UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC. 20549
Form 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 28, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from_____________ to______________
Commission file number: 1-6383
MEDIA GENERAL, INC.
(Exact name of registrant as specified in its charter)
Commonwealth of Virginia 54-0850433
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
333 E. Grace St., Richmond, VA 23219
(Address of principal executive offices) (Zip Code)
(804) 649-6000
(Registrant's telephone number, including area code)
N/A
---
(Former name, former address and former fiscal year,
if changed since last report.)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
------- -------
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of November 2, 1997.
Class A Common shares: 26,160,821
Class B Common shares: 556,574
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MEDIA GENERAL, INC.
TABLE OF CONTENTS
FORM 10-Q REPORT
SEPTEMBER 28, 1997
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Page
----
Part I. Financial Information
Item 1. Financial Statements
Consolidated Condensed Balance Sheets - September 28, 1997,
and December 29, 1996 1
Consolidated Condensed Statements of Operations - Third quarter
and nine months ended September 28, 1997, and September 29, 1996 3
Consolidated Condensed Statements of Cash Flows - Nine
months ended September 28, 1997, and September 29, 1996 4
Notes to Consolidated Condensed Financial Statements 5
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 8
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K 16
(a) Exhibits
(b) Reports on Form 8-K
Signatures 17
</TABLE>
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<TABLE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
MEDIA GENERAL, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(Unaudited)
(000's except shares)
<CAPTION>
September 28, December 29,
1997 1996
----------------- ------------------
ASSETS
<S> <C>
Current assets:
Cash and cash equivalents $ 5,205 $ 4,471
Accounts receivable - net 97,428 81,513
Inventories 18,055 16,329
Other 37,480 25,905
----------------- ------------------
Total current assets 158,168 128,218
----------------- ------------------
Investments in unconsolidated affiliates 126,620 113,872
Other assets 28,328 23,564
Property, plant and equipment - net 510,972 469,978
Intangibles - net 929,992 289,852
----------------- ------------------
$ 1,754,080 $ 1,025,484
================= ==================
See accompanying notes.
1
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MEDIA GENERAL, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(Unaudited)
(000's except shares)
<CAPTION>
September 28, December 29,
1997 1996
----------------- ------------------
LIABILITIES
Current liabilities:
Accounts payable $ 30,906 $ 30,154
Accrued expenses and other liabilities 111,496 72,310
Income taxes payable 5,923 1,381
Short-term borrowings --- 11,000
----------------- ------------------
Total current liabilities 148,325 114,845
----------------- ------------------
Long-term debt 915,000 265,000
Deferred income taxes 174,847 102,055
Other liabilities and deferred credits 119,209 106,344
Stockholders' equity:
Preferred stock ($5 cumulative convertible), par value $5 per share:
Authorized 5,000,000 shares;
none outstanding
Common stock, par value $5 per share:
Class A, authorized 75,000,000 shares; issued
26,134,690 and 25,950,287 shares 130,674 129,751
Class B, authorized 600,000 shares; issued
556,574 shares 2,783 2,783
Additional paid-in capital 15,911 11,393
Unearned compensation (2,799) (1,254)
Retained earnings 250,130 294,567
----------------- ------------------
Total stockholders' equity 396,699 437,240
----------------- ------------------
$ 1,754,080 $ 1,025,484
================= ==================
See accompanying notes.
2
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MEDIA GENERAL, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
(000's except for per share data)
<CAPTION>
Third Quarter Ended Nine Months Ended
------------------------------- -------------------------------
Sept. 28, Sept. 29, Sept. 28, Sept. 29,
1997 1996 1997 1996
------------- ------------- ------------- -------------
Revenues $ 221,975 $ 188,003 $ 667,546 $ 565,435
------------- ------------- ------------- -------------
Operating costs:
Production costs 112,653 102,032 337,953 306,154
Selling, distribution and
administrative 57,478 46,601 171,655 137,346
Depreciation and amortization 23,363 16,171 70,330 49,168
------------- ------------- ------------- -------------
Total operating costs 193,494 164,804 579,938 492,668
------------- ------------- ------------- -------------
Operating income 28,481 23,199 87,608 72,767
------------- ------------- ------------- -------------
Other income (expense):
Interest expense (16,324) (5,264) (49,399) (16,340)
Investment income -
unconsolidated affiliates:
Southeast Paper Manufacturing Co. 2,625 3,452 5,649 18,277
Denver Newspapers, Inc.:
Equity in net income 1,545 232 5,293 872
Preferred stock income 1,502 1,244 4,506 3,732
Other, net 231 1,610 2,220 1,459
------------- ------------- ------------- -------------
Total other income (expense) (10,421) 1,274 (31,731) 8,000
-------------- ------------- -------------- -------------
Income before income taxes and
extraordinary item 18,060 24,473 55,877 80,767
Income taxes 7,495 8,850 23,189 29,208
------------- ------------- ------------- -------------
Income before extraordinary item 10,565 15,623 32,688 51,559
Extraordinary item from early redemption
of debt (net of income tax of $38,613) --- --- (63,000) ---
------------- ------------- ------------- -------------
Net income (loss) $ 10,565 $ 15,623 $ (30,312) $ 51,559
============= ============= ============= =============
Earnings (loss) per common share
and equivalent:
Income before extraordinary item $ 0.39 $ 0.59 $ 1.22 $ 1.94
Extraordinary item --- --- (2.37) ---
------------- ------------- ------------- -------------
Net income (loss) $ 0.39 $ 0.59 $ (1.15) $ 1.94
============= ============= ============= =============
Dividends paid per common share $ 0.13 $ 0.13 $ 0.39 $ 0.37
============= ============= ============= =============
Weighted average common shares
and equivalents 26,737 26,564 26,672 26,577
See accompanying notes.
3
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MEDIA GENERAL, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
(000's)
<CAPTION>
Nine Months Ended
--------------------------------------------
Sept. 28, Sept. 29,
1997 1996
----------------- ------------------
Operating activities:
Net income (loss) $ (30,312) $ 51,559
Adjustments to reconcile net income (loss):
Extraordinary item 63,000 ---
Depreciation and amortization 70,330 49,168
Deferred income taxes (2,012) (1,754)
Investment income -- unconsolidated affiliates (15,448) (22,881)
Distribution from unconsolidated
newsprint affiliate --- 15,600
Change in assets and liabilities 7,320 (278)
----------------- ------------------
Net cash provided by operating activities 92,878 91,414
----------------- ------------------
Investing activities:
Capital expenditures (30,495) (18,786)
Purchase of businesses (277,326) (39,944)
Sale of businesses 147,267 ---
Other, net (1,668) 6,766
------------------ ------------------
Net cash used by investing activities (162,222) (51,964)
------------------ ------------------
Financing activities:
Increase in debt 963,000 47,000
Payment of debt (800,000) (75,750)
Premiums and costs related to early
redemption of debt (84,703) ---
Dividends paid (10,387) (9,793)
Other, net 2,168 186
----------------- ------------------
Net cash provided (used) by financing activities 70,078 (38,357)
----------------- ------------------
Net increase in cash and cash equivalents 734 1,093
Cash and cash equivalents at beginning of year 4,471 3,367
----------------- ------------------
Cash and cash equivalents at end of period $ 5,205 $ 4,460
================= ==================
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest (net of amount capitalized) $ 44,278 $ 16,825
Income taxes 17,569 32,018
</TABLE>
See accompanying notes.
4
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MEDIA GENERAL, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
1. The accompanying unaudited consolidated condensed financial
statements have been prepared in accordance with generally accepted accounting
principles for interim financial reporting, and with applicable quarterly
reporting regulations of the Securities and Exchange Commission (SEC). They do
not include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements and, accordingly, should
be read in conjunction with the consolidated financial statements and related
footnotes included in the Company's Annual Report on Form 10-K for the year
ended December 29, 1996.
In the opinion of management, all adjustments (consisting of
normal recurring adjustments) considered necessary for a fair presentation of
interim financial information have been included. Certain items in 1996 have
been reclassified to conform with the current year's presentation. The
reclassifications have no effect on net income as previously reported. The
results of operations for interim periods are not necessarily indicative of the
results that may be expected for the full fiscal year.
