Total revenues were down 18% in Q1 for Media General, but the company noted that it was also able to reduce operating costs by 14%, including layoffs, unpaid furloughs, ending the 401(k) match and suspending dividends. TV revenues declined 19.1% and publishing revenues 20.1%, while Interactive revenues grew 24.5%.
The latest cost-cutting move announced on Friday is that Media General will freeze its pension plan for employees, effective May 31st. Service accruals ceased at the beginning of 2007 and the plan was closed to new participants at that time, but benefits had been allowed to grow based on future compensation. Future retirement benefits will now be based on final average earnings as of May 31, 2009. The change does not affect the benefits of current Media General retirees.
Including the most recent round of layoffs and the pension freeze, Media General is expecting operating costs to be down about 15% in 2009 compared to 2008.
“Media General has responded swiftly to the revenue declines we have experienced over the past three years, and we have dramatically reshaped and reduced our cost structure. The net result of the cost saving actions implemented during 2008 and this year are expected to reduce our total operating costs for 2009 by 15% from the 2008 level, excluding severance and special charges,” said CEO Marshall Morton.
Coming July 1st is the previously announced structural change to reorganize Media General on a regional basis, rather than having separate management structures for broadcast and print. Morton told analysts that will greatly enhance the company’s “Web First” strategy.
For Q1, total revenues declined 18% to $159.5 million. Operating costs fell 14% to $171.2 million, resulting in an operating loss of $11.7 million – compared to a loss of $4.3 million a year earlier.
Broadcast Division revenues were down 19.1% to $60.4 million, with gross time sales down 24.9%. Local time sales fell 20.4% and national 20.9%. Of course, political was negligible after producing $4.4 million a year earlier. Operating cash flow dropped dramatically to $8 million from $14.1 million a year ago.
Publishing Division revenues declined 20.1% in Q1 to $90.8 million, with advertising sales down 25.2%. Classified was off 38.6%, retail 17.5% and national 12.2%. Publishing cash flow plunged to $4.5 million from $15 million a year ago.
Interactive Media Division revenues were up 24.5% to $9.5 million, mainly due to the addition of DealTaker.com and a 31% gain in local online revenues. Operating cash flow was still a negative $619,000, vs. a negative $2.3 million a year earlier.
Media General expects to close on its $18 million sale of WCWJ-TV (CW) Jacksonville, FL to Nexstar this quarter, completing its divestiture of five non-core stations for $95.7 million. Asked about further sales, Morton said no stations or papers are for sale in the current depressed market, but Media General is looking to sell some non-operating assets, such as real estate and buildings.
Editor’s note: Hopes for that to be the bottom faded in Q1. If you look at the index graphs below you’ll see a second trough in early March which dipped below November’s all-time lows for both indices. So much for beginning the rebuilding process.Review RBR/TVBR’s exclusive analysis on – “Is it the bottom yet for broadcasting stocks?”
