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Thursday, January 27, 2011

Media General Reports Fourth-Quarter 2010 Results, Provides Outlook

RICHMOND, Va. – Media General, Inc. (NYSE: MEG) today reported that operating income in the fourth quarter of 2010 increased 12 percent to $36.4 million from $32.5 million in the fourth quarter of 2009.  Net income in the fourth quarter of 2010 was $9 million, or 39 cents per share, compared with $27.4 million, or $1.18 per diluted share in the 2009 fourth quarter.  The year-over-year change in net income was due almost entirely to non-cash tax expense and higher interest expense in the 2010 period.

Total revenues in the quarter increased 7.2 percent to $189.9 million, driven by a nearly 29 percent increase in Broadcast television revenues, which reflected strong Political advertising and an overall firming in broadcast transactional business.  Total operating costs in the fourth quarter increased 6.1 percent, reflecting the absence of last year’s furlough days, a 28 percent increase in newsprint expense and support of new revenue initiatives.

“In the fourth quarter of 2010, our broadcast-intensive markets – Mid-South and Ohio/Rhode Island – generated significantly higher profits compared with the prior year.  Our television stations, most of which are rated number one or two in their markets, were in an excellent position again this year to attract Political advertising dollars.  Operating results benefited from nearly $24 million in fourth quarter Political revenues, compared with $3.7 million last year.  Our stations benefited from hotly contested races in several markets and from a surge in national party and issue spending in the final weeks and days leading up to November 2,” said Marshall N. Morton, president and chief executive officer.

“We experienced strengthening in our overall broadcast advertising as well.  In the fourth quarter, Local time sales grew nearly 6 percent and National time sales increased nominally, which was a good performance given some displacement of transactional advertising by Political issue and candidate spending.  Automotive advertising, in particular, was strong,” Mr. Morton said.

“In addition, we were pleased to see the benefits of our aggressive digital sales initiatives, which drove a 19 percent increase in revenues at our newspaper and broadcast media websites.  Online Classified revenues grew for the fourth consecutive quarter and increased more than 9 percent, due in part to Yahoo! Hot Jobs and Zillow real estate partnerships.  Local online revenues rose more than 29 percent, reflecting increased advertiser adoption of new online advertising opportunities.  The extension of partnerships for Yahoo! display and Zillow real estate advertising to several TV markets helped accelerate revenue growth at a number of television websites,” Mr. Morton said. 

Media General’s Publishing revenues in the fourth quarter declined 8.4 percent from last year.  Classified print revenues decreased 15 percent, and National and Local print revenues declined 8.2 percent and 7.5 percent, respectively.  Outside sales for Printing and Distribution Services increased 7.7 percent in the quarter.  Total Digital Media revenues increased 1.3 percent and reflected lower revenues at the company’s advertising services businesses, and Blockdot, which mostly offset the double-digit revenue growth at local media websites. 

Market Segments
Virginia/Tennessee market profit in the fourth quarter was $10.9 million, compared with $15.6 million in the 2009 fourth quarter.  Revenues declined 4.4 percent from last year and expenses increased 6 percent.  Broadcast revenues grew 4.4 percent at the market’s two television stations, mostly due to increased department store and telecommunications spending.  Political revenues were $1.6 million compared with $1.7 million in the prior year’s quarter.  The market’s main driver of Political advertising this year was the Tennessee gubernatorial race and two Congressional elections in Virginia.  The Virginia gubernatorial election was the main contributor to Political advertising in 2009.  Digital revenues in Virginia/Tennessee rose 16.8 percent, reflecting increases in Local, National and Classified online advertising.  Publishing revenues decreased 6.8 percent.  Classified revenues decreased 12.7 percent and Local revenues declined 1.7 percent.  National revenues increased 1.9 percent and reflected higher spending by automotive, insurance, department store and telecommunications advertisers.

Florida market profit was $6.3 million, compared with $6.6 million a year ago.  Revenues increased 2.4 percent and expenses increased 3.6 percent.  Broadcast revenues grew more than 30 percent, due to strong Political advertising on WFLA.  Political revenues were nearly $6 million compared with their virtual absence last year, reflecting Florida’s hotly contested gubernatorial, U.S. Senate and attorney general races.  Publishing revenues decreased 12.8 percent.  Total market Classified and Local revenues decreased 15.3 percent and 6.7 percent, respectively. Increases in Local advertising spending at WFLA and were offset by declines in Local newspaper advertising.  National revenues decreased 10.7 percent as BP image advertising and higher spending by automotive, financial services and travel advertisers on WFLA were offset by lower newspaper National advertising. Digital revenues increased 6.8 percent, due to solid growth in Local and National online advertising.

Mid-South market profit was $14.9 million, compared with $8.7 million in the prior year.  Total revenues increased 23.2 percent, due to strong Political spending, and expenses increased 9.6 percent.  Total Broadcast revenues in the Mid-South increased nearly 30 percent.  Political revenues were $6.8 million, compared with $391,000 in 2009.  Total Publishing revenues increased nearly 1 percent, reflecting higher legal Classified advertising, new store Local spending and special sections related to Auburn University’s football team playing in the SEC title game and BCS National Championship.  Total market Local, National and Classified revenues increased 8.4 percent, 12.5 percent and 1.2 percent, respectively.  Printing and distribution revenues nearly doubled.  Digital media revenues rose 26.8 percent, reflecting higher Local and National spending.