In January 1997, the SEC finalized its new disclosure rules
related to exposure to market risk and derivatives. The new rules require
quantitative as well as qualitative disclosures about each type of market risk
inherent in derivatives and other financial instruments. The market risk
disclosures are effective for the Company's 1998 year-end financial statements.
The new rules also require enhanced descriptions of specific aspects of a
company's accounting policies for derivatives. These disclosures were effective
for the Company beginning with the Form 10-Q dated June 29, 1997.
The Company uses the accrual method to account for all
interest rate swap agreements. Amounts due to or from counterparties are
recorded as an adjustment to interest expense in the periods in which they
accrue. Interest rate swap agreements are not held for trading purposes and are
designated to manage market risks resulting from fluctuations of variable
interest rates. Realized gains or losses on early terminations of interest rate
swap agreements are deferred and amortized over their remaining terms as an
adjustment to interest expense.
In February 1997, the Financial Accounting Standards Board
issued Statement No. 128, Earnings Per Share, which is effective for both
interim and annual financial statements covering periods ending after December
15, 1997. At that time, the Company will change the method currently used to
compute earnings per share and will restate its earnings per share for all prior
periods. Under the new standard basic earnings per share will replace the
present primary earnings per share and will exclude the dilutive effect of stock
options. The impact on earnings per share of the Company is not expected to be
material.
2. In January 1997, Media General, Inc., acquired Park
Acquisitions, Inc., parent of Park Communications, Inc. (Park). The acquisition
included ten network affiliated television stations, 28 daily newspapers and 82
weekly newspapers. The total consideration approximated $715 million,
representing the purchase of all the issued and outstanding common stock of
Park, the assumption of liabilities (primarily $476 million of Park's high
coupon long-term debt) and estimated transaction costs. In early February, the
Company redeemed Park's high
5
<PAGE>
coupon debt and recorded an extraordinary charge of $63 million, or $2.37 per
share, representing the debt prepayment premium and the write-off of the
associated debt issuance costs. The acquisition and redemption were financed
with borrowings under an existing revolving credit facility. In connection with
the additional borrowings, the Company entered into additional interest rate
swap agreements totaling $600 million (bringing total debt covered by swap
agreements to $800 million with eight counterparties) which effectively
converted variable rate debt, indexed on LIBOR, to fixed rate debt at weighted
average interest rates approximating 7% with maturities of four to seven years.
Since the acquisition, the Company completed sales of certain
of the former Park properties for approximately $147 million, including $7
million related to the sale of WUTR-TV (Utica, New York) during the quarter, and
purchased new properties for approximately $53 million, including The Potomac
News (Woodbridge, Virginia), the Reidsville Review (Reidsville, North Carolina)
and The Messenger (Madison, North Carolina). The Company utilized the remaining
sales proceeds to reduce long-term debt during the second and third quarters.
On August 4, 1997, the Company completed the exchange of
WTVR-TV (Richmond, Virginia) for three other stations: WSAV-TV (Savannah,
Georgia), WJTV-TV (Jackson, Mississippi) and WHLT-TV (Hattiesburg, Mississippi)
in order to comply with the Federal Communication Commission's requirement that
WTVR-TV be divested within one year from its January 1997 purchase date. The new
stations' results of operations have been included in the Company's operations
beginning with the exchange date.
All of the acquisitions have been accounted for as purchases.
The accompanying financial statements include the results of operations for the
former Park properties, The Potomac News, the Reidsville Review and The
Messenger beginning January 1, 1997, February 14, 1997, April 1, 1997 and April
1, 1997, respectively. The purchase price has been allocated to the assets
acquired and liabilities assumed based on their estimated fair values according
to preliminary appraisals. Such estimated values may change as the appraisals
are finalized and more facts become known. Approximately $650 million of
intangible assets related to Park and the related sale, purchase, and exchange
activities are included in the balance sheet at September 28, 1997, and are
being amortized on a straight-line basis over periods of 10-35 years.
The following summary presents the actual consolidated results
of operations for the nine months ended September 28, 1997, and pro forma
consolidated results of operations for the nine months ended September 29, 1996,
as if the acquisitions had been completed at the beginning of the period. The
pro forma does not purport to be indicative of what would have occurred had the
acquisitions actually been made as of such date, nor is it indicative of results
which may occur in the future.
6
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<TABLE>
<CAPTION>
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Actual Pro forma
Nine months ended Nine months ended
(In thousands, except per share amounts) September 28, 1997 September 29, 1996
------------------ ------------------
Revenues $ 667,546 $ 673,514
============= =============
Income before extraordinary item $ 32,688 $ 29,688
Extraordinary item (63,000) (63,000)
------------- -------------
Net loss $ (30,312) $ (33,312)
============= =============
Income (loss) per common share and equivalent:
Income before extraordinary item $ 1.22 $ 1.12
Extraordinary item (2.37) (2.37)
------------- -------------
Net loss $ (1.15) $ (1.25)
============= =============
</TABLE>
3. Inventories are principally raw materials.
7
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
OVERVIEW
- --------
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.
The Company's fiscal year ends on the last Sunday in December.
Media General, Inc.
Business Segment Information
(Unaudited)
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<S> <C>
Quarters Ended Nine Months Ended
------------------------------- -------------------------------
Sept. 28, Sept. 29, Sept. 28, Sept. 29,
1997 1996 1997 1996
-------------- ------------- ------------- --------------
Revenues:
Publishing $ 117,555 $ 98,569 $ 354,257 $ 297,336
Broadcast Television 36,491 22,012 113,460 59,292
Cable Television 37,825 36,935 115,145 108,287
Newsprint 30,104 30,487 84,684 100,520
-------------- ------------- ------------- --------------
Total revenues $ 221,975 $ 188,003 $ 667,546 $ 565,435
============== ============= ============= ==============
Operating income (loss):
Publishing $ 19,187 $ 10,992 $ 59,555 $ 29,124
Broadcast Television 2,866 5,970 13,336 17,832
Cable Television 7,482 6,699 22,642 17,335
Newsprint (1,054) (462) (7,925) 8,476
-------------- -------------- ------------- --------------
Total operating income $ 28,481 $ 23,199 $ 87,608 $ 72,767
============== ============= ============= ==============
Operating cash flow:
Publishing $ 28,802 $ 18,338 $ 88,051 $ 51,065
Broadcast Television 8,788 6,678 31,014 20,007
Cable Television 13,661 13,226 41,829 37,397
Newsprint 593 1,128 (2,956) 13,466
-------------- ------------- ------------- --------------
Total operating cash flow $ 51,844 $ 39,370 $ 157,938 $ 121,935
============== ============= ============= ==============
</TABLE>
The magnitude of our recent acquisitions has heightened the relevance of
operating cash flow information for purposes of developing a full understanding
of the Company's operating results. The effects of non-cash expenses are
integral to this understanding. Accordingly, for each business segment we have
presented operating cash flow information. The operating cash flow amounts
presented above represent operating income plus depreciation and amortization of
intangible assets. Such cash flow amounts vary from net cash provided by
operating activities as presented in the Consolidated Statements of Cash Flows
because cash payments for interest and taxes are not reflected, nor are the cash
flow effects of non-operating items or changes in certain operations-related
balance sheet accounts.
8
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ACQUISITIONS
- ------------
In January 1997, the Company acquired Park Acquisitions, Inc., parent of Park
Communications, Inc. (Park); additionally, The Potomac News, the Reidsville
Review and The Messenger were acquired in February 1997, April 1997 and April
1997, respectively. The Company also completed the exchange of WTVR-TV for three
other stations: WSAV-TV, WJTV-TV and WHLT-TV. See Note 2 of this Form 10-Q for
additional information regarding acquisitions, dispositions and exchanges.
