Media General Inc. posted sharp declines in its newspaper publishing revenue in the third quarter but profit more than doubled on strong performances this summer from its TV stations and aggressive cost cutting.The Richmond, Va.-based publisher of the Tampa Tribune and Richmond Times-Dispatch reported net income of $6.1 million, or 28 cents per share, compared to last year's $2.5 million, or 11 cents per share. Revenue tumbled 11% to $193.7 million. Analysts polled by Thomson Reuters had forecast earnings of 30 cents a share.
Tampa Tribune's publisher has been hit hard by an accelerated downturn in Florida. Like most publishers, it has seen advertising revenue erode.
Advertising gains from the presidential campaigns and broadcasts of the Summer Olympics on the company's eight NBC television affiliates helped boost profit. The broadcast division generated $7.5 million in revenue from political advertising and nearly $13 million in Olympic Games advertising, said Marshall Morton, the company's chief executive.
But like most newspaper publishers, Media General has seen its newspaper ad revenue erode as readers have migrated to the Web and U.S. economic conditions have deteriorated. The accelerated downturn in Florida, home to Media General's largest market of Tampa, has hit the company hard. Publishing revenue fell 28% in Florida and 18% overall.
"This year's weak economy and unfavorable business climate have created far more challenges than anyone anticipated," Mr. Morton said in a conference call with analysts on Thursday. Mr. Morton also said the company expects political broadcast advertising in the fourth quarter to be weaker than in previous election years.
Media General shares, which have fallen more than 70% in the past year, were trading down 4.4% at $7.96 in 4 p.m. composite trading on the New York Stock Exchange.
Analysts say they don't see pressure easing much on newspaper publishers next year. Goldman Sachs earlier this week lowered its performance estimates for newspapers in 2009, predicting industry ad revenues will decline 11%, versus its prior estimate of a 7.5% drop, following a 14% decline in 2008.
To weather the publishing slump, Media General has been involved in an aggressive cost-cutting program. Besides selling broadcast outlets and centralizing and outsourcing many of its operations, the company late last year initiated a job-cutting program that eliminated 750 positions, or 11% of its work force. Last month, it also announced it will cut its quarterly stock dividend to 12 cents a share from 23 cents. And in light of the latest economic events, Media General has begun negotiating with lenders for more flexible terms that it expects will lead to higher interest rates, John Schauss, the company's chief financial officer, said in the conference call Thursday.
