UPDATE 3-Media General loss narrows, shares extend rally

* Q1 loss $0.75 vs $0.96 year earlier

* Expenses down 12 percent in quarter

* Expects business outlook to improve in Q2

* Media General shares up 1.8 pct, hits fresh 52-week high
(Adds analyst comment, updates stock movement)

By Jennifer Saba

NEW YORK, April 21 (BestGrowthStock) – Media General Inc (MEG.N: )
posted a narrower first-quarter loss as the severe slide in
advertising spending slowed and the media company cut costs by
12 percent, largely by eliminating jobs.

Media General, which operates 23 newspapers and 18
broadcast TV stations, said on Wednesday that the recovery in
advertising should continue in the second quarter, providing
some relief after one of the worst spending downturns in
decades.

Shares of Media General on Wednesday reached a new 52-week
high on optimism about a rebound in advertising. In afternoon
trading the stock was up 1.8 percent to $12.54 on the New York
Stock Exchange.

In an industry where dramatic revenue declines have become
common, Media General’s quarterly revenue was essentially flat,
falling less than 1 percent to about $159 million.

Few analysts offered estimates on the company, making an
average expectation difficult to project. But it marked a
drastic improvement from the fourth quarter, when revenue was
down 14 percent year-on-year.

Advertising revenue at the broadcasting division was the
bright spot, rising 12.1 percent thanks to sales of commercial
time during the Winter Olympics. Even so, at least one analyst
said he had hoped to see an even stronger performance from the
broadcast unit.

“Other broadcasters had better performances,” said
Benchmark Co analyst Edward Atorino, adding others showed
revenue increases in the high teens and 20s.

The company said second-quarter advertising revenue at its
TV stations should advance in the low double-digit percentage
range as political dollars hit the airwaves.

Meanwhile, advertising sales at its newspapers continued to
decline, dropping 9.4 percent year-over-year to $81.2 million.
The rate of decline, however, has slowed, as some key
advertisers have begun to open their wallets.

Media General, like many of its newspaper peers, also
increased its circulation revenue and benefited from a decrease
in newsprint costs in the quarter.

And digital revenue — up 9.8 percent in the first quarter
— is expected to strengthen as retail and classified
advertisers begin to spend and the company takes advantage of
its partnerships with Yahoo Inc (YHOO.O: ) and real estate site
Zillow, Media General said.

Overall, Media General reported a quarterly loss of $16.8
million, or 75 cents per share, compared to a loss of $21.3
million, or 96 cents a share, in the same quarter a year
earlier. The company attributed the loss to higher interest
expenses when it refinanced its debt in February.

One key reason for the stronger performance was cost
cutting efforts, including measures that resulted in 600 job
losses in the past year. Building on those initiatives, the
company announced plans earlier this month to combine copy and
page design at three of its largest dailies, the Richmond
Times-Dispatch, The Tampa Tribune and the Winston-Salem
Journal.
Investment Analysis

(Reporting by Jennifer Saba; Editing by Derek Caney and Tim
Dobbyn)

UPDATE 3-Media General loss narrows, shares extend rally