<TABLE>
CONSOLIDATED OPERATING RESULTS
- ------------------------------
(In thousands, except per share data)
<CAPTION>
<S> <C>
Third Quarter Ended Nine Months Ended
----------------------------------------- --------------------------------------
Sept. 28, Sept. 29, Sept. 28, Sept. 29,
1997 1996 Change 1997 1996 Change
----------- ----------- ----------- ---------- ----------- ---------
Revenues $ 221,975 $ 188,003 18 % $ 667,546 $ 565,435 18 %
Net Income (Loss) 10,565 15,623 (32) (30,312) * 51,559 ---
Earnings (Loss) Per Share 0.39 0.59 (34) (1.15) * 1.94 ---
</TABLE>
* Includes extraordinary charge from early redemption of debt ($63 million net
of income tax benefits of $38.6 million; $2.37 per share)
SEGMENT OPERATING RESULTS
- -------------------------
<TABLE>
PUBLISHING
- ----------
(In thousands)
<CAPTION>
<S> <C>
Third Quarter Ended Nine Months Ended
----------------------------------------- --------------------------------------
Sept. 28, Sept. 29, Sept. 28, Sept. 29,
1997 1996 Change 1997 1996 Change
----------- ----------- ----------- ---------- ----------- ---------
Revenues $ 117,555 $ 98,569 19 % $ 354,257 $ 297,336 19 %
Operating Expenses 98,368 87,577 12 294,702 268,212 10
Operating Income 19,187 10,992 75 59,555 29,124 104
Depreciation &
Amortization 9,615 7,346 31 28,496 21,941 30
Operating Cash Flow 28,802 18,338 57 88,051 51,065 72
</TABLE>
The preceding chart contains the operating results of the Publishing segment,
including recent acquisitions. As a direct result of these acquisitions,
Publishing revenues increased $12.6 million and $39.3 million, and operating
income rose $1.8 million and $5.6 million in the third quarter and first nine
months of 1997, respectively, over the comparable prior-year periods.
Excluding acquisitions, Publishing revenues improved $6.4 million and $17.6
million (6.5% and 5.9%) for the quarter and nine-month period ended September
28, 1997, from the similar 1996 periods. The revenue increases were primarily
attributable to the Company's metropolitan newspapers, where advertising
revenues rose as a result of expanded linage (up 3.5% and 3.9%) and higher
advertising rates (up an average of 4.3% and 3.6%) in the quarter and first nine
months of this year. The quarterly and year-to-date increases were principally
attributable to a strong performance in classified advertising (largely due to
employment) and retail advertising. A small decrease in circulation revenues of
1% and 1.7% in the quarter and first nine months of 1997, resulting from a
decline in circulation volume (down 1.2% and 2.5%) partially offset by slightly
higher average rates, was more than offset by the above mentioned increases in
advertising revenues.
9
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Publishing operating expenses, excluding acquisitions, remained relatively flat
in the third quarter, but dropped $7.2 million in the year to date. This drop
was attributable to a $14.3 million reduction in newsprint expense from the
comparable year-ago nine month period, due to decreased cost per ton, partially
offset by a $1.3 million increase in employee compensation and benefit costs.
Additionally, year-to-date other operating expenses increased $5.5 million over
the first nine months of 1996, the most significant of which related to
re-engineering initiatives which began in late 1996 at the Company's Tampa,
Florida, daily newspaper and in early 1997 at the Company's Richmond, Virginia,
daily newspaper.
Operating income for Publishing, excluding acquisitions, rose $6.4 million and
$24.8 million (60% and 86%) in the third quarter and first nine months of 1997
from the comparable prior-year periods. This growth was principally due to
increased revenues at the Company's metropolitan newspapers, particularly at the
Company's Richmond newspaper, coupled with the substantial drop in newsprint
prices, especially in the year to date.
<TABLE>
BROADCAST TELEVISION
- --------------------
(In thousands )
<CAPTION>
<S> <C>
Third Quarter Ended Nine Months Ended
----------------------------------------- --------------------------------------
Sept. 28, Sept. 29, Sept. 28, Sept. 29,
1997 1996 Change 1997 1996 Change
----------- ----------- ----------- ---------- ----------- ---------
Revenues $ 36,491 $ 22,012 66 % $ 113,460 $ 59,292 91 %
Operating Expenses 33,625 16,042 110 100,124 41,460 141
Operating Income 2,866 5,970 (52) 13,336 17,832 (25)
Depreciation &
Amortization 5,922 708 --- 17,678 2,175 ---
Operating Cash Flow 8,788 6,678 32 31,014 20,007 55
</TABLE>
The preceding chart includes the operating results of the Broadcast Television
segment, including recent acquisitions. As a direct result of these
acquisitions, Broadcast revenues grew $16.6 million and $57.5 million in the
current quarter and nine-month period, and operating income decreased $.4
million in the current quarter, but rose $1.6 million in the year to date, as
compared to the equivalent prior-year periods.
Broadcast revenues, excluding acquisitions, decreased $2.1 million and $3.3
million in the third quarter and first nine months of 1997, from the comparable
periods of 1996. The declines were principally the result of decreases in
national ad revenues, particularly in the automotive category. Although local
revenues for the first nine months of 1997 were up (driven by the automotive
category), political revenues were down due to the absence of several 1996
national and local political issues.
The operating expenses of the Broadcast segment, excluding acquisitions,
remained relatively flat in the third quarter of the current year, but increased
slightly in the year to date from the comparable period of 1996. The increase
was due primarily to rising program costs, the result of increased fees
associated with programs currently in place.
Excluding acquisitions, Broadcast operating income declined $2.7 million and
$6.1 million in the third quarter and first nine months of 1997 compared to the
equivalent year-ago periods. The drop was primarily attributable to reduced
national ad revenues, especially at the Company's flagship station, WFLA-TV in
Tampa, and to a modest increase in program costs, particularly in the year to
date.
10
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<TABLE>
CABLE TELEVISION
- ----------------
(In thousands)
<CAPTION>
<S> <C>
Third Quarter Ended Nine Months Ended
----------------------------------------- --------------------------------------
Sept. 28, Sept. 29, Sept. 28, Sept. 29,
1997 1996 Change 1997 1996 Change
----------- ----------- ----------- ---------- ----------- ---------
Revenues $ 37,825 $ 36,935 2 % $ 115,145 $ 108,287 6 %
Operating Expenses 30,343 30,236 --- 92,503 90,952 2
Operating Income 7,482 6,699 12 22,642 17,335 31
Depreciation &
Amortization 6,179 6,527 (5) 19,187 20,062 (4)
Operating Cash Flow 13,661 13,226 3 41,829 37,397 12
</TABLE>
Revenues at the Company's Cable Television segment rose $.9 million and $6.9
million in the third quarter and first nine months of 1997, up 2.4% and 6.3%
from the year-ago periods. The increases were primarily attributable to the
Company's Fairfax County, Virginia, cable system (Fairfax Cable), as a result of
a 3.2% increase in the number of subscribers (to approximately 232,500 at
September 28, 1997), together with higher average basic subscriber rates, up 5%
and 7.4% in the current quarter and year to date, and average increases of 3.3%
and 6.2% in expanded subscriber rates in the third quarter and first nine months
of 1997, as compared to the same prior-year periods.
Cable operating expenses remained relatively flat in the third quarter, but
increased slightly in the first nine months of 1997 from the comparable
prior-year period. The increase was primarily attributable to a $2.7 million
rise in program costs, due principally to higher program rates and the expanded
subscriber base at Fairfax Cable, which was partially offset by a $1 million
decrease in depreciation expense as compared to the similar year-ago period.
Cable operating income improved $.8 million and $5.3 million (12% and 31%) in
the third quarter and first nine months of 1997 from the year-earlier periods.
The improvement reflects revenue growth at Fairfax Cable as a result of
increases in both rate and subscriber count, partially offset by higher Cable
program costs in the year to date. An operating profit improvement at MEGA
Advertising (the Company's cable advertising subsidary), due primarily to
reduced operating expense levels, also contributed to the growth in Cable
segment profitability in the third quarter and year to date of 1997.
11
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<TABLE>
NEWSPRINT
- ---------
(In thousands)
<CAPTION>
<S> <C>
Third Quarter Ended Nine Months Ended
----------------------------------------- --------------------------------------
Sept. 28, Sept. 29, Sept. 28, Sept. 29,
1997 1996 Change 1997 1996 Change
----------- ----------- ----------- ---------- ----------- ---------
Revenues $ 30,104 $ 30,487 (1) % $ 84,684 $ 100,520 (16) %
Operating Expenses 31,158 30,949 1 92,609 92,044 1
Operating Income (Loss) (1,054) (462) 128 (7,925) 8,476 (193)
Depreciation &
Amortization 1,647 1,590 4 4,969 4,990 ---
Operating Cash Flow 593 1,128 (47) (2,956) 13,466 ---
</TABLE>
The Newsprint segment revenue declines of $.4 million and $15.8 million in the
third quarter and first nine months of 1997, were focused at the Company's
Garden State Paper (Garden State) newsprint mill, located in Garfield, New
Jersey. The decline resulted from a 7.4% and 21% decrease in the average
realized selling price per ton for the quarterly and year-to-date periods ended
September 28, 1997, partially offset by a 6.8 % and a 6.3% rise in tons sold.
