Media General Sees Plenty Of Upside In ’14

The new Media General is looking to become a bigger Media General.

“We expect to be an acquirer in the industry’s continued consolidation,” George Mahoney, president-CEO of the combined old Media General and Young Broadcasting, told analysts during the company’s fourth-quarter earnings conference call.

Despite uncertainties stemming from the FCC’s plan to review joint sales agreements (JSAs) and shared services agreements (SSA)s, Mahoney sees no serious impediments to M&A.

“There’s a fair bit of activity,” he noted. “It will come to pass that people will understand that JSAs are good for local markets and good for consumers. I don’t see anything happening at the FCC that we should be particularly worried about.”

Year-to-year comparison of the company’s financial results was complicated by last year’s merger with Young. Thus, the fourth-quarter financial results Media General reported today consolidate Young’s historical financial statements. That’s because while Media General is the surviving entity, Young is considered the acquirer for accounting purposes.

After a solid fourth quarter, the new Media General is projecting a strong start for 2014 and a strong year overall even though it faces increased costs in part as a result of the merger.

“What we’re seeing is a real nice start based on the Olympics,” Mahoney said. “March Madness, the next sports event on the schedule, is coming in very well. We’re aided by our presence in strong political markets.”

He acknowledged that while retransmission revenues should rise more than 40% to $131.6 million, reverse compensation costs are increasing at the same time. Reverse comp is projected to climb roughly 47% to $50 million in 2014.

“I think all of those things even out,” Mahoney said. “Retransmission revenue has been growing at very healthy pace. Reverse retransmission compensation [reverse comp] we think will even out at a 50-50 kind of number. The CBS contracts for legacy Media General stations have not kicked in. That will change as we go through this year and into 2015.”

Key ad categories including auto and health care, both increased double digits year-to-year in 2013’s fourth-quarter, Mahoney said, and so far 2014 is off to a strong start.

“We don’t see any clouds on the horizon,” he said, observing that along with auto, home improvement and other categories, housing is showing solid improvement.

“Add political on top of that and it should be a blockbuster year for Media General,” Mahoney said.