Articles about "Media General"


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Splitsville: Why newspapers and TV are going their separate ways corporately

Like the sale of the Washington Post this time last year, the merger of E.W. Scripps and Journal Communications, announced last night, and their reorganization into separate print and broadcast companies came as a jaw-dropping surprise.

But the morning after, the complicated transaction makes perfect sense.

  • Local broadcasting is seeing a wave of consolidations. The business is healthy, and getting bigger provides station groups more leverage negotiating retransmission fees with cable providers. That has become a significant new source of revenue growth as political and automotive advertising remain strong.
  • Financially squeezed newspapers drag down the share price of companies with prospering TV, cable and digital divisions. The spinoff of Tribune Publishing scheduled next week and the division of News Corp a year ago give the remaining parent television and entertainment companies investment wind at their back.
  • At the same time, newspaper groups theoretically do better with management whose exclusive focus is on the particular challenges of that industry. Otherwise, they can end up a neglected problem child, getting less capital allocation and management attention, in a company with several financially stronger divisions.

My colleague Al Tompkins has separately rounded up a list of broadcast mergers and print spinoffs, and he also documents the stock price kick broadcast/digital companies have experienced. (Scripps stock is up smartly today  – more than 10 percent by early afternoon.).

For the newspaper industry, the de-consolidation trend has been building steam for seven years now, since the business took a deep dip during the recession of 2006-2009, Scripps did a version in 2007. leaving legacy broadcast and newspapers in one company while putting Food Network and other cable stations in another.

That same year Belo broke its newspaper and television businesses in two. The A.H. Belo newspaper group has since sold papers in Riverside and Providence leaving just the Dallas Morning News and nearby Denton. The Belo television stations have been bought by Gannett’s broadcast group.

Media General was flirting with insolvency in early 2012 when it sold its newspaper group to Warren Buffett’s BH Media (and the Tampa Tribune to another buyer). Media General has bought additional stations since.

While focus in the Post deal was in Jeff Bezos’s purchase of the venerable newspaper, it also left highly profitable local broadcast and cable divisions in the surviving Graham Holdings.

Finally, last year Rupert Murdoch split his international newspaper and entertainment/cable ventures into two companies. And Tribune, emerging from bankruptcy, decided to remake itself as a television and digital company with the Los Angeles Times, Chicago Tribune and six other dailies spun off into Tribune Publishing.

That leaves Gannett. And the Scripps-Journal transaction will heighten existing Wall Street pressure on the company to sell or spin off its 81 community newspapers and USA Today.

CEO Gracia Martore was asked about that possibility in a second quarter earnings conference call with analysts 10 days ago, though the questioner said “I know you won’t answer this.”

In fact, she did answer, albeit in ambiguous fashion. Both a USA Today reporter and I heard Martore say some newspaper organizations are for sale at the right price. But a Gannett spokesman walked that back the next day with a “clarification” that she was referring to newspapers owned by other companies.

Nonetheless, my fellow industry analyst, Ken Doctor has written that, in corporate-speak, Martore was opening the door to sale or spinoff at least a crack. And that was before the Scripps/Journal deal.

Journal Media Group will begin life, when the transaction is completed early next year, debt-free and with $10 million in cash. The company will be based in Milwaukee, though its CEO will be Tim Stautberg, who has headed Scripps newspaper division. The Journal Sentinel is at least twice as big in circulation as any of Scripps’s 12 papers and will be the flagship of the new company. The Journal Sentinel has strengths as a business too — typically among the top papers in household penetration.

All that augers well for editorial quality and financial prospects for the Journal Sentinel and its new mates. (Disclosure: I know and respect top business and news executives at both companies).

However, while Scripps is the acquiring company, Journal Publications will not give members of the Scripps family a special class of stock and voting control. So it will lack the buffer of family control and tradition that has kept McClatchy and the Sulzbergers’ New York Times Co. independent in these tough times. Journal Media Group could itself become a takeover candidate in the near future.

I am sure Journal Sentinel staff and perhaps readers too are wondering whether the paper will continue its investment in outstanding investigative projects, which have garnered three Pulitzers and many other award over the last six years, Scripps ownership certainly offers brighter prospect for that than a takeover by a turnaround hedge fund.

