Good morning, ladies and gentlemen and welcome to Media General, Inc.’s Earnings Call for the Third Quarter ended September 30, 2015. Today’s call is being recorded. Now the company will read a brief legal statement..

This morning the company announced its third quarter 2015 results. The press release along with the supplemental data can be found on the company’s website at www.mediageneral.com. When available, a full transcript along with the replay of today’s call will also be posted on the company’s website.

Today’s presentation contains forward-looking statements, which are subject to various risks and uncertainties. They should be understood in the context of the company’s publicly available reports filed with the SEC, including sections in those reports concerning risk factors.

Media General’s future performance could differ materially from its current expectations. The company undertakes no obligation to update these forward-looking statements.

Today’s speakers will be the company’s President and CEO; Vince Sadusky, who will provide a high level overview of the results and achievements; and Jim Woodward, the company’s Chief Financial Officer, who will discuss our financial results and guidance. They will take your questions after their prepared remarks.

And now I’ll hand the call over to Vince..

Thank you Andy and good morning everyone and welcome to our earnings call. We delivered strong results this quarter and made great progress on our integration and operating plans. Total net revenues on the same asset or as adjusted basis excluding the 27 million reduction in political revenues increased 7%.

Our results were driven by solid growth in core TV advertising, higher retransmission consent fees, and synergies from the Young and LIN mergers. One of our key strategic operating initiatives is to leverage our resources and scale up operating model to grow viewership and revenues in our largest markets.

We have brought in new leadership, re-launched our brands, and implemented our NextGen newsroom and investigative new strategies in many markets with positive results.

For example in Tampa our largest big four network station, every newscast increased viewership on a year-to-date basis and we have moved from the fourth highest viewed station in the market to number two.

Our ratings growth in Tampa has enabled us to increase market share of TV advertising revenue by 130 basis points over the last four quarters which has driven an incremental 7% increase in that station's revenue.

We believe this strategy is resilient for economic cycles, allows us to garner a larger share of political advertising, and generates greater long-term broadcast cash flow growth.

Our strong commitment to local -- positively impacts our non-network affiliated stations as well such as Kwan [ph] and WISH as PayTV operators recognize the benefits of providing unique local news and entertainment programming to our local audiences. Overall in July, we have grown both Early and Late News with the Adults 25 to 54.

66% of our TV stations are currently ranked number one or number two in their local markets for news and 66% of our station websites are also ranked number one or number two for unique visitors compared to our measured broadcast competitors which is an increase from the first half of this year.

Our programming and sales strategy has helped us to achieve a 4% increase in core TV ad revenue during the quarter which exceeded the industry average. Our focus on securing higher retransmission consent fees was another key driver of results. 30% of our subs were up for renewal in 2015.

During the quarter we reached new agreements with the number of PayTV providers that were significant and will set the taste for 2016 when 60% of our subs are up for renewal.

We have some of the highest rated channels in the country including local news, sports, and original entertainment programming and we are confident in our ability to generate increased value from PayTV providers.

During the quarter we also reached an agreement with the ABC Television Network that renews or extends our existing affiliations in all 12 of our ABC markets through the year 2021.

The majority of our network affiliate agreements are effective for years and I believe our significant scale and highly rated content positioned us well to achieve continued and sustainable net retransmission consent fee growth.

Our teams have done an outstanding job integrating the legacy companies and we are largely completed on our systems implementation including traffic, finance, digital, and business performance tools.

During our Investor Day earlier this year we said that on a run rate basis we expected to achieve approximately 35 million of linked synergies by year end. And with less than a quarter to go we have realized greater revenue and cost synergies and now expect to be at a year end run rate of approximately 40 million.

As a result we expect to exceed our fully synergized run rate of 70 million. It is important to note that excluding our digital business in our two non big four affiliated markets, our stations operating broadcast cash flow margin was 34% in Q3 and will increase further once our merger synergies are fully realized.

In our last earnings call we discussed our efforts to evolve our digital business with the intent of returning to revenue growth in the second half of the year.

Our national digital business has achieved significant organic growth in prior years however, due largely to the impact of programmatic digital trading platforms, our national media business has been negatively impacted.

As a result of this changing environment for online display advertising that is driving down market pricing, we recorded a 53 million non-cash impairment charge to goodwill recorded as part of the Media General LIN merger.

Our losses on our national digital business were 12 million for the first three quarters of the year, have been reducing each quarter and were 3 million in Q3. We have taken steps to restructure and further integrate our digital businesses focusing on native, video, and social advertising with our Federated Media and HYFN portfolio companies.

Our product refocus and restructuring including combined locations, rationalizing infrastructure, and building a team with expertise in these premium products and services is resulting in a tangible turnaround.

