TO OUR STOCKHOLDERS:
Media Generals third quarter 1997 net income was $10.6 million, or $.39 per share, compared with third quarter 1996 net income of $15.6 million, or $.59 per share. The decline was largely the result of higher year-over-year interest and amortization expense.
Revenues in the third quarter increased to $222 million from $188 million a year ago and operating cash flow in the quarter rose to $51.8 million from $39.4 million a year ago.
As a result of the companys previously announced first quarter extraordinary charge of $63 million, or $2.37 per share, Media General reported a loss of $30.3 million, or $1.15 per share, for the first nine months of 1997. Income before the extraordinary item was $32.7 million, or $1.22 per share, compared to $51.6 million, or $1.94 per share, for the first nine months of 1996.
Revenues for the first nine months of 1997 increased to $667.5 million from $565.4 million a year ago and operating cash flow in the period increased to $157.9 million from $121.9 million a year ago.
Results for the third quarter and first nine months of 1997 include the former Park newspapers and television stations acquired in January and the companys subsequent purchases, as well as trades and dispositions, principally involving Parks non-southeastern properties. This realignment was completed ahead of schedule during the third quarter.
Publishing
The Companys publishing division showed continued growth in revenues and operating profits during the third quarter. Revenues increased to $117.6 million from $98.6 million a year ago. Operating income rose to $19.2 million from $11 million in the third quarter of 1996 and operating cash flow increased to $28.8 million from $18.3 million a year ago.
While the majority of the revenue increase was attributable to our new acquisitions, classified advertising revenues rose sharply at all of our metropolitan newspapers as the result of strong employment advertising.
Profit margins in the quarter also benefited from lower newsprint costs compared with the year-earlier period.
Broadcast Television
Broadcast television revenues increased to $36.5 million in this years third quarter from $22 million last year, reflecting our present 14 station ownership versus last years three station holdings during the quarter.
Operating income declined to $2.9 million from $6 million a year ago, the result of the significant depreciation and amortization expense associated with the acquired new stations and continued weakness in national advertising revenue.
Broadcast division operating cash flow in the quarter increased to $8.8 million from $6.7 million a year ago.
As anticipated, we completed the sale of the Utica, N.Y., station during the quarter and also completed the previously announced trade of WTVR-TV in Richmond, Va., in exchange for WSAV-TV in Savannah, Ga., WJTV-TV in Jackson, Miss., and WHLT-TV in Hattiesburg, Miss.
Cable Television
Third quarter 1997 cable television revenues were $37.8 million compared to $36.9 million a year ago. Operating income rose to $7.5 million from $6.7 million and operating cash flow in the quarter was $13.7 million compared with $13.2 million in 1996s third quarter.
Subscriber billings at our Fairfax operation increased by 4 percent in the quarter, the result of rate increases and a larger subscriber base.
The subscriber count for the cable division at the end of the quarter was more than 248,500, an increase of 3.2 percent from a year ago.
Newsprint
Third quarter revenues at our wholly owned newsprint operations were $30.1 million versus $30.5 million a year ago. The operating loss of $1.1 million compared with an operating deficit of $0.5 million in last years third quarter. As has been the case since last years third quarter, the operating losses were caused by lower selling prices and recurring production problems.
Lower selling prices also affected profit levels at our one-third-owned Southeast Paper Manufacturing Co., where our share of profits declined to $2.6 million from $3.5 million in the third quarter of 1996.
We anticipate that higher newsprint selling prices, combined with more efficient production at the Garfield, N.J., facility will result in improved newsprint profitability going forward.
Acquisitions
On October 13 we announced an agreement in principle to acquire the Bristol (Va.) Herald Courier and two affiliated weekly newspapers for approximately $91 million. The transaction is subject to regulatory approval and is expected to close early next year.
The Herald Courier is far southwestern Virginias leading source of news and information and fits extremely well with our existing papers in western Virginia, northwestern North Carolina and eastern Kentucky. The newspaper serves a region with a highly diversified economic base and we are pleased with the opportunity to participate in this attractive and growing market.
Outlook
Looking forward, most economic indicators remain positive and we anticipate a solid fourth quarter.
Yours sincerely,
J. Stewart Bryan III
Chairman, President and
Chief Executive Officer
October 31, 1997
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STOCKHOLDER
INFORMATION
Media General is an independent, publicly owned communications company situated primarily in the Southeast with interests in newspapers, broadcast and cable television, recycled newsprint production, and diversified information services.
Form 10-K
Stockholders who would like a copy of Form 10-K, the annual report to the Securities and Exchange Commission, may obtain one by writing: Chief Financial Officer, Media General, Inc., P.O. Box 85333, Richmond, Virginia 23293-0001.
Automatic Dividend Reinvestment and Stock Purchase Plan
Media General Class A stockholders receive a 5% discount from the market price when they reinvest their dividends in additional Media General shares. Participants in the Plan can also make optional cash purchases of Class A common stock at market price and pay no brokerage commissions. To obtain the Plan prospectus and enrollment card, write: Wachovia Bank of North Carolina, N.A., Dividend Reinvestment Dept., P.O. Box 3001, Winston-Salem, North Carolina 27102, (800) 633-4236.
Transfer Agent and Registrar
Wachovia Bank of North Carolina, N.A., Corporate Trust Dept., P.O. Box 3001, Winston-Salem, North Carolina 27102, (800) 633-4236.
Corporate Headquarters
Media General, Inc., 333 East Grace Street, Richmond, Virginia 23219, (804) 649-6000.
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