By: Michael Buettner, Associated Press Writer
(AP) A required change in accounting methods gave Media General Inc., a Richmond-based newspaper and television company, a net loss of $120.3 million for the first quarter, the company reported Thursday.
The loss, which was equivalent to $5.27 a share, included a $126.3 million writedown of goodwill and other intangible assets under a new financial accounting standard adopted late last year.
Under the new method, goodwill — usually the premium paid for an acquisition above the value of the tangible assets acquired — can no longer be written off gradually over a period of up to 40 years. Instead, companies must constantly weigh the value of their investment in the acquired company and write off any reduction in value as it occurs.
Media General reduced the value of some intangible assets associated with some of the television stations it has acquired in recent years because those properties are generating lower cash flows than expected.
Without the accounting change, the company would have earned $6 million, or 26 cents a share, well above the 21 cents per share that Wall Street analysts had been expecting, according to Thomson Financial/First Call.
In the same period a year ago, the company reported net earnings of $3.4 million, or 15 cents a share. Had the accounting rule also been in effect a year ago, first quarter 2001 earnings per share would have been 52 cents.
Revenues for the quarter were $194.5 million, down 2% from $198.9 million reported in the first quarter of 2001.
The company said a decline in newspaper advertising was responsible for the lower revenues. On the broadcasting side, revenues rose 5.5% during the quarter.
“Although we are still concerned about newspaper advertising, we have seen a nice recovery in our broadcast business,” Chairman and Chief Executive Officer J. Stewart Bryan III said in a statement. Bryan added that a cost-cutting program helped the company keep its profits up.
Looking ahead, Bryan said Media General is “somewhat cautious in our near-term outlook for our publishing business.” On the broadcast side, he said, “we feel more confident that we are seeing a recovery.”
Bryan said the company is comfortable with Wall Street analysts’ estimates of second-quarter earnings of 54 cents to 60 cents. For the full year, he said, “analyst estimates range from $2.14 to $2.24, and we are comfortable with the lower end of that range.”
The company’s shares were up $1.45 cents at $67.30 in afternoon trading on the New York Stock Exchange.
On the Net: www.mediageneral.com