RICHMOND, Va. – Newspaper and broadcasting giant Media General Inc., parent of WJAR-TV (NBC 10), said today it swung to a profit in the second quarter in the face of continued double-digit advertising declines thanks to heavy cost cutting.
Richmond, Va.-based Media General (NYSE: MEG) posted a net profit of $20.6 million, or 90 cents per share, compared with a year-ago net loss of $532.2 million, or $24.12 per share, a period when the company’s results were hurt by a $532.1 million writedown.
Seifert Systems Invests in Energy Efficiency to Strengthen Operations
For manufacturers, energy is more than just another operating expense. It plays a critical role…
Learn More
The earnings provided a big boost to Media General stock, which had more than doubled from $2.23 to $4.58 at 1:06 p.m. in trading on the New York Stock Exchange, according to Bloomberg News The stock touched $5.35 at one point.
Income from continuing operations excluding severance costs rose to $3.8 million from $2.6 million a year ago. The company was boosted by a $7.1 million sale of a Florida television station and about $11 million in tax gains.
The positive earnings also came despite another double-digit sales decline. Media General’s quarterly revenue sank 20 percent to $163.8 million from $204.9 million a year earlier. The company said it cut operating costs by 23 percent year-over-year through a mix of layoffs, furloughs and benefit reductions.
“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,” Marshall N. Morton, the company’s president and CEO, said in a statement. “As a result, we are in a stronger position to take advantage of an economic recovery.”
Revenue from Media General’s broadcast division, which includes WJAR, dropped 21.4 percent year-over-year to $17.7 million and local sales of advertising time fell 24.8 percent to $13.6 million. “Time sales were quite weak in April but strengthened somewhat in May and June,” Morton said. The main driver of the advertising slump was reduced ad buying by car and telecommunications companies.
The broadcast division’s expenses in the second quarter were 19.6 percent lower than a year earlier, and spending on salaries was down by 22.9 percent.
WJAR is the dominant television station in the Providence market, capturing nearly 43 percent of the region’s total ad revenue last year, according to BIA Financial Network Inc., a Chantilly, Va.-based market research firm, which estimates WJAR’s revenue fell 11.3 percent to $28.48 million in 2008. The station has been forced to cut jobs to deal with the current downturn.
Media General’s digital media division posted an operating loss of $1.1 million, more than the loss of $656,000 it posted a year earlier, as Internet classified advertising fell. But revenue from locally-based ads on its Web sites grew 18 percent.
Media General Inc. (NYSE: MEG) is the owner of 19 network TV television stations, including WJAR-TV (NBC 10), 22 daily and more than 250 weekly newspapers and other publications, mostly in the Southeast. Additional information is available at MediaGeneral.com.
