The increase to $160.2 million comes despite a decline in a number of national ad categories including auto. The boost was driven by political, retrans and digital sales.
Media General Inc.’s net operating revenue in the third quarter grew 21% to $160.2 million compared to $132.6 million in the third quarter of 2013.
Media General’s President-CEO George L. Mahoney said: “Our strong year-over-year growth in the third quarter of all key financial metrics further demonstrates the value of our merger with Young Broadcasting last November. Comparing the results of the combined company, net operating revenue increased 21%. This growth reflected higher political, retransmission, digital and local advertising revenues along with our purchase of WHTM in Harrisburg on Sept. 1.”
Local gross time sales increased 2% to $76.4 million compared to $74.9 million in the third quarter of 2013. Local automotive advertising was nominally below the third quarter of 2013. Major local advertising categories that increased included healthcare, home improvement and telecommunications, while categories showing declines included restaurant and grocery.
National gross time sales decreased 10% to $34.3 million compared to $38.1 million in the third quarter of 2013. National automotive advertising declined double digits compared to the third quarter of 2013. Other major national advertising categories that decreased included telecommunications, legal and entertainment, while categories showing increases included financial, healthcare and grocery.
Core advertising (local and national gross time sales combined) declined 2% year over year.
Political gross time sales were $21.4 million compared to $2.5 million in the third quarter of 2013. Media General stations benefited in particular from U.S. Senate races in North Carolina, Iowa, Louisiana, Georgia, and South Dakota and from gubernatorial races in Florida, Rhode Island and Wisconsin.
Retransmission revenues increased 51% to $35.3 million from $23.4 million in the third quarter of 2013.
Digital gross time sales increased 35% to nearly $7 million compared to $5.2 million in the third quarter of 2013.
Total operating costs of $125 million compared to $115.5 million in the third quarter of 2013. Total operating costs increased 4%, excluding the higher depreciation and amortization this year due to purchase accounting for the Young merger, and merger-related expense and corporate severance in both years along with our purchase of WHTM on September 1.
Station operating expenses were $54.7 million compared to $49.9 million in the third quarter of 2013. The increase was primarily attributable to higher programming fees paid to the networks and one month of station operating expense for WHTM.
Mahoney added: “Our $21.4 million of political revenue in the third quarter is attributable to our presence in many key markets where U.S. Senate and state gubernatorial races were very competitive. We additionally were pleased to see local advertising revenues grow 2% in the third quarter including WHTM, while, as expected, national advertising revenues decreased from last year. Weak automotive advertising was the primary driver of an approximate 10% decrease in national revenues.”
“Our net revenue growth, combined with expense management, drove increases in broadcast cash flow, which was up 53%; in adjusted EBITDA, which increased 79%; and in free cash flow, which was $30 million this year compared to a $3.4 million deficit in last year’s third quarter.”