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Media General Reports Fourth-Quarter 2012 Results

January 31, 2013

RICHMOND, Va., Jan. 31, 2013 /PRNewswire/ — Media General, Inc. (NYSE: MEG), a broadcast television and digital media company, today reported fourth-quarter 2012 operating income of $42.3 million, more than 2.5 times greater than fourth-quarter 2011 operating income of $16.3 million. Net income in the fourth quarter was $17.6 million, or 62 cents per share, compared with a net loss of $3.3 million, or 15 cents per share, in the prior year.

George L. Mahoney, president and chief executive officer of Media General, said, “Media General had an exceptional fourth quarter, marked by 40% revenue growth. Record Political advertising was $30 million. Core Local and National advertising revenues, excluding Political, increased 4%. Media General was particularly well positioned to maximize Political advertising opportunities, with six of our stations located in four of the key battleground states. Broadcast cash flow in the fourth quarter was $50.4 million, with a margin of 46%,” said Mr. Mahoney.

Starting with the full-year 2013, Media General’s fiscal year will be a conventional calendar year (Jan. 1 – Dec. 31). Previously, the company’s fiscal year ended on the last Sunday in December, a newspaper industry practice. Fiscal year 2012 began on December 26, 2011 and ended on December 31, 2012. Fiscal year 2011 began on December 27, 2010 and ended on December 25, 2011.

Total revenues in the fourth quarter of 2012 were $108.7 million compared with $77.9 million in the prior year. Local gross time sales increased 5.3% to $50.7 million. National gross time sales grew 1.4% to $25.2 million. The largest advertising category, automotive, increased 21%. Other key categories with strong growth in the quarter included entertainment, home improvement and furniture.

Cable and satellite retransmission fees rose 84.3% to $9.9 million, as a result of contract renewals in late 2011 that included higher rates. Digital revenues increased 18.8% to $2.7 million, driven primarily by Local advertising, which grew 16%.

Higher station operating costs in the fourth quarter reflected an increase in commissions from the strong revenue performance, higher NBC affiliate fees, a five-day furlough repayment in December 2012, and prior-year savings of nearly $2 million from a companywide furlough program.

Corporate expense of $101,000 in the fourth quarter compared with $9.6 million last year, and included two large non-recurring gains in the current quarter. The gains included a non-cash curtailment of more than $2 million resulting from former newspaper employees leaving the company’s post-retirement plans, and a $5 million non-cash gain resulting from outsourcing disability coverage for substantially all Medicare eligible participants to a third party.

Total interest expense in the fourth quarter was $21 million, compared with $14.6 million last year. In the current quarter, cash interest paid was $16.7 million, non-cash interest expense was $2.6 million, and accrued but not paid cash interest was $1.7 million.

Noncash tax expense was $3.4 million in the fourth quarter, compared with $6.2 million in the prior year. The lower tax expense was primarily due to the absence of an intraperiod tax allocation made between continuing operations and Other Comprehensive Income that was recorded in the fourth quarter of last year.

EBITDA from continuing operations (income before interest, debt modification and extinguishment costs, taxes, and depreciation and amortization) was $48.1 million, compared with $23.8 million in the 2011 period.

Media General provides the non-GAAP financial metrics: Broadcast cash flow, EBITDA from continuing operations, After-tax cash flow from continuing operations, and Free cash flow. The company believes these metrics are alternative measures used in peer comparison and by lenders, investors, financial analysts and rating agencies to evaluate a company’s ability to service its debt requirements and to estimate the value of the company. A reconciliation of these metrics to amounts on the GAAP statements has been included in this news release.

Conference Call and Webcast

The company will hold a conference call with financial analysts today at 2:30 p.m. ET. To dial in to the call, listeners may call 866-831-6234 about 10 minutes prior to the 2:30 p.m. start. The participant passcode is “Media General.”

Listeners may also access a live webcast by logging on to www.mediageneral.com and clicking on the “Live Webcast” link on the homepage about 10 minutes in advance. A replay of the webcast will be available online at www.mediageneral.com beginning at 3:30 p.m. today. A telephone replay will also be available, beginning at 1:00 p.m. on February 1, 2013, and ending at 11:59 p.m. on February 8, 2013, by dialing 888-286-8010 or 617-801-6888 and using the passcode 57846918.

2012 Financial Statements

Media General will issue its 2012 audited financial statements, including footnotes, on its website www.mediageneral.com, following the close of the stock market today. A link to the statements will be posted prominently on the website’s home page.

