Media General 1Q Core Rev Up 4.6%

Media General Inc.’s station net revenue in the first quarter grew 16% to $144 million compared to the same quarter last year.

Media General’s President-CEO George L. Mahoney said: “Today we report the first full quarter for the combined Media General and Young Broadcasting, which merged on Nov. 12, 2013. It was an outstanding quarter.”

Comparing first-quarter 2014 results to the first quarter of 2013 as adjusted for the combined company, Mahoney said: “Our net operating revenue increased 16% from last year and reflects growth in all of our revenue categories. Core local and national gross time sales increased 4.6%.  Automotive and telecommunications advertising increased 20% and 50%, respectively, compared to last year.

“Our stations generated significant revenues during the Sochi Winter Olympics and the NCAA March Madness basketball tournament. Political revenues of $4.4 million were more than five times last year’s level, as we benefited especially from the race in Florida’s 13th congressional district, near Tampa.

“Also, retransmission consent revenues grew nearly 50%, and digital media revenues rose 33%,” Mahoney said. “Broadcast cash flow increased 38%, primarily as a result of our strong revenue growth, and operating income increased 87%, excluding merger-related expenses in the current quarter. Adjusted EBITDA nearly doubled to $39.3 million compared with $23.2 million last year,” he added. 

“The new credit facilities that became effective on our merger with Young Broadcasting have enabled us to lower annualized combined cash interest costs from $75 million to $39 million. Interest expense in the first quarter was just under $10 million, compared with a combined $21.4 million last year. This lower interest expense, combined with revenue growth in the first quarter, enabled us to generate strong free cash flow and repay $36 million of debt.  Our net leverage at the end of the first quarter was 4.23x. 

“On the operational front,” Mahoney said, “we have embarked on a new initiative to identify and capture additional cost savings by adopting broadcast industry best practices. Today, we are announcing another $10 million of annualized cost synergies to be captured by the end of the year. This is in addition to the initial operating and financial synergies we announced at the time of the merger with Young.  We will continue to seek out efficiencies and expect to be in a position to announce more savings later this year.

“On March 21, 2014, we also announced plans to merge with LIN Media in a transaction that will more than double the size of Media General and create the second-largest pure-play local television company in the United States. Scale matters in this industry, and our rapid growth creates the opportunity to further increase shareholder value,” said Mahoney.

The merger with LIN is expected to be immediately accretive on a free cash flow per share basis, Media General said, and should be completed in early 2015, subject to regulatory approvals, the approval of Media General and LIN Media shareholders and other customary closing conditions.