Media General’s 4Q Earnings Dip 32%

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By: STEPHANIE STOUGHTON, AP Business Writer

(AP) Media General Inc. said Thursday its fourth-quarter earnings fell 32%, reflecting a lopsided comparison with a 2004 quarter bolstered by political advertising and a settlement.

The owner of the Richmond Times-Dispatch earned $25.0 million, or $1.05 a share, in the quarter ended Dec. 25, beating the $1.03-per-share forecast by analysts surveyed by Thomson Financial. In the year-ago period, Media General earned $36.8 million, or $1.55 a share, in the year-earlier period.

The recent quarter’s earnings were also hurt by rising costs for energy, employee benefits, and newsprint. Those costs were partially offset by lower interest and corporate expenses, as well as improvements in Media General’s online division.

In the 2004 quarter, the Richmond-based company gained $6.1 million from the settlement of a newsprint swap dispute.

Revenue decreased 1.7% to $245.5 million in the quarter from $249.7 million in the year-earlier period.

Marshall N. Morton, Media General’s chief executive officer, said the small decline underscored the success of the company’s new revenue development initiatives, which were designed to help compensate for the loss of political advertising tied to the November 2004 elections.

“We were especially pleased that all three of our operating divisions continued their industry-leading advertising revenue growth,” Morton said. “We believe this performance reflects the quality of our core products, the success of new products and services and the strength of our markets.”

In the publishing division, advertising revenue rose 3.5% in the fourth quarter, but the unit’s profit fell 4.7%. Classified and retail advertising posted solid gains. But lower circulation revenue from a change in carrier wholesale rates and a 4.4% increase in expenses took their toll.

In the broadcast division, revenue fell 9.6% in the fourth quarter, and profit plunged 27.6%. Gains in local and national time sales could not offset “the virtual absence of political revenues,” the company said.

Revenue from the small interactive-media division soared 47.3%, and it lost $1.4 million.

For the full year, Media General lost $243.0 million, or $10.18 per share, after it was forced to the change the way it values its broadcast licenses. The accounting change, which affects Federal Communications Commission licenses tied to television-station acquisitions in 1997 and 2000, was required by the Securities and Exchange Commission.

The company earned $80.2 million, or $3.38 per share, in 2004.

Revenue rose 1.9% to $917.9 million last year from $900.4 million in 2004.

Looking forward to the first quarter, Media General said it expects “some improvement” in publishing revenue growth when compared to the fourth quarter of 2005. Employment and real-estate classified ads, it said, should offset shortfalls in auto classifieds.

The broadcast division should benefit from Super Bowl advertising and then the NCAA basketball tournament in March. Local and national time sales are forecast to increase 7% to 8% in the first quarter.

Media General owns a number of newspapers, television stations, and online businesses, primarily in the Southeast. Its large newspapers include The Tampa Tribune and the Winston-Salem (N.C.) Journal. It also owns 22 daily community newspapers and 26 network-affiliated television stations.

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