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Media General Inc. (MEG)
Q4 2009 Earnings Call
January 28, 2010 02:00 p.m. ET
Lou Anne Nabhan - VP
Marshall Morton - President and CEO
Reid Ashe - EVP and COO
John Schauss - VP- Finance and CFO
Ed Atorino - Benchmark
Barry Lucas - Gabelli & Company
Ken Silver - RBS
Previous Statements by MEG
» Media General Inc. Q2 2009 Earnings Call Transcript
» Media General Inc. Q4 2008 Earnings Call Transcript
» Media General, Inc. Q3 2008 Earnings Call Transcript
I would like to now hand the call over to Lou Anne Nabhan, Vice President. Please proceed
Lou Anne Nabhan
Thank you Katie and good afternoon everyone. Welcome to our conference call and Webcast. Earlier today Media General, announced fourth quarter 2009 results. And that press release has been posted on our website. The comments on today's conference call will be posted immediately following the call.
As always today's presentation contains forward looking statements that are subject to various risks and uncertainties and should be understood in the context of the Media General publicly available reports filed with the SEC.
Our future expectations could differ materially from what we give you today. 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-Finance and Chief Financial Officer.
Let me turn the presentation over to Marshall.
Thank you, Lou Anne, and good afternoon everyone. The fourth quarter of 2009 marked a welcome turning point in our business performance that was both gratifying and encouraging, and reflected the early positive returns of our reorganized, market based, corporate focus.
Income from continuing operations before income taxes increased 40%, to $22.9 million, compared with $16.4 million and last year's fourth quarter, adjusted for severance and impairment charges.
Our profit improvement reflected the benefit of the significant expense reductions we have implemented during the recession. Total operating expenses in the fourth quarter of 2009 were 22% lower than the prior year, again excluding impairment.
In addition, the fourth quarter's 14% revenue decline showed some improvement from the 18% decline we had experienced in this year's third quarter. In our third quarter conference call, we reported that we had entered the fourth quarter seeing signs of strengthening and ad spending, especially on the broadcast side.
I’m pleased to report today that business continued to improve as the quarter unfolded. In the month of December, total revenues were essentially even with the equivalent month of 2008, and four of our six market segments generated higher revenues Virginia/Tennessee, Mid-South, Ohio/Rhode Island and Advertising Services.
In Florida, December revenues were down only 5.3%, a sign of the severe depression of their economy has abated somewhat.
Looking at the performance of our major revenue categories in the fourth quarter, political revenue decreased 84% from $23.4 million in last year's fourth quarter to $3.7 million this year. Our 2009 political revenues were higher than one would normally expect in an off-election year. The result of the Virginia gubernatorial election, the election for Senator Kennedy's open Senate seat in Massachusetts which benefited our Providence TV station, a special mayoral election in Birmingham, Alabama, and issues advertising related to health care reform.
Local revenues in the fourth quarter decreased 8.5% and reflected a robust double-digit increase in digital media sales, breakeven results in broadcast sales, and lower print advertising sales.
National revenue decreased just under 5% in the quarter, reflecting a double-digit increase in digital media sales, a low single-digit increase in broadcast division television sales, and lower print sales.
Classified revenue decreased 18.5% print and online. Subscriptions, content and circulation revenues increased nearly 6% and reflected higher cable retransmission fees and higher circulation revenues, attributable to rate increases at all newspapers.
Total Publishing revenues in the fourth quarter, decreased 14% from the prior year, a sequential improvement from the 18.5% decline in the third quarter of '09. In addition to the category results I've just discussed, printing and distribution revenues from outside accounts are becoming a larger part of our total print revenue mix.
In the fourth quarter they grew 23%. We added accounts totaling almost $6 million in new business in '09 and look forward to further growth from these opportunities in 2010.
From a circulation perspective, in addition to our rate increases, we implemented new subscription sales pressure right after Labor Day. By early November, we were logging more starts than stops, and overall stops had decreased 21% from the previous year.
Total Broadcast revenues in the fourth quarter declined 17%, which was entirely a reflection of the lower political revenues this year. Digital Media revenues increased 11% in the fourth quarter, a much stronger performance than the 2% increase generated in the third quarter of '09. Major benefit of our new market structure is that all of our properties in a given market now report to a single leader.
Before, are the different platforms reported through a separate chain of command. Today, all of the platforms in a market share responsibility and accountability for increasing market share by responding quickly to changing customer needs. Our new structure allows our market leaders to fully leverage all of the resources within the market without bias to platform.
All of our sellers are now selling all of our products and services to all of our customers. This is a huge change and the benefit is evident in the Digital Media revenue growth we generated in the fourth quarter, when new online and mobile revenue initiatives that were put into place after we changed our operating approach came to fruition.