Media General rules out split


Don’t look for Media General to split its newspapers and TV operations into separate companies. The company declared that it still sees benefits from having both broadcast and print operations and is hoping the FCC will dump the crossownership rule and let it own more local newspaper-TV combinations.
Noting the company’s nearly 160 years of successfully operating local media businesses, CEO Marshall Morton made it clear to analysts that he doesn’t intend to have the company broken apart on his watch. "Today our focus is on being the local multimedia leader in strong growth markets, with the principle geographic focus of the Southeast. We provide excellent news, information and entertainment over a variety of platforms in all the markets we serve. We’re adapting and evolving in the digital world, leveraging the strength of our traditional platforms for the benefit of our online operations, as well as continually enhancing our newspapers and television broadcasts to serve changing customer needs. We also provide a multitude of targeted products, in print, on the air and online, in all of our markets. We strongly believe in the long-term viability of local media franchises and our portfolio of high quality assets positions us to build long-term value for our shareholders. Strategically, our integrated presence in print, broadcast and on the web will bring us better content, deliver a higher quality product and draw more audience and improve our market positions better than we otherwise could. It enhances our value to advertisers by enabling them to reach their target customers whenever and however they like, better than they otherwise could," Morton insisted.

On the financial side, Morton said breaking Media General into two separate, smaller companies would likely result in lower credit ratings for each, and thus a higher cost of capital. He said those two smaller companies would likely be less attractive to institutional investors and Wall Street analysts than the existing company. "So, we believe that a separation of Media General into a newspaper company and a television company does not make sense for Media General strategically, operationally or financially," the CEO concluded.

TVBR observation: Throughout the Media General conference call, we repeatedly heard Tampa mentioned. When real estate was booming, Media General raked in the bucks from its grandfathered newspaper-TV combination in the market. That operation has been held up repeatedly as an example of the advantages of crossownership to enhance local news coverage. But a single company can’t buck an overriding economic trend. The Tampa market is hard hit by the housing downturn, so Media General has had to cut staff, particularly at the Tampa Tribune. Perhaps the cuts would have been even deeper if it weren’t for the benefits of crossownership. Now, though, the company just has to hold on and operate WFLA-TV/Tampa Tribune as efficiently as it can until the local market recovers.