2012 could be important year for Media General


What will Media General do in the coming year to get its financial house in order? In his most recent quarterly conference call CEO Marshall Morton indicated that he wouldn’t rule out selling some TV stations, although he was not inclined to actually put any on the sale block.

But Media General does need to do something to boost its stock price and reassure investors after the disappointing results it reported for Q3.

In their latest roundup of the high-yield media bonds in their coverage universe Bishop Cheen and Davis Hebert at Wells Fargo Securities gave their view of the Media General financials and outlook.

“Media General reported Q3 revenue of $144.7 million, down 11.3% year over year and missing our $152.2 million expectation, while EBITDA declined 24.0% to $18.9 million, also behind our $20.6 million expectation. Publishing revenue actually came in ahead of our expectations, falling 9.1% to $70.6 million (we were looking for a 10% decline), while broadcasting sales were behind our expectations, down 13.2% to $65.1 million, reflecting a 2.6% decline in core ad sales and the loss of political advertising. Local ad sales were down slightly by 0.6%, while national advertising was off by 6.3%. Last, digital revenue was also behind our estimates, falling 14.3% to $9.0 million,” the analysts wrote of the bad news in Q3.”

There was a bit of good news, though, in the Media General numbers. “Costs (excluding depreciation) were lower by 9%, and the company expects expenses to be lower again in Q4,” Cheen and Hebert noted. “Looking ahead to Q4, Media General says its Q4 nonpolitical broadcast sales are pacing up 9%–11% and pointed toward the Summer Olympics and elections as catalysts for 2012.”

How is Media General handling its debt load? “Leverage is approximately 7.0x based on our calculation, considering $665 million in total debt and $95.2 million in LTM EBITDA, and 6.9x, net of $10.1 million in cash,” the analysts told their bond investor clients.

RBR-TVBR observation: At least TV is looking up with the 2012 elections and Media General having quite a few NBC stations which will be carrying the Summer Olympics. But it still has a lot of daily newspapers and the US newspaper industry is on track to complete its 22nd consecutive quarter of declining revenues at the end of this week – with no end to the string in sight.

Media General also has huge exposure to the Florida economy, where the formerly red-hot housing industry is struggling to get back in gear. The company’s huge multi-media operation in Tampa just went through a new round of layoffs in an attempt to right-size the newspaper side.