Average realized newsprint selling prices fell from $610 per ton in the first
nine months of 1996 to $481 per ton in the comparable period of 1997. However,
the market is continuing to improve as evidenced by a 10% average selling price
increase from $456 per ton in the first quarter of 1997 to $501 per ton in the
third quarter.
Newsprint operating expenses for both the third quarter and first nine months of
1997 remained essentially level with the year-earlier periods. The cost of
Garden State's principal raw material, recovered newspapers (ONP), dropped $1.2
million and $3.2 million (down 18% and 17%) in the most recent quarterly and
year-to-date periods, due principally to lower market demand, and energy cost
declined by $1 million in the year to date, mainly attributable to the mild 1997
winter. These declines were offset by increases of $1.1 million and $4.2 million
in maintenance and production costs for the third quarter and first nine months
of 1997, including increases of $.5 million and $1.9 million in the cost of
additive and bleaching chemicals used to enhance the quality of paper produced.
Newsprint operating income declined $.6 million and $16.4 million in the third
quarter and first nine months of 1997 from the comparable periods of 1996. The
decrease resulted from a $40 and $129 decline in average realized selling price
per ton for the current quarter and year-to-date period as compared to the
equivalent year-ago periods, reflecting an industry-wide generally unfavorable
supply and demand imbalance. Throughout 1997, as newspaper consumption increased
and newsprint stocks declined, the Company has increased its newsprint price,
but average realized selling prices have not yet reached 1996 levels. Continued
gradual improvement in realized newsprint selling prices is expected during the
fourth quarter of 1997.
UNCONSOLIDATED AFFILIATES
- -------------------------
The Company's investment income from unconsolidated affiliates increased $.7
million in the third quarter, but fell $7.4 million in the first nine months of
1997 from the comparable periods of 1996. The decrease was caused by the
Company's share of the operating results of its Southeast Paper Manufacturing
Company (SEPCO) newsprint affiliate, which decreased $.8 million from the third
quarter of 1996 and $12.6 million from the first nine months of 1996. Despite a
2.8% and 6.1% increase in tons sold in the third quarter and first nine months
of 1997 compared to the same periods in 1996, revenues declined 5.2% and 17.7%
as a result of SEPCO's average realized selling price declining to $485 per ton
in the first nine months of 1997 from $621 per ton in the comparable prior-year
12
<PAGE>
period, also the result of the previously described unfavorable supply and
demand imbalance as compared to the similar year ago period; however, newsprint
selling prices have shown quarter-over-quarter improvement throughout 1997 and
are expected to continue the trend throughout the remainder of the year.
Income earned from the Company's Denver Newspapers, Inc. (DNI), affiliate grew
$1.6 million and $5.2 million in the third quarter and first nine months of 1997
over the comparable periods of 1996 due to a $1.3 million and $4.4 million
increase in the Company's share of net income applicable to common stockholders
and a $.3 million and $.8 million rise in income from the Company's DNI
preferred stock investment. DNI's improved operating results for both the
current third quarter and year-to-date period were attributable to strong
advertising revenue growth coupled with reduced newsprint expense which,
together, more than offset the effects of a modest decrease in circulation
revenues and an increase in operating expenses.
INTEREST EXPENSE
- ----------------
Interest expense of $16.3 million and $49.4 million in the third quarter and
year-to-date period ended September 28, 1997, increased $11.1 million and $33.1
million over the comparable year-earlier periods. This was due primarily to
increases of $621 million and $665 million in average debt outstanding in the
third quarter and first nine months of 1997, the result of recent acquisitions.
Slightly offsetting the year-to-date increase in average debt was a reduction in
the Company's average effective borrowing rate to 6.8% for the first nine months
of 1997; however, the average borrowing rate in the current quarter remained
unchanged from 1996's third quarter rate of 6.9%.
NON-OPERATING ITEMS
- -------------------
Other income, net, decreased $1.4 million in the third quarter of 1997 from the
year-ago period, due primarily to the absence of gains on the sale of fixed
assets in the same year-ago period. The $.8 million increase in the current year
to date was principally the result of a rise in interest income, which was
partially offset by the aforementioned absence of increased gains on the sale of
fixed assets.
INCOME TAXES
- ------------
Excluding the extraordinary item, the Company's effective tax rate was 41.5% in
both the third quarter and first nine months of 1997, up from 36.2% in the
previous year's comparable periods. Income tax expense declined $1.4 million and
$6 million (15% and 21%) in the quarter and first nine months of 1997 on a
pretax earnings decrease of $6.4 million and $24.9 million, respectively. The
Company's effective tax rate rose in 1997 due to the increase in nondeductible
intangible asset amortization related to recent acquisitions.
13
<PAGE>
NET INCOME (LOSS)
- -----------------
The Company incurred a net loss of $30.3 million ($1.15 per share) in the first
nine months of 1997 as the result of a $63 million charge, net of tax benefits
of $38.6 million, ($2.37 per share) related to the redemption of Park's high
coupon debt in February 1997. Excluding this extraordinary item, net income
declined from $15.6 million to $10.6 million in the third quarter and from $51.6
million to $32.7 million in the first nine months of 1997 from the comparable
periods of 1996. The $5.1 million drop in net income for the quarter resulted
principally from an $11.1 million rise in interest expense, partially offset by
a $5.3 million increase in operating income. This rise in operating income was
achieved despite a $5 million increase in amortization expense during the
quarter. The $18.9 decrease in net income in the year to date was primarily
attributable to a $33.1 million increase in interest expense, partially offset
by a $14.8 million rise in operating income. The increase in year-to-date
operating income was similarly impacted by a $15.3 million rise in amortization
expense. Strong performances in Publishing and Cable were more than adequate to
offset weak quarterly and year to date results in Newsprint and Broadcast, but
fell short of fully covering the rise in interest expense which was directly
attributable to recent acquisitions.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
Funds generated by operating activities during the first nine months of 1997
totaled $92.9 million, up $1.5 million from the comparable period of 1996. The
increase was due to a rise in non-cash depreciation and intangibles amortization
expense combined with this year's lower non-cash income, partially offset by a
decline in net income (excluding the extraordinary item) and the absence of the
prior-year distribution of $15.6 million from SEPCO. Funds generated from
operating activities, coupled with funds provided from the sales of
non-southeastern Park properties and new borrowings, supplied $277 million for
acquisitions (excluding the liabilities assumed), $30.5 million for capital
expenditures and $10.4 million for the payment of dividends to stockholders.
Total debt outstanding at September 28, 1997, was $915 million, up $617 million
(principally the result of the Park acquisition) from the year-ago level of $298
million, but down $133 million from the March 30, 1997, level of $1,048 million.
The majority of the debt reduction in the current year was funded with proceeds
from the sale of certain of the former Park properties; the balance was derived
from improved cash flow from operations. At September 28, 1997, the Company had
$375 million in unused credit lines available from its committed seven-year $1.2
billion revolving credit facility. Augmenting this credit facility's borrowing
capacity, the Company continues to have an arrangement with an insurance company
which makes available an uncommitted credit facility allowing the Company to
borrow up to an additional $150 million under senior notes at prevailing
interest rates.
As previously disclosed in Note 2 of this Form 10-Q, in early 1997 in connection
with the borrowings related to the Park acquisition, the Company entered into an
additional $600 million of interest rate swap agreements which effectively
converted variable rate debt to fixed rate debt at interest rates approximating
7% over four to seven year periods.
The Company anticipates that internally generated funds provided by operations
during 1997, together with existing credit facilities, will be more than
adequate to finance other possible acquisitions, projected capital expenditures,
dividends to stockholders, and working capital needs.