In the third quarter digital revenues increased 3% year-over-year to 44 million which is 20% higher than Q2 digital revenues, and 45% higher than Q1 digital revenues. We continue to be with digital marketing as a strategic compliment to our leading local television business.

Turning for a moment to spectrum, the SEC released a final opening bid for the incentive auction on October 16th. Along with the prices they finalized several rules and confirmed that the reverse auction will take place in the Spring of 2016 as we expected.

The new opening bid prices did change in some of our markets but on the whole do not impact to our previous estimates. We continue to work our spectrum market model and plan to participate in the auction given we have a number of station in high demand markets.

Looking ahead to the fourth quarter, core broadcast pacing on an as adjusted basis and excluding political is up 2.5% and digital is pacing up in the high teens. We believe TV pacing will continue to improve as order placements were early last year due to heavy political. I’d like to comment on the overall local TV space.

The core ad revenue continues to grow as local TV remains a very effective and efficient advertising vehicle. I would urge investors to think about the differentiation of our business to other areas of media and not lump us all together.

The fact is our local news, syndicated network and sports programs are highly viewed and our unique programming wheel has withstood unlimited cable and digital video choices. We remain the highest consumed single channels in our local markets and our unique offering will continue to be a very effective advertising pool – tool in the future.

The addition of digital content and advertising is incremental to our core business and the underpayment of sub fees based upon our high viewership levels is a fact. We are confident that our industry niche and our particular company’s unique assets and opportunities sets us apart.

In summary, 2016 is poised to be a very exciting year with the additional synergies from the LIN-Media General merger, revenue increases from 60% of our PayTV subscribers renewing, a robust presidential election and the return of December Olympics on our 14 NBC stations.

Given our significant footprint in the highly contested political market such as Ohio, Iowa, Michigan, and Florida continue to improve in station in digital operations and our potential spectrum value; I believe Media General is the best positioned local media company for growth and success.

And finally, before I turn the call over to Jim, I would like to briefly discuss the latest developments with respect to the Meredith transaction and subsequent Nexstar proposal. As you know we have a binding merger agreement in place with Meredith and our Board continues to recommend the Meredith transaction.

As we announced in mid-October, Media General reached an agreement with Meredith that allows for the mutual exchange of certain non-public information with Nexstar.

This agreement allowed our Board and Advisors to more fully evaluate Nexstar’s proposal and at the same time allows Nexstar to perform due diligence on the key value drivers for our company. On October 19th, we signed a non-disclosure agreement with Nexstar as permitted under our agreement with Meredith and our exchanging information with Nexstar.

As that process continues, management and the Board are working diligently and are focused on achieving the best results for our shareholders. With that let me remind you that today’s call is to discuss our third quarter results, so I ask that you please limit your questions to that topic. Thank you in advance.

Now I’d like to turn the call over to Jim..

Thank you, Vince and good morning everyone. Before I begin I would like to draw your attention to the explanation of GAAP results in our press release.

As we’ve done in past quarters in order to help you make more meaningful comparisons, we've provided supplemental combined company financial information on the Investor Relations page of our website, mediageneral.com. The as adjusted amounts reflect those assets we currently operate.

We believe the same asset comparison provides a transparent and complete basis by which to analyze our current operating results. My comments today are going to focus on the combined company, using this supplemental combined company financial information. Our total net revenues of $322 million were in line with our guidance.

As Vince mentioned, excluding the $27 million decline in political advertising revenues from 2014, total net revenue increased 7%. Including political advertising total net revenues declined 2% year-over-year. Excluding political, our net broadcast revenues grew 8% and core time sales grew 4% year-over-year.

Overall our total net broadcast revenues were in line with our guidance at $278 million in the third quarter. Diving deeper into our revenues, net local revenues increased 11% to $212 million compared to $191 million in the prior year. Key factors were growth and retransmission consent fees and higher local advertising revenues.

National -– net national revenues were essentially flat at 52 million. Our top 10 categories were up 5% year-over-year. Automotive advertising, our largest category, grew 7% in the third quarter compared to prior year and represented 28% of net broadcast revenue.

The increase was driven by both domestic and foreign manufacturers continuing their year-long push to sell more cars. Net political revenues were 5 million during the third quarter compared to 32 million in the prior year. Net digital revenues, which include our TV station websites grew 3% to 44 million in the third quarter.

And as Vince mentioned, our plans to retool our digital business have been affected and we are back on track to achieving growth. We did record a $53 million non-cash goodwill impairment charge related to our digital business.

In response we’ve introduced new products and restructured the business resulting in a restructuring charge of 1.1 million during the quarter. Our restructuring of the business is expected to reduce operating cost by approximately $5 million on an annual basis.

The impairment charge does not impact the company’s liquidity and our digital business is on pace to achieve higher revenue growth than in previous quarters. Some more on expenses, excluding the increase in programming fees paid to networks, our operating expenses and SG&A for the quarter increased 4%.