I sample, rather than read regularly, the work of metro newspaper organizations. But I would put the Journal Sentinel in the top rank, together with Poynter’s Tampa Bay Times, the Boston Globe, Seattle Times, Dallas Morning New and Star-Tribune of Minneapolis.

Curiously, all six of those are essentially single-paper operations — or at least they were until this morning. Joining a chain, and a publicly-traded one, is sure to up the pressure for financial performance on the Journal Sentinel, so I would not be astonished to see newsroom cuts down the road. Read more

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LIN Media, Media General plan broadcast merger

LIN Media and Media General announced Friday morning that they are merging to form the second largest pure-play U.S. broadcasting group.

If the FCC approves the merger, the new combined group will reach 46 markets or about 23 percent of the American population.

Half of the stations involved are affiliated with one of the big four networks.

At least a few of the stations may have to be sold off or run by other companies to avoid FCC restrictions on cross ownership in a single market.

It is just the latest in a flurry of acquisitions and mergers in the TV industry that has seen Belo broadcast and Gannett merge and earlier, Media General and Young Broadcasting combined forces. Other players including Meredith, Journal, Tribune, NBC Universal and Sinclair have been recent buyers, too.

According to the announcement by LIN and Media General, which came before the stock market opening Friday, LIN will receive $763 million in cash and 49.5 million shares of stock. When the dust settles, LIN will own 36 percent of the new company, Media General shareholders will hold 64 percent.

LIN President and CEO Vincent Sadusky will be the president and CEO of the new organization, which will still bear the name of Media General. Read more

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Media General-New Young Broadcasting merger gets FCC, shareholder approval

Media General | Richmond Times-Dispatch

The FCC Friday approved Media General’s planned merger with New Young Broadcasting Holding Co. The companies plan to close the deal Nov. 12, a Media General release says.

On Thursday, Media General’s shareholders approved the deal, which was first announced in June. Significantly for the company, the merger means it will soon own WRIC-TV in Richmond, where the company will remain based after the merger. FCC rules once prevented Media General from owning a television station in Richmond, as it used to own the Richmond Times-Dispatch. Read more

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Family control will end at Media General following merger

Richmond Times-Dispatch

The Bryan family will no longer control Media General if a planned merger with New Young Broadcasting occurs. The deal will end a streak going back to the end of the 19th century, when Lewis Ginter gave The (Richmond, Va.) Daily Times to Joseph Bryan.

The agreement will eliminate the “dual-class stock structure that has given [J. Stewart Bryan III], the company’s chairman and former CEO, voting power to elect 70 percent of its board of directors,” John Reid Blackwell reports.

Bryan, the great-grandson of the founder of the newspaper company that grew to become Media General, will remain the combined company’s chairman. He has said he will own about 1 million shares, but his holdings won’t put him among the five largest shareholders — the smallest has about a 5 percent stake — in the new company, regulatory filings show.

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Media General reports net loss, CNN has higher ratings

Media General | TVNewsCheck | Los Angeles Times

Media General reported a net loss of $16 million in the second quarter of 2013, but revenues grew in several advertising categories, including automotive, furniture and home improvement.

Revenue from political advertising fell 86 percent, not exactly a surprise in an odd-numbered year. Also missing this year: Olympics revenue. “Total station revenues in the third quarter this year will decrease due to the near absence of these revenues,” the company says in its earnings release.

The company spent $19.5 million on interest in the second quarter. Retransmission fees increased, as did digital revenue.

Time Warner announced its second quarter earnings Wednesday, reporting a 10 percent rise in revenue. CNN’s ratings were up “almost 70 percent in its key demo,” the company’s release says. Read more

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Warren Buffett

Warren Buffett’s big payday, and other notes on Media General’s merger with Young

Few paid much attention to the blandly worded announcement a week ago of a merger between Media General and New Young Broadcasting. That was no surprise — an agreement between two midsize local broadcasting companies isn’t nearly as big a deal as, say, Gannett’s $2.2 billion acquisition of Belo today.