14
<PAGE>
OUTLOOK
- -------
Consistent with the trend throughout 1997, the Company anticipates a strong
fourth quarter in Publishing and Cable, while Newsprint should improve as
selling prices continue their gradual ascent. Despite anticipated improvements
in local revenues, Broadcast is still expected to be impacted by an
industry-wide weak climate in the national advertising market.
The quick integration of recently acquired companies into Media General has
strengthened the Company's ability to provide communications throughout the
Southeast and to capitalize on emerging opportunities. In early October, the
Company reached an agreement to acquire the Bristol (Virginia) Herald-Courier
and two affiliated weekly newspapers. The transaction is expected to close early
in the first quarter of 1998, subject to regulatory approval. The Herald-Courier
is a leading source of news and information in southwestern Virginia, and the
three papers will fit extremely well with the Company's existing newspapers in
western Virginia, northwestern North Carolina and eastern Kentucky.
<PAGE>
15
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
3 (ii) Bylaws of Media General, Inc., amended as of July 31, 1997.
27 Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Company during the quarter
ended September 28, 1997.
16
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MEDIA GENERAL, INC.
DATE: November 11, 1997 /s/ J. Stewart Bryan III
------------------------
J. Stewart Bryan III, Chairman, President and
Chief Executive Officer
DATE: November 11, 1997 /s/ Marshall N. Morton
----------------------
Marshall N. Morton
Senior Vice President and Chief Financial Officer
17
MEDIA GENERAL, INC.
By-Laws
Amended and Restated as of July 31, 1997
<PAGE>
<TABLE>
<S> <C>
INDEX
Article I. Meetings of Stockholders 1
1. Place of Meetings 1
2. Annual Meetings 1
3. Special Meetings 1
4. Notice of Meetings 1
5. Quorum 1
6. Voting 1
7. Advance Notice Provisions for Election of Directors 1
8. Advance Notice Provisions for Business to be Transacted at Annual Meeting 2
Article II. Directors 3
1. General Powers 3
2. Number, Election, Term and Qualification 3
3. Vacancies 3
4. Removal 3
5. Compensation 3
6. Advisory Directors 3
Article III. Directors Meetings 3
1. Annual Meeting 3
2. Regular Meetings 3
3. Special Meetings 4
4. Notice 4
5. Quorum 4
6. Waiver of Notice 4
7. Action Without a Meeting 4
Article IV. Directors Committees 4
1. Executive Committee 4
2. Other Committees 4
Article V. Officers 4
1. Officers 4
2. Election, Term 5
3. Removal of Officers 5
4. Duties of Chairman of the Board 5
5. Duties of Chairman of the Executive Committee 5
6. Duties of Vice Chairmen of the Board 5
7. Duties of President 5
8. Duties of Vice Presidents 5
9. Duties of General Counsel 5
10. Duties of Secretary 5
11. Duties of Treasurer 5
12. Duties of Controller 6
13. Duties of Assistant Secretaries 6
14. Duties of Assistant Treasurers 6
15. Duties of Assistant Controllers 6
16. Salaries of Officers 6
17. Bonds 6
Article VI. Certificates of Stock 6
1. Form 6
2. Transfer Agents and Registrars 6
3. Lost, Destroyed and Mutilated Certificates 6
4. Transfer of Stock 6
5. Closing of Transfer Books and Fixing Record Date 7
Article VII. Voting of Stock Held 7
Article VIII. Miscellaneous 7
1. Checks, Notes, Etc. 7
2. Fiscal Year 7
3. Corporate Seal 7
Article IX. Amendments 7
1. New By-Laws and Alterations 7
2. Legislative Amendments 7
</TABLE>
<PAGE>
Article I -- Meetings of Stockholders
Section 1. Place of Meetings -- Meetings of Stockholders shall be held
at the principal office of the Corporation in Richmond, Virginia or at such
other place, either within or without the Commonwealth of Virginia, as from time
to time may be fixed by the Board of Directors.
Section 2. Annual Meetings -- The Annual Meetings of Stockholders shall
be held on the third Friday in May of each year, if not a legal holiday, and if
a legal holiday, on the next business day following.
Section 3. Special Meetings -- Special meetings of the Stockholders may
be called by the Chairman of the Board, a Vice Chairman, the President, the
Board of Directors, or in such other manner as is permitted by law.
Section 4. Notice of Meetings -- Written notice stating the place, day
and hour of the meeting and, in case of a special meeting, the purpose or
purposes for which the meeting is called, shall be given not less than ten nor
more than sixty days before the date of the meeting (except as a different time
is specified in these By-laws or by the laws of Virginia) either personally or
by mail, by or at the direction of the Chairman of the Board, a Vice Chairman,
the President, the Secretary, or the Officer or persons calling the meeting, to
each Stockholder of record entitled to vote at such meeting. If mailed, such
notice shall be deemed to be given when deposited in the United States mail
addressed to the Stockholder at his address as it appears on the stock transfer
books of the Corporation, with postage thereon prepaid.
Notice of a Stockholders meeting to act on an amendment of the Articles
of Incorporation, on a plan of merger or exchange of shares, on a sale of all or
substantially all of the assets of the Corporation, or the dissolution of the
Corporation shall be given, in the manner provided above, not less than
twenty-five nor more than sixty days before the date of the meeting. Any such
notice shall be accompanied by such additional documents as may be required by
law.
Section 5. Quorum -- A majority of the shares entitled to vote,
represented in person or by proxy, shall constitute a quorum at a meeting of
Stockholders; provided however, that when any specified action is required to be
voted upon by a class of stock voting as a class, holders of a majority of the
shares of such class shall constitute a quorum for the transaction of such
specified action. If a quorum is present, action on a matter is approved if the
votes cast in favor of the action exceeds the votes cast opposing the action,
except when a larger vote or a vote by class is required by the laws of the
Commonwealth of Virginia and except that in elections of Directors those
receiving the greatest number of votes shall be deemed elected even though not
receiving a majority. Less than a quorum may adjourn, without notice other than
by announcement at the meeting, until a quorum shall attend.
Section 6. Voting -- Each holder of shares of a class entitled to vote
on a matter coming before a meeting of Stockholders shall be entitled to one
vote for each share he or she holds.
A Stockholder may vote either in person or by proxy executed by the
Stockholder or by his duly authorized attorney in fact. No proxy shall be valid
after eleven months from its date, unless otherwise provided in the proxy.
Section 7. Advance Notice Provisions for Election of Directors -- Only
persons who are nominated in accordance with the following procedures shall be
eligible for election as Directors of the Corporation. Nominations of persons
for election to the Board of Directors as Class A or Class B Directors may be
made at any Annual Meeting of Stockholders, or at any special meeting of
Stockholders called for the purpose of electing Directors, (a) by or at the
direction of the Board of Directors or (b) by any Stockholder of the Corporation
(i) who is a Stockholder of record of the Class in respect of which such
nomination is made on the date of the giving of the notice provided for in this
Section 7 and on the record date for the determination of Stockholders entitled
to vote at such meeting and (ii) who complies with the notice procedures set
forth in this Section 7.
In addition to any other applicable requirements, for a nomination to
be made by a Stockholder such Stockholder must have given timely notice thereof
in proper written form to the Secretary of the Corporation.
To be timely, a Stockholders notice to the Secretary must be delivered
to or mailed and received at the principal executive offices of the Corporation
(a) in the case of an Annual Meeting, not less than 90 days nor more than 120
days prior to the date of the Annual Meeting, as provided in Article I, Section
2 of these By-laws; and (b) in the case of a special meeting of Stockholders
called for the purpose of electing Directors, not later than the close of
business on the 10th day following the day on which notice of the date of the
special meeting was mailed or public disclosure of the date of the special
meeting was made, whichever first occurs.
