Media General Inc., owner of 25 daily newspapers in the Southeast, on Thursday forecast third-quarter earnings sharply below Wall Street estimates, citing continued broadcast revenue declines, higher energy costs, and expenses for hurricane coverage.
The company forecast third-quarter earnings of 38 cents to 41 cents — significantly below analysts’ expectations for profit of 62 cents per share and the company’s year-ago earnings of 66 cents.
In addition to increased energy costs, Media General said certain other expenses were higher than expected, including new business development initiatives, the launch of new Spanish-language products in Tampa, and “wall-to-wall” news coverage during the hurricanes.
The company said August sales slipped 1.1 percent to $69.1 million, as broadcast revenue slid 9.3 percent. Publishing sales lifted by 2.9 percent and interactive media division sales experienced a 52.3 percent surge, but with $1.7 million in sales, the interactive media segment amounts to a sliver of the company’s overall revenue.
“Publishing’s rate of revenue growth in July and August was lower than expected, mostly because of reduced advertiser spending in the retail category,” said President and Chief Executive Marshall N. Morton.
“While we expected broadcast revenues to be down somewhat in the face of difficult comparisons to last year’s strong political and Olympics spending, a very weak national advertising market is driving greater declines than expected,” he said.
Nationwide, the automotive, telecommunications, financial, and fast food industries are spending “significantly” less on broadcast advertising than a year ago, the company said.
Media General said it expects publishing revenue to grow 3 percent in the third quarter, versus the 4 percent to 5 percent predicted earlier. Broadcast sales will likely fall 4 percent to 4.5 percent from last year, rather than the previously expected 1 percent to 1.5 percent.
Media General publishes the Tampa Tribune, Winston-Salem Journal, and Richmond Times-Dispatch, along with 22 smaller daily community papers. Shares of the company fell $2.75, or 4.3 percent, to $61.20 in morning trading on the New York Stock Exchange.