As it battles slumping ad sales, Media General says it has gotten some leverage relief from new terms it has reached with its lenders. The TV/newspaper company’s beaten down shares moved up yesterday. CEO Marshall Morton told the UBS 36th Annual Global Media and Communications Conference in New York that operating costs have been cut 7% this year and the company plans to cut costs another 2% in 2009.The 2007-2008 cost-cutting included a 17% reduction in headcount to an expected 5,750 employees as of the end of this month.
Morton told the gathering that the company has been aggressive in cutting costs, but has not cut back on local TV news programming. The company did complete the sale of four of the five TV stations it put on the market, and he said the 5th sale is progressing. Media General executives will not be getting any profit sharing or incentive compensation for 2008.
CFO John Schauss said free cash for 2008 is expected to be $165-170 million. That will have enabled the company to reduce its debt from $898 million at the end of 2007 to approximately $730 million at the end of this year.
The CFO spoke of that leverage relief deal. “We have agreed to terms with 100% of our lender banks to debt agreement modifications that will provide us with the flexibility we desire, and at a cost that will be manageable. We will announce the terms of the modified agreement when the documentation is finalized next week.