Wall Street really, really liked the Q2 report from Media General, with net income way past expectations at 90 cents per share. The company’s stock price was double Tuesday’s closing price of $2.35 at some points in trading on Wednesday. CEO Marshall Morton reported encouraging signs in both newspapers and television. At the closing bell, the shares were up 84.3% at $4.33.
Broadcast revenues declined 21.4% in Q2 to $64.7 million, while gross time sales were off 26.3%. That came from a 24.8% decline in local and a 24.7% drop for national, both blamed primarily on lower automotive and telecommunications advertising. And, of course, political was almost non-existent, falling the $800K. Morton noted, though, that the TV decline was only slightly higher than seen in Q1. April was the worst month, with improvement in May and June, so the trends are moving in the right direction. Broadcast operating cash flow for the quarter was $17.2 million, down from $21.4 million in Q2 2008.
The long-suffering newspaper division, however, increased operating cash flow to $18.4 million from $14.2 million a year ago. Total revenues for the publishing division fell 20.3% to $90.5 million, with ad revenues down 26%, but that was more than offset by a 24.8% reduction in overhead costs, excluding severance and other one-time costs.
“Media General has implemented many difficult but necessary expense reductions that strengthen our ability to weather the deep recession and recognize the reduced revenue streams available in our business. As a result, we are in a stronger position to take advantage of an economic recovery,” said CEO Morton.
Beginning next quarter we’ll have to look at Media General in a whole new way. The quarterly reporting will no longer be by publishing, broadcasting and interactive media (still posting a cash flow loss, by the way), but rather by the regional organization structure that went into effect the beginning of this month. The company said it will provide historical data for the five regions for the first two quarters of this year and all of 2008 for comparison purposes. Four of the five regions have both TV and newspaper properties, while one has only TV. There will also be a sixth segment for the interactive operations not tied to a local media property.
RBR/TVBR observation: Certainly Media General is not out of the woods yet, nor is any other traditional media company. As Morton noted, it’s been tough to make the staff cuts and other changes to improve the company’s financial structure, but they’re clearly paying off.