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<PAGE>
To be in proper written form, a Stockholders notice to the Secretary
must set forth (a) as to each person whom the Stockholder proposes to nominate
for election as a Director (i) the name, age, business address and residence
address of the person, (ii) the employer and principal occupation of the person,
(iii) a biographical profile of the person, including educational background and
business and professional experience, (iv) the class or series and number of
shares of capital stock of the Corporation which are owned beneficially and of
record by the person and (v) any other information relating to the person that
would be required to be disclosed in a proxy statement or other filings required
to be made in connection with solicitations of proxies for election of Directors
pursuant to Section 14 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and the rules and regulations promulgated thereunder; and (b)
as to the Stockholder giving the notice (i) the name and record address of such
Stockholder, (ii) the employer and principal occupation of such Stockholder,
(iii) the class or series and number of shares of capital stock of the
Corporation which are owned beneficially or of record by such Stockholder, (iv)
a description of all arrangements or understandings between such Stockholder and
each proposed nominee and any other person or persons (including their names)
pursuant to which the nomination(s) are to be made by such Stockholder, (v) a
representation that such Stockholder intends to appear in person or by proxy at
the meeting to nominate the person or persons named in his notice and (vi) any
other information relating to such Stockholder that would be required to be
disclosed in a proxy statement or other filings required to be made in
connection with solicitations of proxies for election of Directors pursuant to
Section 14 of the Exchange Act and the rules and regulations promulgated
thereunder. Such notice must be accompanied by a written consent of each
proposed nominee to be named as a nominee and to serve as a Director if elected.
No person shall be eligible for election as a Director of the
Corporation unless nominated in accordance with the procedures set forth in this
Section 7. If the Chairman of the meeting determines that a nomination was not
made in accordance with the foregoing procedures, the Chairman shall declare to
the meeting that the nomination was defective, and such defective nomination
shall be disregarded.
Section 8. Advance Notice Provisions for Business to be Transacted at
Annual Meeting -- No business may be transacted at an Annual Meeting of
Stockholders, other than business that is either (a) specified in the notice of
meeting (or any supplement thereto) given by or at the direction of the Board of
Directors (or any duly authorized committee thereof), (b) otherwise properly
brought before the Annual Meeting by or at the direction of the Board of
Directors (or any duly authorized committee thereof) or (c) otherwise properly
brought before the Annual Meeting by any Stockholder of the Corporation (i) who
is a Stockholder of record of any class entitled to vote on such business on the
date of the giving of the notice provided for in this Section 8 and on the
record date for the determination of Stockholders entitled to vote at such
Annual Meeting and (ii) who complies with the notice procedures set forth in
this Section 8.
In addition to any other applicable requirements, for business to be
properly brought before an Annual Meeting by a Stockholder, such Stockholder
must have given timely notice thereof in proper written form to the Secretary of
the Corporation.
To be timely, a Stockholders notice to the Secretary must be delivered
to or mailed and received at the principal executive offices of the Corporation
not less than 90 days nor more than 120 days prior to the date of the Annual
Meeting, as provided in Article I, Section 2 of these By-laws.
To be in proper written form a Stockholders notice to the Secretary
must set forth as to each matter such Stockholder proposes to bring before the
Annual Meeting (i) a brief description of the business desired to be brought
before the Annual Meeting and the reasons for conducting such business at the
Annual Meeting, (ii) the name and record address of such Stockholder, (iii) the
employer and principal occupation of such Stockholder, (iv) the class or series
and number of shares of capital stock of the Corporation which are owned
beneficially and of record by such Stockholder, (v) a description of all
arrangements or understandings between such Stockholder and any other person or
persons (including their names) in connection with the proposal of such business
by such Stockholder and any material interest of such Stockholder in such
business and (vi) a representation that such Stockholder intends to appear in
person or by proxy at the Annual Meeting to bring such business before the
meeting.
No business shall be conducted at the Annual Meeting of Stockholders
except business brought before the Annual Meeting in accordance with the
procedures set forth in this Section 8; provided, however, that once business
has been properly brought before the Annual Meeting in accordance with such
procedures, nothing in this Section 8 shall be deemed to preclude discussion by
any Stockholder of any such business. If the Chairman of an Annual Meeting
determines that business was not properly brought before the Annual Meeting in
accordance with the foregoing procedures, the Chairman shall
2
<PAGE>
declare to the meeting that the business was not properly brought before the
meeting, and such business shall not be transacted.
Article II -- Directors
Section 1. General Powers -- All corporate powers shall be exercised by
or under the authority of, and the business and affairs of the Corporation shall
be managed under the direction of, the Board of Directors, subject to any
requirement of Stockholder action.
Section 2. Number, Election, Term and Qualification -- The number of
Directors of the Corporation shall be fixed by the Shareholders or by the Board
of Directors, but shall not be fewer than eight nor more than twelve. For the
purpose of election of Directors only, the Directors shall be divided into two
classes; the Directors whom the holders of Class A Common Stock are entitled to
elect shall be designated Class A Directors, and the Directors whom the holders
of Class B Stock are entitled to elect shall be designated Class B Directors.
Directors shall, except as provided in Section 3 of this Article II, be elected
by the classes of shares entitled to elect them, at each Annual Meeting of
Stockholders, to hold office until the next Annual Meeting of Stockholders or
until their death, resignation, retirement, removal or disqualification.
Directors need not be residents of the Commonwealth of Virginia or Stockholders
of the Corporation. Except for a Director who may be or has been an Officer of
the Company, all Directors shall be under the age of 73 years, provided however,
that a Director serving at the time he reaches such age shall be permitted to
complete his term of office but shall not thereafter be eligible for reelection,
and provided further, that this sentence shall not apply to any Director in
office as of November 24, 1977.
Section 3. Vacancies -- Except as limited by law, any vacancy occurring
in the Board of Directors may be filled by the affirmative vote of a majority of
the remaining Directors though less than a quorum of the Board of Directors.
Section 4. Removal -- At a meeting called expressly for that purpose,
any Director may be removed from office, with or without cause, by a vote of the
Stockholders holding a majority of the shares of the class of stock which
elected such Director. If any Directors are so removed, new Directors may be
elected at the same meeting.
Section 5. Compensation -- The Board of Directors may compensate
Directors for their services as such and may provide for the payment of all
expenses incurred by Directors in attending regular and special meetings of the
Board of Directors.
Section 6. Advisory Directors -- The Directors may, from time to time,
by a majority vote of all Directors, elect one or more persons to serve as
advisory directors for such term(s) as the Directors by resolution shall
establish or until such advisory directors death, resignation, retirement,
disqualification or removal. Advisory directors shall not be Directors of the
Corporation and shall have no rights, privileges or powers of Directors other
than those specifically provided herein or as may be specifically assigned to
them by the Directors. Advisory directors shall attend meetings of the Directors
and meetings of any committees of the Directors to which they may be appointed.
Advisory directors shall not be entitled to vote on any business coming before
the Directors or any Committee thereof and shall not be counted for the purpose
of determining the number of Directors necessary to constitute a quorum, for the
purpose of determining whether a quorum is present or for any other purpose
whatsoever. Any or all advisory directors may be removed at any time with or
without cause by vote of the shareholders or by action of the Directors. The
termination of any persons relationship with the Corporation as an advisory
director shall not be deemed to create a vacancy in the position of advisory
director.
Article III -- Directors Meetings
Section 1. Annual Meeting -- The Annual Meeting of the Board of
Directors (which meeting shall be considered a regular meeting for the purposes
of notice) shall be held on the same day as the Annual Meeting of Stockholders
for the purpose of electing Officers, unless the Board shall determine
otherwise, and carrying on such other business as properly may come before such
meeting.
Section 2. Regular Meetings -- Regular meetings of the Board of
Directors shall be held for the purpose of carrying on such business as may
properly come before the meeting in the months of January, March, May, July,
September and November of each year on such day within such months and at such
time and at such place, within or without the Commonwealth of Virginia, as may
be designated by the Chairman and specified in the notice of the meeting.
Furthermore, regular meetings of the Board of Directors shall be held
immediately following each special meeting of Stockholders to act upon any
matter considered by the Stockholders and to consider such other business as may
3
<PAGE>
properly come before the meeting. Any such meeting shall be held at the place
where the Stockholders meeting was held.
Section 3. Special Meetings -- Special meetings of the Board of
Directors shall be held on the call of the Chairman of the Board, a Vice
Chairman, the President, or any four members of the Board of Directors, at the
principal office of the Corporation or at such other place as the President may
direct.
Section 4. Notice -- Notice of regular and special meetings of the
Board of Directors shall be mailed to each Director at least two (2) days, or
telegraphed at least twenty-four (24) hours, prior to the time of the meeting.
