Newspapers dragging as Media General enjoys TV growth


The final quarter of 2010 saw broadcast revenues grow nearly 29% at Media General, but the companywide growth was only 7.2%, with the double-digit TV growth being countered by an 8.4% decline at the company’s newspapers.

TV revenues were up 28.7% to $92.1 million. Political, obviously, played a big role in that gain, jumping to $23.9 million from only $3.7 million a year earlier. Local rose 5.8% to $6 million and national gained 0.3% to $24.6 million. Retransmission consent fees also contributed to the growth, rising 23.5% to $5.1 million.

Meanwhile, newspaper revenues fell 8.4% to 86.5 million. Classified took the big hit, falling 15.1% to $16.1 million. National dropped 8.2% to $5.7 million, local 7.5% to $43.4 million and circulation 7.2% to $16.4 million. The only up category was printing/distribution, gaining 7.7% to $3.8 million.

Digital media revenues were up only slightly in the quarter, gaining 1.3% to $11.2 million. Local led the way, up 29.4% to $4.6 million. National rose 9.7% to $970K and classified 9.3% to $2.2 million, but advertising services fell 21.3% to $3.6 million.
Total company revenues for Q4 gained 7.2% to $189.9 million. Operating income increased 12% to $36.4 million. Net income was $9 million, or 39 cents per share, down from $27.4 million, or $1.18 per share a year earlier – but that change was due almost entirely to non-cash tax expense and higher interest expense.
“In the fourth quarter of 2010, our broadcast-intensive markets – Mid-South and Ohio/Rhode Island – generated significantly higher profits compared with the prior year. Our television stations, most of which are rated number one or two in their markets, were in an excellent position again this year to attract Political advertising dollars. Operating results benefited from nearly $24 million in fourth quarter Political revenues, compared with $3.7 million last year. Our stations benefited from hotly contested races in several markets and from a surge in national party and issue spending in the final weeks and days leading up to November 2,” said Media General CEO Marshall Morton in a statement ahead of his quarterly conference call with Wall Street analysts.

“We experienced strengthening in our overall broadcast advertising as well. In the fourth quarter, Local time sales grew nearly 6% and National time sales increased nominally, which was a good performance given some displacement of transactional advertising by Political issue and candidate spending. Automotive advertising, in particular, was strong. In addition, we were pleased to see the benefits of our aggressive digital sales initiatives, which drove a 19% increase in revenues at our newspaper and broadcast media websites,” said Morton.

Look for Q1 to be a down revenue quarter, the company advised: “For the first quarter of 2011, Media General expects total revenues in the range of level to 3% down compared with last year. Broadcast revenues are expected to be in a range from even with last year to down 3% from last year, due mostly to the absence of Political, Olympics and Super Bowl advertising revenues partially offset by strengthening of the transactional business. Publishing revenues are expected to decrease 2-6%, due to continued weakness in Local and Classified revenues. Digital Media revenues are expected to increase 6-9% and the company’s local media websites are expected to increase 18-21%. Total operating costs are expected to increase 5-7%, which mostly reflects 2 percent of merit raises and partial restoration of the company’s 401(k) match.”

RBR-TVBR observation: If trends continue over the next couple of years, broadcasting will pass up publishing as the largest revenue segment at Media General. Full year 2010 revenues were down 8.2% to $328.4 million for the newspapers, while TV rose 18.5% to $306.8 million. The next political year, 2012, could well see broadcasting surpass publishing in revenues – as it already does in profitability.