Media General Swings to Loss, Warns Of Big Goodwill Write-Down

By: E&P Staff

Richmond, Va.-based Media General Inc. Thursday reported a preliminary second-quarter loss from continuing operations of $1.4 million, 6 cents a share, compared to a profit of $4.3 million, or 19 cents a share, in the year-ago quarter.

The results included severance charges of 14 cents per diluted shares. Excluding the severance charge from the wave of layoffs at its properties, especially in Tampa, Fla., income in the second quarter of 2008 was 8 cents per diluted share.

Media General’s results do not include a non-cash goodwill impairment charge, which the company said is expected to be between $500 million to $550 million after taxes.

Newspaper advertising for the quarter plunged 17.1% driven by a 24.7% fall in revenue at the Tampa Tribune and related Florida publications.

The publishing division reported a profit for the quarter of $6.8 million compared with $22.6 million in 2007.

Media General reported revenue fell 12.5% in Virginia, where it publishes the Richmond Times-Dispatch; 7.3% in North Carolina; and 3.5% in Alabama. It said revenue was up “nominally” in South Carolina on results from a new weekly newspaper in the greater Florence/Myrtle Beach market.

Classified advertising revenue plummeted 29.5%, mostly on results from Tampa.

Among Media General’s metro papers, help-wanted classified revenue fell 42.7; real estate was down 38.9%; and automotive plunged 38.5%.

Retail advertising revenue declined 6.3%, mostly on lower spending in Tampa in the department store, home furnishings, and entertainment categories, Media General said.

National ad revenue decreased 19.2%, on lower spending in the utilities, travel and automotive categories in Tampa.

Circulation revenue was off 3%.

Media General said its publishing division spent 12.3% less on newsprint in the quarter, reflecting a 19.5% decline in consumption.

Media General said it would report its goodwill impairment charge when it files a report with the Securities and Exchange Commission around Aug. 8.

“We determined that, in view of the continued economic slowdown and the market’s perception of media industry equity valuations, this was the appropriate time to undertake the impairment testing,” President and CEO Marshall N. Morton said in a statement.

Media General said it took a loss on its Interactive Media Division of $656,000, compared with a profit of $359,000 in the 2007 quarter.

Revenues were at an all-time high of $10.6 million, up 13.7%, on a 45.7% percent increase in local advertising and revenue from, which Media General acquired in March. It said online classified revenue fell 4%, and national/regional revenue was off 7.1%, on “softer advertising from national agencies, particularly at in Tampa.”

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