By: Mark Fitzgerald
Media General Inc. reported a fourth-quarter loss of $85.5 million, or $3.86 a share, mostly on a big write-down on its broadcast division — but also on a 20% drop in newspaper ad revenue.
The Q4 2008 loss compares to a profit in the fourth quarter of 2007 of $9.6 million, or 43 cents a share, a year earlier.
Excluding the pre-tax, non-cash $130.4 million write-down on the value of its network affiliate and other one-time charges, Media General had a profit from continuing operations of 39 cents a share, compared with 46 cents a year ago.
Most operating decreases came from its publishing division, the Richmond, Va.-based parent of The Tampa Tribune and Richmond Times-Dispatch said. Not surprisingly, Florida, with its collapsed housing economy, was the epicenter of Media General’s Q4 troubles.
“The publishing division’s lower fourth-quarter results were due to the continuation of the declining economic trends that we have experienced all year, particularly in Florida,” President and CEO Marshall N. Morton said in a statement.
Publishing profit for the quarter plunged 57.2% from the year-ago period, with total publishing revenue down 16.8% and advertising revenue down 20.1%.
Take Florida properties out, and total publishing
revenues decreased 14.8%, Media General said.
Newspaper and other publishing revenue fell 16.8% in Virginia, and 15% in North Carolina. In Alabama, revenues decreased only 5.2%, Media General said on a classified decline that was not as steep as other markets. In South Carolina, revenues declined modestly, just 3.9% helped by the acquisition of a weekly newspaper in March.
Classified ad revenue plummeted 37.6% in the fourth quarter, with the losses especially steep at its three metro dailies. In those markets, employment classified revenue plunged 60%; real estate 50%; and automotive 46%.
Legal classified revenues increased because of real estate foreclosure listings, Media General noted.
Publishing retail ad revenue was off 12% in the quarter, on what the company said was lower spending across most markets.
National ad revenue fell 10.9%, mostly on declines in national automotive and telecommunications.
Circulation revenue increased $915,000, or 5.7% reflecting single-copy and home-delivery price increases imposed in most markets in early 2008.
Newspaper and publishing expenses fell 7.2%, after excluding severance expenses from Q4 and the year-ago quarter plus some other one-time expenses from 2008.
Salary expense was down 11.7% as the result of workforce reductions. Newsprint expense increased 1.5% as higher newsprint cost managed to offset a 25.6% decrease in consumption.
Media General said it narrowed its interactive media division operating loss, which was $1.6 million, compared with $2.6 million a year ago. Revenues were up 10%.
A “strong profit contribution” from its online shopping site DealTaker.com, acquired last March plus a 43% increase in online revenue at local Web sites was offset somewhat by a decline of 24.5% in online classified advertising, and a f37% drop in the national category.
Media General debt was $730 million at the end of the fourth quarter, down from $750 million at the end of the third quarter, and from $898 million at the beginning of the year.
The effective tax rate for the quarter was a 28.6% tax benefit on the company’s pre-tax loss compared to a 40.3% tax expense on pre-tax income in 2007. The decline in the tax rate was due primarily to $7.5 million of a tax valuation allowance that related to continuing operations.
Because of the impairment charge, Media General’s continuing operations EBITDA (earnings before interest, taxes, depreciation and amortization) in the fourth quarter was a was a deficit of $92 million, compared with $46 million in the 2007 period.
Excluding the impairment and other non-cash charges, after-tax cash flow was $22.2 million, down from $26.9 million a year ago.