About Media General
Media General is a leading provider of news, information and entertainment across 18 network-affiliated broadcast television stations and their associated digital media and mobile platforms. The company’s stations serve consumers and advertisers in strong local markets, primarily in the Southeast. Media General’s network affiliates include eight NBC stations, eight CBS stations, one ABC station and one CW station. Six of the company’s stations operate in the Top 40 markets in the United States. Media General’s stations reach more than one-third of TV households in the Southeast and more than 8 percent of U.S. TV households. Media General entered the television business in 1955 when it launched WFLA-TV in Tampa, Florida, as an NBC affiliate. Today, WFLA is the company’s largest TV station, operating in the 14th largest DMA in the United States.

Contact Media General

Additional information about Media General is available on its website www.mediageneral.com or by contacting Lou Anne J. Nabhan, Vice President-Corporate Communications, at (804) 887-5120 or lnabhan@mediageneral.com.

    Media General, Inc.
    CONSOLIDATED STATEMENTS OF OPERATIONS

                                                                                                                                                                                 Fourteen Weeks                                           Thirteen Weeks                                           Fifty-Three Weeks                                           Fifty-Two Weeks
                                                                                                                                                                                      Ending                                                  Ending                                                     Ending                                                     Ending
                                                                                                                                                                                     ------                                                   ------                                                    ------                                                      ------

                                                                                                                                                                                  December 31,                                             December 25,                                              December 31,                                                December 25,
    (Unaudited, in thousands except per share amounts)                                                                                                                                                    2012                                                    2011                                                         2012                                                      2011
    -------------------------------------------------                                                                                                                                                     ----                                                    ----                                                         ----                                                      ----

    Station revenue (less agency commissions)                                                                                                                                                         $108,658                                                 $77,881                                                     $359,722                                                  $280,611

    Operating costs:
                                         Station production expenses                                                                                                                                    33,637                                                  25,483                                                      125,996                                                   111,586
                                          Station selling, general, and
                                          administrative expenses                                                                                                                                       24,762                                                  19,618                                                       88,235                                                    80,472
                                         Corporate and other expenses                                                                                                                                      101                                                   9,581                                                       31,705                                                    33,651
                                          Depreciation and software
                                          amortization                                                                                                                                                   5,298                                                   5,630                                                       22,422                                                    23,029
                                         Amortization of intangible assets                                                                                                                                 441                                                   1,313                                                        2,637                                                     5,253
                                          Loss (gain) related to fixed assets,
                                          net                                                                                                                                                            2,094                                                     (23)                                                       2,062                                                       213
                                         Total operating costs                                                                                                                                          66,333                                                  61,602                                                      273,057                                                   254,204
                                         ---------------------                                                                                                                                          ------                                                  ------                                                      -------                                                   -------

    Operating income                                                                                                                                                                                    42,325                                                  16,279                                                       86,665                                                    26,407
    ----------------                                                                                                                                                                                    ------                                                  ------                                                       ------                                                    ------

    Other income (expense):
                                         Interest expense                                                                                                                                              (10,155)                                                (14,616)                                                     (51,566)                                                  (64,403)
                                         Interest expense - related party                                                                                                                              (10,851)                                                    ---                                                      (26,468)                                                      ---
                                          Debt modification and extinguishment
                                          costs                                                                                                                                                            ---                                                     ---                                                      (35,415)                                                      ---
                                         Other, net                                                                                                                                                          6                                                     593                                                          458                                                     1,281
                                         Total other expense                                                                                                                                           (21,000)                                                (14,023)                                                    (112,991)                                                  (63,122)
                                         -------------------                                                                                                                                           -------                                                 -------                                                     --------                                                   -------

    Income (loss) from continuing operations before income taxes                                                                                                                                        21,325                                                   2,256                                                      (26,326)                                                  (36,715)

    Income tax expense                                                                                                                                                                                   3,408                                                   6,217                                                       13,631                                                    12,218
    ------------------                                                                                                                                                                                   -----                                                   -----                                                       ------                                                    ------

    Income (loss) from continuing operations                                                                                                                                                            17,917                                                  (3,961)                                                     (39,957)                                                  (48,933)
    Discontinued operations:
                                          Income (loss) from discontinued
                                          operations (net of tax)                                                                                                                                         (682)                                                    657                                                      (11,270)                                                  (25,389)
                                          Loss related to divestiture of
                                          discontinued operations (net of tax)                                                                                                                             401                                                     ---                                                     (142,190)                                                      ---
    Net income (loss)                                                                                                                                                                                  $17,636                                                 $(3,304)                                                   $(193,417)                                                 $(74,322)
    ================                                                                                                                                                                                   =======                                                 =======                                                    =========                                                  ========