But there were at least three spicy stories lurking beneath the corporate-speak:

Warren Buffett’s Berkshire Hathaway cashed in big

In May 2012 Buffett and Berkshire Hathaway bought all of Media General’s newspapers except the Tampa Tribune.

That deal included two related transactions.

First, Berkshire Hathaway loaned Media General $445 million to refinance a crushing debt load coming due. The initial interest rate was an eye-popping 10.5 percent.

Second, as thanks for saving Media General from that life-threatening financial distress, BH received penny-a-share warrants to acquire 19.9 percent of the company — 4.6 million shares in all.

One benefit of the merger, Media General said last week, is that it will be able to refinance its debt at a considerable savings of interest expense. BH will reportedly be paid “a $44 million premium” as part of the refinancing.

In addition, Media General’s shares jumped more than 30 percent the day the merger was announced and have roughly doubled in value since Buffett’s three-legged investment just over a year ago. That’s a tidy appreciation — to the tune of $25 million — on stock that didn’t cost Berkshire Hathaway much of anything.

Plus BH acquired 63 dailies and weeklies for a bargain price of $142 million and has used them as the base for building a bigger chain, subsequently buying papers in Tulsa, Greensboro and Roanoke.

So, consider the sweet deal a quick demonstration — on a modest scale for giant Berkshire Hathaway — of how Buffett got to be one of the five richest men in the world.

A mystery — who’s in charge here? 

The merged company will retain the Media General name, stay in its Richmond, Va., headquarters, and keep its top executives in place. Of the two companies, Media General has more stations, higher revenue and higher earnings, so it would appear to be the acquiring company or first among equals.

However, privately-held New Young comes to the party with just $164 million in debt compared with Media General’s $601 million, so it is the stronger of the two financially. New Young shareholders will end up with 67.5 percent of the new stock.

And in a phased transition to a new board of directors, New Young will ultimately control six of the new company’s 11 seats.

Both companies should benefit. They gain the mass of a bigger footprint with 30 stations, reaching nearly 15 percent of TV households, and more clout to negotiate lucrative retransmission fees from cable operators. They may turn out to be happy partners, working hand-in-hand indefinitely. But if not, it looks to me as if New Young would be in control.

So why call the company Media General? New Young is a confusing name on its surface. The name has nothing to do with youth — it’s derived from the founder’s name. The “New” part makes a distinction from old Young, whose flagship KRON-TV in San Francisco lost its NBC affiliation a decade ago and whose financial troubles festered for years before the bankruptcy.

There are precedents in the corporate world for the stronger partner keeping the weaker one’s name. When NationsBank acquired Bank of America in 1998, it opted to call the new company Bank of America.

End of an era of family control

Media General’s roots go back to the merger of Richmond’s two papers in 1940. When Media General went public in 1966 and acquired the Tampa Tribune and Winston-Salem Journal three years later, the Bryan family created two classes of stock, giving themselves a majority of the voting shares.

That’s the same structure that keeps the Grahams in control of The Washington Post and Sulzbergers at The New York Times (and prevails at E.W. Scripps and McClatchy).

The two-class arrangement held up until last week when Chairman J. Stewart Bryan III, a young man when he joined the company but now 75, said separate family voting shares would come to an end as part of the merger and that he and the family trust were voting for it.

Long story short, Media General has had ups and downs through those 70-plus years, but was always an able TV operator, with a top-rated station in Tampa and other markets.

It turned out not to be as nimble an operator in the digital era. Its showpiece converged newsroom, launched with fanfare in Tampa in 2000, was a modest success at best, while various digital acquisitions and startups fizzled.

Combine that with its purchase of several TV stations at premium prices in 2006 and deteriorating results from its newspaper division, and the company was on the brink of collapse by late 2011.

In an astonishing earnings conference call that October, analysts (who are typically gentle questioners) seemed to scoff at management’s profit projections and assurances that debt obligations could be met. Mario Gabelli, whose investment funds had held a big minority stake in Media General for several decades, got on the call and bluntly asked whether auditors would certify the company as a going concern.

