Media General’s Q1 revenue increased 16% to $144 million, compared to combined net operating revenue of $124 million in the first quarter of 2013. Broadcast cash flow increased 38% to $45.9 million, compared to combined BCF of $33.3 million in the first quarter of 2013; BCF margin in the current quarter was 32%, compared to 27% in the prior year.
The company saw an additional $10 million of operating synergies identified as a result of the company’s merger and integration with Young Broadcasting. The new credit facilities that became effective on our merger with Young enabled Media General to lower annualized combined cash interest costs from $75 million to $39 million. Interest expense in the first quarter was just under $10 million, compared with a combined $21.4 million last year. This lower interest expense, combined with revenue growth in Q1, enabled strong free cash flow and a repayment of $36 million of debt. Their net leverage at the end of the first quarter was 4.23X.
On 3/21, Media General and LIN Media announced plans to merge and create the second-largest pure-play local broadcast television company in the US; subject to various approvals, this merger is expected to close in early 2015.
Said Media General CEO George Mahoney: “Today we report the first full quarter for the combined Media General and Young Broadcasting, which merged on November 12, 2013. It was an outstanding quarter. Our net operating revenue increased 16% from last year and reflects growth in all of our revenue categories. Core local and national gross time sales increased 4.6%. Automotive and telecommunications advertising increased 20% and 50%, respectively, compared to last year. Our stations generated significant revenues during the Sochi Winter Olympics and the NCAA March Madness basketball tournament. Political revenues of $4.4 million were more than five times last year’s level, as we benefited especially from the race in Florida’s 13th congressional district, near Tampa. Also, retransmission consent revenues grew nearly 50%, and digital media revenues rose 33%.”
Per GAAP, in Q1, net income attributable to Media General was $5.4 million, or 6 cents per diluted share, based on weighted-average diluted common shares outstanding of 88.7 million. Net income attributable to Media General in the first quarter of 2013 was $3.1 million, or 5 cents per diluted share, based on weighted-average diluted common shares outstanding of 60.2 million. The current quarter results included merger-related expenses of $4.8 million. In accordance with GAAP, the presentation of “net income (loss) attributable to Media General” does not include the results of WXXA-TV or WLAJ-TV.
Also per GAAP, net operating revenue in the first quarter of 2014 was $143.9 million, compared with $50 million in the prior year. Total operating costs in the first quarter of 2014 were $124.7 million, compared with $43 million in the prior year. Operating income in the first quarter of 2014 was $19.3 million, compared with $7.1 million in the prior year.
Total debt outstanding decreased to $881.4 million on March 31, 2014, compared with $917 million on December 31, 2013, reflecting consolidated debt repayments of $35.6 million.
Non-GAAP Results for First-Quarter 2013 (as adjusted combined company) All 2013 results in the discussion below are as adjusted for the combined company.
Net operating revenue of $124 million increased 16% to $144 million in the first quarter of 2014. This increase reflected growth in all revenue categories, including local and national gross time sales, political time sales, retransmission consent and digital media.
Local gross time sales of $72.1 million increased 5.9% to $76.4 million in the first quarter of 2014. National gross time sales of $33.5 million increased 1.8% to $34.1 million in the first quarter of 2014. Core growth included significant increases in several advertising categories, such as 20% in automotive and 50% in telecommunications, as well as healthy increases in healthcare and entertainment. Advertising was very strong during the Sochi Winter Olympics on the company’s nine NBC stations and during the NCAA March Madness basketball tournament on the company’s 12 CBS stations.
Political gross time sales of $879,000 increased to $4.4 million in the first quarter of 2014. Retransmission revenues of $22.8 million increased 49% to $34 million in Q1. Digital gross time sales of $4.1 million increased 33% to $5.4 million in Q1.