Notice of a special meeting must set forth the purpose for which the meeting is
called.
Section 5. Quorum -- A majority of the Directors shall constitute a
quorum for the transaction of business. The act of the majority of the
Directors present at a meeting at which a quorum is present shall be the act of
the Board of Directors.
Section 6. Waiver of Notice -- Notwithstanding any other provisions of
these By-laws, whenever notice of any meeting for any purpose is required to be
given to any Director a waiver thereof in writing signed by the person or
persons entitled to said notice, whether before or after the time stated
therein, shall be the equivalent to the giving of such notice.
A Director who attends a meeting shall be deemed to have had timely and
proper notice thereof unless he attends for the express purpose of objecting to
the transaction of any business because the meeting is not lawfully called or
convened.
Section 7. Action Without A Meeting -- Any action which is required to
be taken at a meeting of the Directors or of a Directors Committee may be taken
without a meeting if a consent in writing, setting forth the action so to be
taken, shall be signed before such action by all of the Directors or all of the
members of the Committee, as the case may be. Such consent shall have the same
force and effect as a unanimous vote.
Article IV -- Directors Committees
Section 1. Executive Committee -- The Board of Directors, by a
resolution adopted by a majority of the number of Directors, may designate no
less than four (4) nor more than six (6) Directors, including the Chairman of
the Board, the Chairman of the Executive Committee, any Vice Chairman and the
President, to constitute an Executive Committee. Members of the Executive
Committee shall serve until removed, until their successors are designated or
until the Executive Committee is dissolved by the Board of Directors. All
vacancies which may occur in the Executive Committee shall be filled by the
Board of Directors. The Executive Committee, when the Board of Directors is not
in session, may exercise all of the powers of the Board of Directors except as
limited by law, and may authorize the seal of the Corporation to be affixed as
required. Regular meetings of the Executive Committee shall be held six (6)
times per year, alternating with the regular meetings of the full Board of
Directors, on such days and at such time and at such place, within or without
the Commonwealth of Virginia, as may be designated by the Chairman of the Board
or Chairman of the Executive Committee and specified in the notice of the
meeting. The Special Meetings, Quorum, Waiver of Notice, and Action Without A
Meeting provisions applicable to meetings of the Board of Directors set forth in
Article III, Sections 3, 5, 6, and 7, respectively, shall apply to meetings of
the Executive Committee as well, with all references therein to Directors to
refer to the members of the Executive Committee and all references therein to
the Board of Directors to refer to the Executive Committee. Notice of regular
and special Executive Committee meetings of the Board of Directors shall be
telephoned or otherwise given to each member thereof at least twenty-four (24)
hours prior to the time of the meeting. Notice of a special meeting must set
forth the purpose for which the meeting is called.
Section 2. Other Committees -- Other Committees with limited authority
may be designated by a resolution adopted by a majority of the full number of
Directors.
Article V -- Officers
Section 1. Officers -- The Officers of the Corporation shall be a
Chairman of the Board, a Chairman of the Executive Committee, one or more Vice
Chairmen of the Board, a President, one or more Vice Presidents (any one or more
of whom may be designated as an Executive Vice President or a Senior Vice
President), a General Counsel, a Secretary, a Treasurer, a Controller and, in
the discretion of the Board of Directors, one or more Assistant Secretaries,
Assistant Treasurers and Assistant Controllers. The Chairman of the Board, the
Chairman of the Executive Committee, the Vice
4
<PAGE>
Chairmen of the Board and the President shall be chosen from the members of the
Board of Directors. Any two offices may be combined in the same person except
the offices of President and Secretary.
Section 2. Election, Term -- Officers shall be elected at the regular
Annual Meeting of the Board of Directors or at such other time as the Board of
Directors may determine and shall hold office, unless removed, until the next
Annual Meeting of the Board of Directors or until their successors are elected
and qualified.
Section 3. Removal of Officers -- Any Officer may be removed with or
without cause at any time by the Board of Directors at any duly called meeting.
Section 4. Duties of Chairman of the Board -- The Chairman of the Board
shall be a member of the Executive Committee and, in the absence or incapacity
of the President or vacancy in the office of President, shall perform the duties
of that office until the Board of Directors shall otherwise determine. He shall
preside at all meetings of the Stockholders and Directors, and shall see that
all the orders and resolutions of the Board of Directors are carried into
effect, subject, however, to the rights of the Directors to delegate any
specific powers. He shall, in addition, have such powers and duties as may be
specifically assigned to him by the Board of Directors.
Section 5. Duties of Chairman of the Executive Committee -- The
Chairman of the Executive Committee shall be a member of the Executive
Committee, and shall preside at all meetings of the Executive Committee and
shall see that all orders and resolutions of the Executive Committee are carried
into effect, subject, however, to the rights of the Executive Committee to
delegate any specific powers. He shall, in addition, have such powers and duties
as may be specifically assigned to him by the Board of Directors.
Section 6. Duties of Vice Chairmen of the Board -- Subject to the
control of the Board of Directors and the Chairman of the Board and to the
provisions of the Articles of Incorporation and By-laws, the Vice Chairmen shall
severally perform such duties as may, from time to time, be assigned to each by
the Chairman of the Board or the Board of Directors.
Section 7. Duties of President -- Subject to the control of the Board
of Directors and the Chairman of the Board and to the provisions of the Articles
of Incorporation and By-laws, the President shall have general charge,
supervision and control of all the business and affairs of the Corporation, and
in the absence or incapacity of the Chairman of the Board or the Vice Chairmen,
shall perform the duties of the Chairman or the Vice Chairmen until the Board of
Directors shall otherwise determine. He shall make annual reports showing the
condition of the affairs of the Corporation, making such recommendations as he
thinks proper, and shall from time to time submit to the Board of Directors such
information as may be required, relating to the business and property of the
Corporation. He shall further perform all such duties as may from time to time
be assigned or delegated to him by the Board of Directors.
Section 8. Duties of Vice Presidents -- The Vice Presidents shall
severally perform such duties as may, from time to time, be assigned to each by
the Chairman of the Board, the Vice Chairmen, the President or the Board of
Directors.
Section 9. Duties of General Counsel -- The General Counsel shall be
the chief legal officer of the Corporation. He shall, with the help of those
whom he may employ (including any firm of which he may be a member) supervise
the handling of all claims made by or against the Corporation, the filing of
such statements, reports or other documents as may be required by state and
federal agencies controlling corporations and their securities, render legal
advice to the Officers and Directors and generally manage all matters of a legal
nature for the Corporation.
Section 10. Duties of Secretary -- The Secretary shall keep a record in
proper books for the purpose of all meetings and proceedings of the Board of
Directors and of the Executive Committee and also the minutes of the
Stockholders meetings, and record all the votes of the Corporation. He shall
attend to the giving and serving of all notices of the Corporation and shall
notify the Directors and Stockholders of their respective meetings. He shall
have custody of the seal of the Corporation and shall affix the seal or cause it
to be affixed to all documents which are authorized to be executed on behalf of
the Corporation under its corporate seal. He shall have custody of all deeds,
leases, and contracts and shall have charge of the books, records and papers of
the Corporation relating to its organization and management. In addition, he
shall perform such other duties as may from time to time be delegated to him by
the Chairman of the Board, the Vice Chairmen, the President or the Board of
Directors.
Section 11. Duties of Treasurer -- The Treasurer shall have custody of
all the funds and securities of the Corporation and shall dispose of the same as
provided in these By-laws, or as directed by the Board of Directors or the
Executive Committee, if created. He shall have the care and custody of all
securities, books of account, documents and papers of the Corporation except
such as are kept by the Secretary. He shall keep regular and full accounts
showing his receipts and disbursements.
5
<PAGE>
He shall at all times submit to the Board of Directors such statements as to the
financial condition of this Corporation as they may require and shall perform
such other duties as may from time to time be delegated to him by the Chairman
of the Board, the Vice Chairmen, the President or the Board of Directors.
Section 12. Duties of Controller -- The Controller shall be responsible
for all accounting, budgeting, and internal auditing functions of the
Corporation, subject to the direction of the Chairman of the Board, the Vice
Chairmen, the President, the Vice President designated as Principal Accounting
Officer, or the Board of Directors. In addition, he shall perform such other
duties as may from time to time be delegated to him by the Chairman of the
Board, the Vice Chairmen, the President or the Board of Directors.
