By David B. Wilkerson
CHICAGO (Dow Jones) -- Shares of newspaper publisher and
broadcaster Media General Inc. fell as much as 19% Thursday after
the company reported dismal fourth-quarter results and said it
would suspend its dividend due to an uncertain economic
outlook.
Before the market opened, Richmond, Va.-based Media General
(MEG) said it swung to a fourth-quarter loss on a charge related to
the diminished value of some of its assets and a steep decline in
print advertising revenues, reflecting the industry's painful
transition to an online model.
The dividend suspension on Media General's Class A and Class B
shares will allow the company to "direct additional cash flow to
the reduction of our debt," said Marshall Morton, chief executive,
in a statement.
Last September, the company cut its quarterly dividend by nearly
half, to 12 cents a share.
Media General shares were down 51 cents to $2.33 in afternoon
trading on Thursday.
Media General said it lost $85.5 million, or $3.86 a share, in
the three months ended Dec. 31. The loss includes a non-cash
after-tax impairment charge of $83.1 million, reflecting the
reduced value of Federal Communications Commission licenses issued
to its television stations and network affiliation agreements
maintained by those stations.
Across the U.S., media companies have seen the market values of
their TV and radio stations drop far below their book values as the
perception of media assets has waned over the past year. Such
companies are required to make note of the discrepancy in those
values and account for the difference.
Excluding the impairment charge and other items, Media General
would have earned $8.6 million, or 39 cents a share, in the latest
quarter. In the year-earlier period, excluding severance costs, the
company earned $10.2 million, or 46 cents a share.
Revenue dropped nearly 12% to $207 million, reflecting a 20%
decline in newspaper advertising revenue.
In December, Media General's revenue fell 17.5% from the same
month a year earlier to $56.1 million, spurred by a 37% decline in
classified ad revenue at its newspapers.
Fourth-quarter revenue at the company's newspapers, including
the Tampa Tribune, the Richmond Times-Dispatch, the Winston-Salem
(N.C.) Journal and 21 other dailies, fell 17%.
Classified ad revenue, traditionally the most important source
of income for newspapers, dropped 38%, driven primarily by declines
in the company's three largest markets: Tampa, Richmond and
Winston-Salem. In those three areas, help-wanted ad revenue plunged
60%, real estate by 50%, and automotive by 46%.
In recent years, newspaper classifieds had been curtailed to
some degree by competitors like Craigslist and Monster.com -- but
the economic downturn that became a worldwide financial meltdown in
the second half of 2008 has sent classified revenues crashing
through the floor, as year-over-year decreases of 30% or more have
become commonplace, in markets of varying sizes.
At Media General's 19 television stations in the fourth quarter,
revenue fell 7%, with gross ad sales down 6.4%. As with so many
other local TV outlets across the country, a precipitous fall-off
in automotive ads was the main reason for the decline.
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