Media General, Inc. (MEG)

MEG 
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Media General, Inc. (MEG)

Q3 2012 Results Earnings Call

October 17, 2012 11:00 AM ET

Executives

Lou Anne Nabhan - Vice President, Investor Relations

Marshall Morton - President and CEO

George Mahoney - Vice President and COO

Jim Woodward - Vice President, Finance and CFO

Analysts

Barry Lucas - Gabelli & Company

Edward Atorino - Benchmark

David Cohen - Midwood Capital

Presentation

Operator

Good day, ladies and gentlemen. And welcome to the Third Quarter 2012 Media General Earnings Conference Call. My name is Stephanie, and I’ll be your coordinator today. At this time, all participants are in listen-only mode. Following the prepared remarks there will be a question-and-answer session. (Operator Instructions)

I would now like to turn the presentation over to Ms. Lou Anne Nabhan, Vice President, Investor Relations. Please proceed.

Lou Anne Nabhan

Thank you, Stephanie, and good morning, everyone. Welcome to our conference call and webcast. Earlier today, we announced our third quarter 2012 results. The press release is on our web site and a transcript of today’s comments will be posted immediately following the call and a little later today a replay will be available.

Our presentation today does contain forward-looking statements which are subject to various risks and uncertainties. They should be understood in the context of the company's publicly available reports filed with the SEC, including the section on risk factors. Media General's future performance could differ materially from its current expectations.

Our speakers today are Marshall Morton, President and Chief Executive Officer; George Mahoney, Vice President and Chief Operating Officer; and Jim Woodward, Vice President, Finance and Chief Financial Officer.

Let me now turn the presentation over to Marshall.

Marshall Morton

Thank you, Lou Anne, and good morning, everyone. The third quarter was in many ways extraordinary for Media General. On June 25, the first day of the third quarter, we completed the sale of the majority of our newspapers to Berkshire Hathaway.

We used the net proceeds from the sale immediately to reduce our debt outstanding from $652 million at the end of the second quarter to the $551 million you now see at the end of the third quarter.

From an operating perspective, Media General’s television stations had an outstanding third quarter. Political advertising in this very competitive election year is at an all-time high. We’re benefiting from operating top-ranked stations, where political advertisers prefer to place their ads and from our presence in the key battleground states of Ohio, Florida, Virginia and North Carolina. Political revenues in the third quarter were nearly $20 million.

The Summer Olympics in London was the most watched television event in U.S. history and that translated into record Olympics revenues for our 8 NBC stations, $15.5 million. On top of fully leveraging these event driven revenue opportunities, our core business was strong in the third quarter. George will elaborate on that in a moment.

Broadcast cash flow more than doubled to $41 million this year from $20 -- from $19 million last year. Station revenues increased by $28 million or 42%. Broadcast cash flow margin in the current quarter was 43.5%, compared with 29% last year.

Weeks since the third quarter closed have also been remarkable. Last week, we completed the sale of our only remaining newspaper group, The Tampa Tribune and its associated print and digital products. With that sale, the transformation of Media General’s business model to one focused entirely on broadcast television and digital media is complete.

Media General is strongly positioned for future success, based on operating 18 network-affiliated local television stations and growing in important markets mostly in the Southeast. Most of our stations are number one or number two in their market.

In addition, our financial position has been greatly strengthened this year as a result of our new financing arrangement with Berkshire Hathaway that was completed in May. Berkshire Hathaway provided us with a $400 million term loan that matures in 2020 and a $45 million revolver. This arrangement provides us with significant operating and financial flexibility till the end of this decade.

In August, I announced that I’m going to retire at the end of this year. I’ve worked closely with our Board for the past few years and plan for the best management succession for Media General, so I was delighted that the Board elected George Mahoney to succeed me.

George and I’ve worked together closely since he joined Media General in 1993 and he has been a part of the company’s every success. I’m confident that George has the experience, talent and energy to lead Media General to new successes.

He understands the company well. He doesn’t get bogged down in the past, he learns from it and he embraces the future as an opportunity. We’ve done that for a long time at Media General. I think George will continue that and actually ramp it up.

George will be supported well by our Chief Financial Officer, Jim Woodward, whom many of you know and by all of our corporate officers.

Having reached my 67th birthday earlier this month, I’m looking forward to retirement. Overall, Media General has a bright future that is brightened I believe by the tighter focus we have today, by the strong cash flow and by the plans we have in place to enhance cash flow through better margins.

We’re able to take advantage of a marketplace that’s thirsty for now for information, we’ve got the information. Future of the media business is always one that has shift and change in it. The management that will be in place going forward is a management that understands the need for shift and change.

Read the rest of this transcript for free on seekingalpha.com