By: Mark Fitzgerald
Media General Inc., facing a proxy war at its annual meeting next month, said late Thursday its first-quarter results will be worse than Wall Street analysts expect.
And the reason, the Richmond, Va., publisher and broadcaster said, is a familiar one to Sun Belt newspapers — Florida. The Tampa Tribune is the biggest of Media General’s 25 dailies.
“Despite aggressive programs that are reducing expenses across the company, the recession in Tampa is so deep that we will not be able to fully offset the revenue shortfalls we are experiencing there,” Media General President and CEO Marshall N. Morton said in a statement. “We currently expect Media General to report a loss from continuing operations in the first quarter in the range of 40 cents to 45 cents per share, excluding amounts related to the five television stations held for sale.”
According to Thompson Financial, the consensus of industry analysts was that Media General’s loss would be 13 cents a share.
Media General also announced Thursday that its February revenue had dropped 11% to $63.4 million, mostly on weak classified advertising results, especially for real estate and employment categories at the Tribune.
Newspaper classified advertising revenue fell 28.5% in the month, Media General said.
Media General did not report the Tampa results separately but said the combined classified of its three metro papers — the Tribune, the Richmond (Va.) Times-Dispatch, and the Winston-Salem (N.C.) Journal — plunged by big numbers.
Revenue from real estate classified dropped 41%, help-wanted plummeted 38%, and automotive fell 34%.
Retail ad revenue at the metros was down $1.5 million, or 8.5%, and national and circulation revenue were down modestly.
“Revenue results for Media General newspapers in other markets are much better than Florida,” Morton said. “For example, in Virginia, North Carolina, and in all other markets, total publishing revenues in February decreased 7%, 5.7%, and 2.4%, respectively, while revenues in Florida declined 31%.”
Without Florida, he added, total publishing division revenues would be down 6.2%, and retail advertising actually would have increased.
Media General’s bad Q1 news comes as it fends off a proxy challenge by Harbinger Capital Partners, which has nominated four board candidates elected by holders of publicly traded stock. The family controlled company has angrily fought the Harbinger bid, and in a letter to shareholders characterized the nominees as unqualified and lacking any strategy to turn around the company’s plummeting stock price.
In the last year, Media General stock has lost more than half its value, falling from a high of $39.61 a share to $15 to $16.
Media General released its February results and Q1 guidance after the 4 p.m. EDT close of markets. Shares of Media General (NYSE: MEG) ended the day at $15.96, up 71 cents, or 4.66%.