    Net income (loss) per common share - basic and diluted (1):
                                          Income (loss) from continuing
                                          operations                                                                                                                                                     $0.63                                                  $(0.18)                                                      $(1.68)                                                   $(2.18)
                                         Discontinued operations                                                                                                                                         (0.01)                                                   0.03                                                        (6.47)                                                    (1.13)
    Net income (loss) per common share - basic and diluted                                                                                                                                               $0.62                                                  $(0.15)                                                      $(8.15)                                                   $(3.31)
    ======================================================                                                                                                                                               =====                                                  ======                                                       ======                                                    ======

    Weighted-average common shares outstanding:
                                         Basic and diluted                                                                                                                                              27,266                                                  22,505                                                       23,744                                                    22,478

                                    (1)   For earnings per share purposes, shares under the Performance Accelerated Restricted Stock (PARS) and Deferred Stock
                                          Units (DSU) plans are considered to participate equally with common shareholders in the Company's earnings.  For the
                                          fourteen weeks ending December 31, 2012, this reduced both the income from continuing operations per share and the net
                                          income per share by $0.03.
    Media General, Inc.
    CONSOLIDATED BALANCE SHEETS

                                                                    December 31,                    December 25,
    (Unaudited, in thousands)                                                          2012                            2011
    ------------------------                                                           ----                            ----

    ASSETS

    Current assets:
                      Cash and cash
                      equivalents                                                 $36,802                         $23,108
                      Accounts
                      receivable -
                      net                                                          58,486                          58,587
                     Other                                                         18,493                          17,424
                      Assets of
                      discontinued
                      operations                                                      670                         331,784
                     Total current assets                                         114,451                         430,903
                                                                                  -------                         -------

    Other assets                                                                   45,462                          28,277

    Property, plant and equipment - net                                           166,105                         176,821

    Goodwill  and other intangibles - net                                         447,403                         450,040
    Total assets                                                                 $773,421                      $1,086,041
    ============                                                                 ========                      ==========

    LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

    Current liabilities:
                      Accounts
                      payable                                                     $11,669                         $16,527
                      Accrued
                      expenses and
                      other
                      liabilities                                                  64,362                          46,472
                      Liabilities
                      of
                      discontinued
                      operations                                                      467                          38,716
                     Total current liabilities                                     76,498                         101,715
                                                                                   ------                         -------

    Long-term debt                                                                295,721                         658,199

    Long-term debt - related party                                                257,466                               -

    Retirement, postretirement, and postemployment
     plans                                                                        242,309                         223,132

    Deferred income taxes                                                          58,865                          45,954

    Other liabilities and deferred credits                                         18,786                          23,088

    Stockholders' equity (deficit)                                               (176,224)                         33,953
    Total liabilities and stockholders' equity
     (deficit)                                                                   $773,421                      $1,086,041
    ==========================================                                   ========                      ==========
    SUPPLEMENTAL INFORMATION

    Media General, Inc.
    Selected Revenue Categories

                                                  Fourteen Weeks                 Thirteen Weeks                                 Fifty-Three Weeks                Fifty-Two Weeks
                                                      Ending                         Ending                                           Ending                          Ending
                                                      ------                         ------                                          ------                           ------
                                                   December  31,                  December 25,                                    December  31,                    December 25,
    (Unaudited, in thousands)                                           2012                          2011  % Change                                     2012                            2011 % Change
    ------------------------                                            ----                          ----  --------                                     ----                            ---- --------
    Local (gross)                                                    $50,656                       $48,112            5.3 %                          $187,346                        $176,652           6.1 %
    National (gross)                                                  25,195                        24,848            1.4 %                            94,504                          88,634           6.6 %
    Political                                                         30,474                         3,607             ---                             63,698                           5,714            ---
    Cable/Satellite (retransmission) fees                              9,944                         5,396           84.3 %                            37,662                          21,367          76.3 %
    Digital (local website revenues)                                   2,721                         2,290           18.8 %                             9,899                           8,361          18.4 %

    Broadcast Cash Flow

                                               Fourteen Weeks Ending         Thirteen Weeks Ending                          Fifty-Three Weeks Ending          Fifty-Two Weeks Ending
                                               ---------------------         ---------------------                          ------------------------          ----------------------
                                                   December  31,                  December 25,                                    December  31,                    December 25,
    (Unaudited, in thousands)                                           2012                          2011                                               2012                            2011
    ------------------------                                            ----                          ----                                               ----                            ----

    Operating income                                                 $42,325                       $16,279                                            $86,665                         $26,407
    Add:
      Corporate and other expenses                                       101                         9,581                                             31,705                          33,651
      Depreciation and software amortization                           5,298                         5,630                                             22,422                          23,029
      Amortization of intangible assets                                  441                         1,313                                              2,637                           5,253
      Loss (gain) related to fixed assets, net                         2,094                           (23)                                             2,062                             213
      Amortization of broadcast film rights                            2,984                         2,566                                             10,738                          16,298
    Less:
      Payments for broadcast film rights                               2,839                         2,521                                             10,493                          15,925
      ----------------------------------                               -----                         -----                                             ------                          ------
    Broadcast cash flow                                              $50,404                       $32,825                                           $145,736                         $88,926
    ===================                                              =======                       =======                                           ========                         =======
    SUPPLEMENTAL INFORMATION

