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Media General Inc. (MEG)
Q2 2009 Earnings Call
July 22, 2009 11:00 am ET
Marshall Morton – President & Chief Executive Officer
John Schauss – Vice President of Finance & Chief Financial Officer
Reid Ashe – Executive Vice President & Chief Operating Officer
Lou Anne Nabhan – Vice President of Corporate Communications
Ed Atorino – Benchmark
Barry Lucas – Gabellie & Company
Sharon Hill - AIM Group
Dennis Leibowitz – Act II Partners
Previous Statements by MEG
» Media General Inc. Q4 2008 Earnings Call Transcript
» Media General, Inc. Q3 2008 Earnings Call Transcript
» Media General, Inc. Q2 2008 Earnings Call Transcript
Lou Anne Nabhan
Earlier today we announced second quarter 2009 results and the press release has been posted on our website. The comments from today's conference call will be posted immediately following the call and a replay will appear later in the day.
Our presentation today does contain forward-looking statements, which are subject to various risks and uncertainties. It should be understood in the context of the company's publicly available reports filed with the SEC. Media General's future performance could differ materially from its current expectations.
Our speakers today are Marshall Morton President and Chief Executive Officer, Reid Ashe Executive Vice President and Chief Operating Officer, and John Schauss Vice President in Finance and Chief Financial Officer.
Let me first turn the presentation over to Marshall.
For the second quarter of 2009, net income of $21 million, $0.90 per share, compared to an impairment light and loss of $532 million a year ago. The current period included an income tax benefit of $11 million on continuing operations, including $3.6 million from a favorable determination concerning a state tax issue, and $7.5 million of tax benefit attributable to our first half results.
Also in the 2009 second quarter, we had a $7.1 million gain after tax on the sale of our CW Station in Jacksonville. Excluding severance expense from both quarters and last year's impairment charge, the income from continuing operations before taxes in 2009 second quarter was $3.8 million compared with $2.6 million in the prior year, a 23% decrease in total operating expenses year-over-year, excluding impairment, was the major contributor to the improved operating results.
Significantly lower expenses reflected actions we've taken on multiple fronts to align our cost structure with current revenue opportunities. These include reductions in force across the company, a furlough program in 2009, suspension of the match on our 401k plan, and the final step in appraising our pension plan as of May 31, 2009. Total revenues in the second quarter decreased 20% from last year.
Looking at sequential comparisons to this year's first quarter, the revenue decline in publishing was about the same. The decline in broadcast was a little higher, which mostly reflected the fact that we did not have the benefit of the Super Bowl advertising that we had had in the first quarter.
Interactive media revenues declined 5.8% compared to a 24.5% increase in the first quarter, mostly attributable to the acquisition of DealTaker.com on the first day of the second quarter last year. Our classified advertising revenue declines abated some point in the second quarter compared to the first, and the improvement was most noted in the automotive category.
The retail category declined somewhat less in the second quarter than the first. Broadcast live sales were quite weak in April, but improved in May and June. Overall, from a revenues perspective, I'm pleased to report that we ended the quarter a little stronger than we began it.
Looking at our expense performance in more detail, at the beginning of 2007 just before we began the staff reductions related to this recession, we had 6,900 employees today we have 5,000, a 28% reduction. This has been a painful but necessary step to stay strong as we continue to weather the recession, and when the economy improves we will be well positioned for the rebound. We continue to expect the cost-saving actions implemented during 2008 and 2009 will reduce our total operating cost for 2009 by 15% compared with 2008, excluding severance and special charges.
The benefit of our cost reductions is most evident in our publishing segment results in the second quarter. Publishing profits increased from $6.8 million in last year's second quarter to $12 million this year, owing to a 27% decrease in operating expenses. Moderating the segment profit increase was a 26% drop in advertising revenues.
Broadcast segment profit decreased 24%. Political revenues in 2009 were $2 million dollars lower this year, and national and local transactional sales decreased as well, driven primarily by the reduced spending in the automotive and telecommunications categories. Broadcast operating expenses decreased 21% from last year.
The interactive media segment had a loss of $1.1 million compared to the prior year loss of $656,000. This deterioration mainly came from lower online classified revenues. Partially mitigating the revenue decline was lower expense across all websites and increased profits at DealTaker.com.
Now, I'll ask Reid to provide more details on the performance of our three business segments in the second quarter.
Starting with the publishing segment, classified advertising was down 35%, retail 21%, and national 19%. Circulation revenue increased to 12%, driven by higher single-copy and home delivery prices in most markets, and lower subscriber discounts. Total publishing expenses, excluding severance, decreased to 25% from last year. The expense savings came in all departments, but were most notable in salaries, benefits and newsprint.