NEWS - Banking & Finance

By Lou Phelps

Jan 30, 2012 - In its earnings call on Thursday, Media General’s leadership told financial analysts that the company is working to modify its agreements with lenders on the newspaper and television company’s $658 million in debt.  Failing that, the company could be at risk of going into bankruptcy.

But, for many newspaper companies, pre-arranged bankruptcy packages have allowed the companies to emerge without the weight of mountains of debt, incurred by most in the 2005 to 2007 era of acquisitions and growth before the U.S. economy and the future impact on the media industry of the internet was fully felt or understood.

Lee Enterprises is emerging this week from a successful bankruptcy filing.  And others have done the same very successfully, including the Journal Register Company and Morris Publishing Company.  Mary Junck, president and CEO of Lee, was named the new president of the Associated Press last week, testimony that newspaper industry insiders are confident about Lee’s future.

Media General’s CFO James Woodward said that Media General’s debt to cash flow leverage ratio at year-end was 7.43 times, bellowed its required 7.75 covenant. 

But the company also reported some very positive changes, and 2011 was an ‘off’ year, as far as political advertising.  With 2012 a presidential election year, the company anticipates dramatic revenue improvements.  In 2010, a Congressional election year, the company reported $24 million in additional political advertising, versus only $3 million in 2011.  A presidential election year portends even higher revenues.  The company owns both TV and newspapers in the important state of Florida, for example. 

Media General ended 2011 with approximately $658 million in debt.

On the conference call, the company’s executives also mentioned the sale of assets, according to reporters on the call.  “Marshall Morton, Media General president-CEO, cited E.W. Scripps’ purchase of McGraw-Hill’s four stations for $212 million last October as one model for valuing Media General stations in comparable markets,” reports TVNewsCheck.com.

“Media General anticipates solid revenue growth this year thanks to a combination of political revenues, Super Bowl, summer Olympics and retransmission revenue growth. Media General projects that retrans revenues will increase 57% this year, or roughly $12 million, to about $33 million,” the broadcasting news website reports as news from the company’s leadership team on the call.