    Media General, Inc.
    EBITDA, After-tax Cash Flow, and Free Cash Flow

                                                                                                                     Fourteen Weeks                                Thirteen Weeks                                Fifty-Three Weeks                                Fifty-Two Weeks
                                                                                                                          Ending                                       Ending                                          Ending                                          Ending
                                                                                                                         ------                                        ------                                         ------                                           ------

                                                                                                                      December 31,                                  December 25,                                   December 31,                                     December 25,
    (Unaudited, in thousands)                                                                                                                 2012                                         2011                                              2012                                           2011
    ------------------------                                                                                                                  ----                                         ----                                              ----                                           ----

    Income (loss) from continuing operations                                                                                               $17,917                                      $(3,961)                                         $(39,957)                                      $(48,933)
    Interest                                                                                                                                21,006                                       14,616                                            78,034                                         64,403
    Debt modification and extinguishment costs                                                                                                   -                                            -                                            35,415                                              -
    Depreciation and software amortization                                                                                                   5,298                                        5,630                                            22,422                                         23,029
    Amortization of intangible assets                                                                                                          441                                        1,313                                             2,637                                          5,253
    Taxes                                                                                                                                    3,408                                        6,217                                            13,631                                         12,218

    EBITDA from continuing operations                                                                                                      $48,070                                      $23,815                                          $112,182                                        $55,970
    =================================                                                                                                      =======                                      =======                                          ========                                        =======

    Income (loss) from continuing operations                                                                                               $17,917                                      $(3,961)                                         $(39,957)                                      $(48,933)
    Taxes *                                                                                                                                  3,408                                        6,217                                            13,631                                         12,218
    Depreciation and software amortization                                                                                                   5,298                                        5,630                                            22,422                                         23,029
    Amortization of intangible assets                                                                                                          441                                        1,313                                             2,637                                          5,253

    After-tax cash flow from continuing operations                                                                                         $27,064                                       $9,199                                           $(1,267)                                       $(8,433)
    ==============================================                                                                                         =======                                       ======                                           =======                                        =======

    After-tax cash flow from continuing operations                                                                                         $27,064                                       $9,199                                           $(1,267)                                       $(8,433)
    Capital expenditures                                                                                                                    10,623                                        3,372                                            17,886                                         19,053

    Free cash flow                                                                                                                         $16,441                                       $5,827                                          $(19,153)                                      $(27,486)
    ==============                                                                                                                         =======                                       ======                                          ========                                       ========
                                                   *  The Company's income taxes are non-cash in nature and have been added back accordingly.
                                                      See 2011 Form 10-K for further discussion.

    Corporate and other expenses

                                                                                                                  Fourteen Weeks Ending                        Thirteen Weeks Ending                         Fifty-Three Weeks Ending                          Fifty-Two Weeks Ending
                                                                                                                  ---------------------                        ---------------------                         ------------------------                          ----------------------

                                                                                                                      December 31,                                  December 25,                                   December 31,                                     December 25,
    (Unaudited, in thousands)                                                                                                                 2012                                         2011                                              2012                                           2011
    ------------------------                                                                                                                  ----                                         ----                                              ----                                           ----
    Corporate (excluding depreciation and amortization)                                                                                     $6,112                                       $7,015                                           $28,211                                        $29,909
    Corporate severance                                                                                                                        (51)                                         176                                             3,394                                            254
    Incentive compensation (including stations)                                                                                              1,374                                        1,776                                             5,723                                          1,611
    Postretirement benefits**                                                                                                               (2,337)                                          44                                            (2,222)                                           173
    Postemployment benefits**                                                                                                               (4,975)                                        (115)                                           (4,828)                                            35
    Other operating expenses                                                                                                                   (22)                                         685                                             1,427                                          1,669
    Corporate and other expenses                                                                                                              $101                                       $9,581                                           $31,705                                        $33,651
                                                                                                                                              ====                                       ======                                           =======                                        =======

                                                  **   In the fourth quarter of 2012, the Company recorded gains related to postretirement and
                                                       postemployment benefits. The postretirement gain resulted from former newspaper employees leaving
                                                       certain of the Company's postretirement plans. The postemployment gain is due to outsourcing
                                                       coverage for substantially all Medicare eligible participants to a third-party.

SOURCE Media General, Inc.


Source: PR Newswire