Media General’s Morton Set To Leave On Top

Media General President-CEO Marshall Morton had plenty of good news to report to Wall Street in his last quarterly conference call before retirement the end of this year. The company has completed its exit from the newspaper business; posted big revenue gains in the third quarter; and is on track to grow revenues 25% to 28% in the fourth quarter.

As a pure play television company, Media General is calculating that growth against a lower number than the $168 million in revenues it reported for 4Q of 2011, which included its former newspaper properties. Using pro forma financial data that Media General filed with the SEC in June, TVNewsCheck calculated the comparable 4Q revenue number for 2011 to be $81.6 million. So, the current guidance would bring the current quarter in at $102 million to $104.5 million.

With election ad spending still heavy, Morton told analysts that Media General’s stations are focused on managing inventory as strategically as possible through Election Day. “Beyond then, the stations are focused on post-election opportunities to recapture the revenue from the political displacement. And a lot of planning, internally and with advertisers, has already gone into that,” Morton said.

“We’re also capitalizing on Thanksgiving and Christmas advertising opportunities,” he added.

One analyst tried to get incoming President-CEO George Mahoney, currently VP-COO, to comment on core non-political ad pacings.

“It’s a pretty noisy time to be talking about pacings, but what we’re seeing is that the fourth quarter looks strong for us,” was all Mahoney would say on the topic. “I think it’s premature in the fourth quarter to be talking about any particular number, but we’re pleased with what we’re seeing.”

After being introduced earlier in the call and praised by Morton, Mahoney took note of the pure play company he’s inheriting, following the recent sale of the Tampa Tribune, its last newspaper asset.

“It is wonderful to be able to focus all of Media General’s resources on our higher-margin broadcast television and digital businesses,” Mahoney said.

Morton later noted that Media General is still looking at potential sales of “surplus assets,” primarily real estate. But the outgoing CEO, who will continue as a director, was sounding more like a buyer than a seller in television.

“On operating assets at the moment, we like the ones we’ve got. We are interested in duopoly kinds of situations. We’ve got one that works very well for us. It has allowed us to expand our impact in the marketplace. There’s still two voices — one we own, one we manage. It works profitably for us and for the people who own the [other] station,” Morton said. He was referring to the Augusta, Ga., market, where Media General’s ABC affiliate, WJBF, provides news, sales and other services to the NBC affiliate, WAGT, owned by Schurz.

For 3Q, revenues were up nearly 42% (excluding the divested newspapers) to $93.8 million. That revenue growth included a record $15.5 million in Olympics advertising for the company’s eight NBC affiliates. Broadcast cash flow (BCF) more than doubled (up 111.9%) to $40.8 million.

Gross local ad sales gained 15.6% to $47.4 million, national gained 19.2% to $24.9 million and political shot up to $19.6 million from a mere $1.3 million a year ago. Retransmission consent revenues gained 77.6% to $9.4 million and local website revenues were up 20.7% in 3Q to $2.6 million.

Analyst Barry Lucas of Gabelli & Co. praised Media General for its 43.5% BCF margin in 3Q, saying he had to go back to 2004 to find a comparable margin. So, he asked, is that BFC margin sustainable?

“A big difference is that we’ve pulled our costs overall down during that time period. The world of 2004 and the world of 2012 are two different things, so we’ve learned to get more out of a given hour of programming and more out of a given group of people, because electronics and technology do that,” Morton replied. “Yes, we see it is a sustainable kind of margin.”