North Carolina market profit was $2.9 million, compared with a profit of $3.4 million last year.  Revenues increased 1.5 percent, and expenses increased 4.5 percent from last year.  Broadcast revenues increased 20.5 percent, due to Political advertising as well as higher spending by Local and National advertisers at the market’s two television stations.  Political revenues were $724,000, an increase from $203,000 in 2009, and overall reflected the absence of hotly contested races in North Carolina.  Publishing revenues declined 8.6 percent in the fourth quarter.  National and Local revenues increased 2.5 percent and 2.3 percent, respectively, while Classified revenues decreased 19 percent.  Digital media revenues increased 40.5 percent, due to robust Local and Classified revenue growth, which was directly attributable to the company’s aggressive digital sales initiative.

Ohio/Rhode Island market profit was $9.4 million, compared with $5.3 million last year, due to strong Political revenues from the market’s two NBC-affiliated television stations.  Total revenues increased 38.4 percent and expenses increased 13 percent, excluding severance costs.  Broadcast revenues grew from the prior year by nearly 40 percent.  Political revenues were $8.8 million compared with $1.2 million in 2009, reflecting gubernatorial and Congressional races in Ohio and a gubernatorial election, Congressional race and issue spending in Rhode Island.  National advertising decreased 12.9 percent, despite increases in automotive, furniture and bank advertising.  Local revenues were about even with the prior year’s quarter.  Digital media revenues rose 8.5 percent.

Advertising Services and Other segment profit of $316,000 declined from $1.7 million last year, due largely to a decrease in revenues from, the company’s shopping and coupon website; Blockdot, which specializes in interactive entertainment and advergaming technologies, and NetInformer, a provider of wireless media and mobile marketing services.

Other Results
Interest expense was $17.1 million in the fourth quarter, compared with $10.3 million last year, due to the company’s new debt financing structure completed in February 2010.  Debt at the end of 2010 was $663 million, compared with $712 million at the beginning of the year. 

Corporate expense increased $865,000 from last year, due in part to the impact of employee furlough days.

Income tax expense in the fourth quarter was $10.5 million, all non-cash.  The previous estimate of $7.5 million was impacted by intraperiod tax allocation and other non-cash adjustments.  A tax benefit of $1 million was reported for the same period last year, which reflected the company’s estimated net operating loss carryback claim for 2009.

EBITDA (income from continuing operations before interest, taxes, depreciation and amortization) was $49.1 million in the fourth quarter of 2010, compared with $46.7 million in the 2009 period.  After-Tax Cash Flow was $32 million, compared with $25.1 million in the prior-year’s quarter.  Capital expenditures in the fourth quarter of 2010 were $10.9 million, compared with $6.8 million in the prior-year period.  Free Cash Flow (After-Tax Cash Flow minus capital expenditures) was $21.1 million, compared with $18.3 million in the prior-year period.

Media General provides the non-GAAP financial metrics EBITDA from continuing operations, After-Tax Cash Flow,  and Free Cash Flow. The company believes these metrics are useful in evaluating financial performance and/or are common alternative measures used by investors, financial analysts and rating agencies.  These groups use EBITDA, along with other measures, to evaluate a company’s ability to service its debt requirements and to estimate the value of the company. A reconciliation of these metrics to amounts on the GAAP statements has been included in this news release.

For the first quarter of 2011, Media General expects total revenues in the range of level to 3 percent down compared with last year.  Broadcast revenues are expected to be in a range from even with last year to down 3 percent from last year, due mostly to the absence of Political, Olympics and Super Bowl advertising revenues partially offset by strengthening of the transactional business.  Publishing revenues are expected to decrease 2-6 percent, due to continued weakness in Local and Classified revenues.  Digital Media revenues are expected to increase 6-9 percent and the company’s local media websites are expected to increase 18-21 percent. Total operating costs are expected to increase 5-7 percent, which mostly reflects 2 percent of merit raises and partial restoration of the company’s 401(k) match.

Conference Call, Webcast and Financial Statements
The company will hold a conference call with financial analysts today at 2:30 p.m. ET.  The conference call will be available to the media and general public through a limited number of listen-only dial-in conference lines and via simultaneous webcast. To dial in to the call, listeners may call 1-800-599-9829 about 10 minutes prior to the 2:30 p.m. start.  The participant passcode is “Media General.”  Listeners may also access the live webcast by logging on to and clicking on the “Live Webcast” link on the homepage about 10 minutes in advance.  A replay of the webcast will be available online at beginning at 5:30 p.m. today.  A telephone replay is also available, beginning at 5:30 p.m. today and ending at 5:30 p.m. on February 3, 2011, by dialing 888-286-8010 or 617-801-6888, and using the passcode 18563205.

Forward-Looking Statements
This news release contains forward-looking statements that are subject to various risks and uncertainties and should be understood in the context of the company’s publicly available reports filed with the Securities and Exchange Commission.  Media General’s future performance could differ materially from its current expectations.

2010 Audited Financial Statements
Media General will issue its 2010 audited financial statements, including footnotes, on its website, following the close of the stock market today.  A link to the statements will be posted prominently on the website’s home page. 

About Media General
Media General is a leading provider of news, information and entertainment across multiple media platforms, serving consumers and advertisers in strong local markets, primarily in the Southeastern United States.  Media General’s operations are organized in five geographic market segments and a sixth segment that includes the company’s interactive advertising services and certain other operations.  The company’s operations include 18 network-affiliated television stations and their associated websites, three metropolitan and 20 community newspapers and their associated websites, and more than 200 specialty publications that include weekly newspapers and niche publications targeted to various demographic, geographic and topical communities of interest.  Many of the company’s specialty publications have associated websites.  Media General additionally operates three interactive advertising services companies:  Blockdot, which specializes in interactive entertainment and advergaming technologies;, a coupon and shopping website; and NetInformer, a leading provider of wireless media and mobile marketing services.

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Investor Contact:
Lou Anne Nabhan
(804) 649-6103

Media Contact:
Ray Kozakewicz
(804) 649-6748