The sequel was the transaction with Buffett six months later and the separate sale of the Tampa Tribune, which had been losing as much as $2 million a month, to a Los Angeles investment firm.

Through it all, Bryan and the executive team scrambled to avoid bankruptcy at all costs. They won that battle, but until last week the corporation continued floundering in debt.

I’ve had a front-row seat for the company’s fortunes — first as en employee, then as a competitor, and now as analyst — and my impression of Bryan and his team is one of proud Virgina gentlemen, unfailingly polite, sensitive to family honor and appearances.

A more ruthless operator would have cut losses much earlier at the newspapers — The Tampa Tribune especially — and perhaps would have seen the advantages of entering and coming out of bankruptcy protection for a fresh start with little debt. Even with Buffett as the buyer, I’m sure it was painful for Bryan to walk away from the flagship Richmond Times-Dispatch.

In that respect, the merger had another modest benefit: Media General didn’t have a Richmond-based TV station, but New Young brought one to the deal. So the company will regain a journalism foothold in its hometown.

Correction: This story originally misstated where New Young Broadcasting got its name from. Read more

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Media General to merge with New Young Broadcasting

Richmond Times-Dispatch | Bloomberg News

Media General and the New Young Broadcasting company of Nashville, Tenn., will merge, the Richmond Times-Dispatch reports.

The new company, which will be called Media General, will own 30 television stations. It will be based in Richmond, Va., where Media General currently operates. Read more

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Retiring Media General CEO was ‘always attempting to look to the next mountaintop’

Richmond BizSense
In an exit interview with Michael Schwartz, outgoing Media General CEO Marshall Morton says he’ll have no difficulty “unplugging” — ” I was always attempting to look to the next mountaintop and then decide what pathway would be the most productive one to get there,” Morton says — and that selling the conglomerate’s newspapers to Warren Buffett was a “relief”:

In the past, if we encountered two years of downturn in revenue, we’d have said, “It’s a cycle. It’ll turn around. It always has.” But I did worry about the newspapers. These were our long-term employees who worked hard in a business that had a lot of value in our community. But we just were not able to make any headway. They did induce concern on my part. We’re talking about real people here. So to find an owner like Warren Buffett or Berkshire Hathaway, it was the answer. I’m not going to call it too good to be true, but it was the answer we really didn’t allow ourselves to believe would happen.

Related: Media General execs realized in 2011 newspaper decline wasn’t cyclical | Investment adviser: Media General’s leadership ‘still the worst management team around’ Read more

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Local advertising grows at Media General, 3rd quarter earnings report shows

Media General
Media General reported strong revenue from automotive, political and Olympics advertising in the third quarter of 2012, but interest on the company’s debt and losses from what remained of its newspaper division drove it to a loss of $30.3 million.

Operating income was up nearly $18 million over the third quarter of 2011. Advertising revenue was up 20 percent at the company’s TV station websites, where local advertising in particular was up 28 percent. Across its properties, local advertising revenue was up 15.6 percent, to $47 million. Station costs were up, in part because of higher sales commissions, the earnings report says. The company has reduced expenses slightly, partly due to corporate layoffs announced in July, and expects more revenue growth in the fourth quarter.

Media General sold most of its newspapers to Berkshire Hathaway in May and sold The Tampa Tribune, its last remaining newspaper, to a private equity firm earlier this month. Last week, Richard Danielson and Jeff Harrington of the Tampa Bay Times reported Media General sold the Tribune for less than the estimated value of its land and building. Poynter owns the Tampa Bay Times, which competes with the Tribune.

Previously: Media General reports income increase, net loss in second quarter Read more

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Tampa Tribune sold to investment firm

The Tampa Tribune | Tampa Bay Times | MarketWatch
Media General sold The Tampa Tribune to Revolution Capital Group, the companies announced Monday. The sales price was $9.5 million.

“It’s a bittersweet day for Media General to complete the sale of its last remaining newspaper group,” Media General CEO Marshall Morton said in a press release. “We believe strongly in the value of local content,” Revolution managing partner Robert Loring said in the release.

Loring told Tampa Tribune reporter Richard Mullins “We are definitely in this for the long haul. We don’t flip businesses.” Read more

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