectations the economy will improve, advertising revenues will increase, and interest rates will remain low.

Journal Register shares gained 64 cents, 4%, to $16.60 in afternoon trading on the NYSE.

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