Media General Sees Online Revenue Growing

By: Newspaper and broadcasting company media General Inc. said Tuesday it sees revenue growing in 2006, buoyed by its online business.

The company expects overall revenue to grow between 14 percent and 16 percent from 2005 revenue of $918 million. It did not give an overall earnings estimate in its midyear review, but it predicted that operating profit will increase over 2005, and net income will compare favorably compared with last year, which was helped by a gain on the sale of the Denver Post.

Analysts polled by Thomson Financial expect earnings of $3.10 a share on revenue of $1 billion.

Media General, which publishes The Tampa Tribune and other newspapers, derives more than half its revenue from its publishing division. The company expects that division to see 6 percent to 7 percent revenue growth. Through May, total publishing revenue was up 3.3 percent, with advertising revenue up 4.8 percent and newspaper advertising revenue up 9.3 percent. Another driver, classified advertising revenue, is up 10.2 percent so far this year.

In broadcasting, the division is expected to see a 28 percent to 30 percent increase in revenue. So far this year, total revenue has increased 2.4 percent, with airtime sales jumping 4.6 percent. The boost came from several areas, including the Winter Olympics on NBC affiliates, Superbowl advertising on several ABC affiliates and the NCAA basketball tournament on 16 CBS affiliates. The company expects political advertising revenue totaling $36 million for the year. Overall, Media General runs 26 network affiliates.

Media General said its strategy involves boosting its online presence, where it runs Web site associated with its newspapers and television studios as well as variety of interactive games. It expects online revenue of $30 million in 2006, with that figure growing by $10 million each successive year. The online division will become "cash-flow positive" in 2006 and then profitable in 2007, President and Chief Executive Marshall N. Morton said in a statement.

Media General said it is making changes in its retirement plan to help reduce the "volatility" of pension expenses, one of the key drivers for expense growth along with other employee benefits. Interest expenses will likely increase due to the company's acquisition of four NBC Universal affiliates, with corporate expenses also rising 10 percent and the company adding $6 million in expenses as it works to expense stock options.

The company estimated capital expenditures of $100 million in 2006, with the bulk coming out of the publishing and broadcasting divisions at $54 million and $41 million, respectively. The overall cost is expected to drop to $75 million in 2007.

Shares of Media General fell 29 cents to $39.64 on the New York Stock Exchange in midday trading.