Section 13. Duties of Assistant Secretaries -- The Assistant
Secretaries shall, jointly or severally, in the absence or incapacity of the
Secretary or vacancy in the office of Secretary, perform the duties of the
Secretary. They shall also perform such other duties as may from time to time be
delegated to them by the Chairman of the Board, the Vice Chairmen, the
President, the Board of Directors or the Secretary.
Section 14. Duties of Assistant Treasurers -- The Assistant Treasurers
shall, jointly and severally, in the absence or incapacity of the Treasurer or
vacancy in the office of Treasurer, perform the duties of the Treasurer. They
shall also perform such other duties as may from time to time be delegated to
them by the Chairman of the Board, the Vice Chairmen, the President, the Board
of Directors or the Treasurer.
Section 15. Duties of Assistant Controllers -- The Assistant
Controllers shall, jointly and severally, in the absence or incapacity of the
Controller or vacancy in the office of Controller, perform the duties of the
Controller, and shall in general assist the Controller in the performance of his
duties. They shall also perform such other duties as may from time to time be
delegated to them by the Chairman of the Board, the Vice Chairmen, the
President, the Board of Directors or the Controller.
Section 16. Salaries of Officers -- The Board of Directors shall fix
the salaries of all of the Officers of the Corporation.
Section 17. Bonds -- The Board of Directors may by resolution require
that any or all Officers, agents and employees of the Corporation give bond to
the Corporation, with sufficient sureties, conditioned on the faithful
performance of the duties of their respective offices or positions, and comply
with such other conditions as may from time to time be required by the Board of
Directors.
Article VI -- Certificates of Stock
Section 1. Form -- Certificates representing shares of the capital
stock of the Corporation shall be in such form as is permitted by law and
prescribed by the Board of Directors and shall be signed by the President or a
Vice President and the Secretary or an Assistant Secretary or any other Officer
authorized by a resolution of the Board of Directors. They may, but need not, be
sealed with the seal of the Corporation or a facsimile thereof. The signatures
of the Officers upon such certificates may be facsimiles if the certificate is
countersigned by a Transfer Agent or registered by a Registrar other than the
Corporation itself or an employee of the Corporation.
In case any Officer who has signed or whose facsimile signature has
been placed upon a stock certificate shall have ceased to be such Officer before
such certificate is issued, it may be issued by the Corporation with the same
effect as if he were such Officer at the date of its issue.
Section 2. Transfer Agents and Registrars -- Transfer Agents and/or
Registrars for the stock of the Corporation may be appointed by the Board of
Directors and may be required to countersign stock certificates.
Section 3. Lost, Destroyed and Mutilated Certificates -- Holders of the
stock of the Corporation shall immediately notify the Corporation of any loss,
destruction or mutilation of the certificate therefor, and the Board of
Directors may in its discretion, or any Officer of the Corporation appointed by
the Board of Directors for that purpose may in his discretion, cause one or more
new certificates for the same number of shares in the aggregate to be issued to
such Stockholder upon the surrender of the mutilated certificate or upon
satisfactory proof of such loss or destruction and the deposit of a bond in such
form and amount and with such surety as the Board of Directors may require.
Section 4. Transfer of Stock -- The stock of the Corporation shall be
transferable or assignable only on the books of the Corporation by the holders
in person or by attorney on surrender of the certificates for such shares duly
endorsed and, if sought to be transferred by attorney, accompanied by a written
power of attorney to have the same transferred on the books of the Corporation.
6
<PAGE>
Section 5. Closing of Transfer Books and Fixing Record Date -- For the
purposes of determining Stockholders entitled to notice of or to vote at any
meeting of Stockholders or any adjournment thereof, or entitled to receive
payment of any dividend, or in order to make a determination of Stockholders for
any other proper purpose, the Board of Directors of this Corporation may fix in
advance a date as the record date for any such determination of Stockholders,
such date in any case to be not more than seventy days prior to the date on
which the particular action requiring such determination of Stockholders is to
be taken. If no record date is fixed for the determination of Stockholders
entitled to notice of or to vote at a meeting of Stockholders, or Stockholders
entitled to receive payment of a dividend, the date on which the notice of the
meeting is mailed or the date on which the resolution of the Board of Directors
declaring such dividend is adopted, as the case may be, shall be the record date
for such determination of Stockholders. When a determination of Stockholders has
been made as provided in this section with respect to any meeting, such
determination shall apply to any adjournment thereof.
Article VII -- Voting of Stock Held
Unless otherwise provided by the vote of the Board of Directors, the
Chairman of the Board, a Vice Chairman, the President, or the Secretary may from
time to time appoint an attorney or attorneys or agent or agents of this
Corporation to cast the votes which this Corporation may be entitled to cast as
a Stockholder or otherwise in any other corporation, any of whose stock or
securities may be held by this Corporation, at meetings of the holders of the
stock or other securities of such other corporation, or to consent in writing to
any action by any other such corporation, and may instruct the person or persons
so appointed as to the manner of casting such votes or giving such consent, and
may execute or cause to be executed on behalf of this Corporation such written
proxies, consents, waivers or other instruments as he may deem necessary or
proper in the premises; or the Chairman of the Board, a Vice Chairman, the
President, or the Secretary may himself attend any meeting of the holders of
stock or other securities of such other corporation and thereat vote or exercise
any powers of this Corporation as the holder of such stock or other securities
of such other corporation.
Article VIII -- Miscellaneous
Section 1. Checks, Notes, Etc. -- All checks and drafts on the
Corporations bank accounts and all bills of exchange, promissory notes,
acceptances and other instruments of a similar character shall be signed by such
Officer or Officers or agent or agents of the Corporation as shall be thereunto
authorized from time to time by the Board of Directors.
Section 2. Fiscal Year -- The fiscal year of the Corporation shall be
determined in the discretion of the Board of Directors, but in the absence of
any such determination it shall be the calendar year.
Section 3. Corporate Seal -- The Corporate Seal shall be circular and
shall have inscribed thereon, within and around the circumference, the words
"Media General, Inc., Richmond, VA." In the center shall be the word "Seal."
Article IX -- Amendments
Section 1. New By-laws and Alterations -- These By-laws may be amended
or repealed and new By-laws may be made at any regular or special meeting of the
Board of Directors by a majority of the Board. However, By-laws made by the
Board of Directors may be repealed or changed and new By-laws may be made by the
Stockholders and the Stockholders may prescribe that any By-law made by them
shall not be altered, amended, or repealed by the Directors.
Section 2. Legislative Amendments -- In event any portion of these
By-laws is subsequently altered by act of the General Assembly of Virginia those
portions thereof which are not affected by such legislation shall remain in full
force and effect until and unless altered or repealed in accordance with the
other terms hereof.
7
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM MEDIA
GENERAL, INC.'S CONSOLIDATED CONDENSED BALANCE SHEETS AND CONSOLIDATED CONDENSED
STATEMENTS OF OPERATIONS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-28-1997
<PERIOD-END> SEP-28-1997
<CASH> 5,205
<SECURITIES> 0
<RECEIVABLES> 103,563
<ALLOWANCES> 6,135
<INVENTORY> 18,055
<CURRENT-ASSETS> 158,168
<PP&E> 1,081,300
<DEPRECIATION> 570,328
<TOTAL-ASSETS> 1,754,080
<CURRENT-LIABILITIES> 148,325
<BONDS> 915,000
0
0
<COMMON> 133,457
<OTHER-SE> 263,242
<TOTAL-LIABILITY-AND-EQUITY> 1,754,080
<SALES> 667,546
<TOTAL-REVENUES> 667,546
<CGS> 337,953
<TOTAL-COSTS> 337,953
<OTHER-EXPENSES> 70,330
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 49,399
<INCOME-PRETAX> 55,877
<INCOME-TAX> 23,189
<INCOME-CONTINUING> 32,688
<DISCONTINUED> 0
<EXTRAORDINARY> (63,000)
<CHANGES> 0
<NET-INCOME> (30,312)
<EPS-PRIMARY> (1.15)
<EPS-DILUTED> 0
</TABLE>