We continue to manage our expenses effectively and the integration teams are ahead of plan realizing merger related synergies. Including programming fees paid to networks, our operating expenses for the quarter increased 11% to 222 million.

BCF for the quarter was 90 million compared to a 115 million in the third quarter of 2014 when we generated significant political advertising revenues. Corporate and other expenses excluding stock based compensation was 9 million compared to 11 million in the prior year.

The primary driver of the year-over-year decline reflects our work to realize merger related synergies. Adjusted EBITDA decreased 23 million to 81 million in the quarter compared to a 104 million in the prior year, again this is primarily driven by the year-over-year decline in political spending.

Turning to Media General’s debt and key credit metrics, as of September 30, 2015 we had cash on hand of 38 million and $147 million of availability under our revolver. Our net debt at the end of the quarter was just under 2.2 billion.

During the quarter and year-to-date we repaid 42 million and a 178 million respectively of debt and leverage as defined under our senior credit agreement was 5.07 times. Also during the third quarter we continued our previously announced share repurchase program.

Cumulatively through the end of the quarter we repurchased 2.1 million shares for approximately $34 million. As we’ve stated previously the strength of our cash flows allows us to consider and implement return of capital plans, invest in the business, and pay down debt.

Focusing on outlook for the fourth quarter, if you exclude political advertising revenues for both years we expect net revenues to increase in the range of 11% to 15% versus the fourth quarter of 2014. Our net political revenue in 4Q of 2014 was $62 million.

Including political we expect net revenues to decrease in the range of 2% to 5% compared to net revenues of 384 million in the fourth quarter of 2014. Net digital revenues are expected to increase 9% to 16% compared to the 46 million in the fourth quarter of 2014.

For expenses we expect that direct operating and SG&A excluding programming fees paid to the networks will increase in the range of 3% to 5% in the fourth quarter.

Including programming fees paid to the networks, we expect that direct operating and SG&A will increase in the range of 12% to 14% compared to expenses of 204 million in the fourth quarter of 2014.

We expect corporate expenses excluding stock based comp to be between $8 million and $9 million and given our significant NOL balance we do not expect to pay any significant cash taxes. For the full year 2015, we expect capital expenditures to be about $55 million.

Lastly, we remain confident in our 2015-2016 free cash flow guide of 540 million to 600 million. Before I hand it back to the operator for Q&A, I want to reiterate what Vince mentioned earlier that today's call is to talk about earnings. So we ask that you please focus your questions on our results. With that we’ll be happy to take your questions.

Operator?.

[Operator Instructions]. And we can take our first question from Marci Ryvicker with Wells Fargo. Your line is open..

Thank you, I have a couple. The first question, you made a comment on the better synergies from LIN and Media General.

Can you talk about where that might be coming from, that’s the first question? The second is, I’m assuming you are out of the market and cannot repurchase shares with all of the transaction stuff going on? And then the third question is can you sort of walk us through the expense guide for the fourth quarter, maybe just focus on what core operating expenses are at the TV Station Group and maybe what’s layered on top of that? Thank you..

Good morning Marci. So, yes, I’ll take the first couple of questions and hand it over to Jim to talk about expenses. On the synergy side, it was the combination of achieving cost synergies earlier.

So things like preferred contract, acceleration of facilities consolidation, it was that bad on the cost side as well as on the revenue side as well, primarily doing better on retransmission fees than we originally anticipated.

With regard to your second question on share repurchases, we're going through this process right now so, we view ourselves to be in a blackout period..

Got it..

And then with regards to expenses, I’ll let Jim go ahead and handle that..

Okay, thank you Vince. Good morning Marci. So yes, for the Q4 expense guidance we said the range excluding the programming fees to awards is going to be up 3 to 5 in Q4.

So, what drives that? We have made some investments in the business including content centers and building out a national sales team, research and programming department, but also included in that is the potential cost for the increased digital revenues. So if you were to exclude that we're flat quarter-to-quarter..

Got it, thank you..

Thank you..

And we can take out next question from James Dix with Wedbush Securities. Your line is now open..

Hey, good morning guys.

I guess, just first on the ad market, can you give a little bit of color on the change in growth you’re seeing in your pacings for the fourth quarter which is the pretty good growth you saw in the third? And then, I guess, just related to that if I could just know, when you talk about core and excluding political, do you make any attempt to assess how much displacement occurs by the political or are you just pulling it all out and then talking about it in that regard? And then my last one no, actually my second is, when you look at your digital revenue, roughly how much of that is essentially ad sales or driven by the advertising sales as opposed to other services that you provide? And I’m curious of those ad sales, how much of those are related to sales of what you call video advertising as opposed to other types of advertising? And then I had one follow up on spectrum, but I’ll just stop there..

Okay, sure thing. So with regard to the color on the ad market, we had mentioned our core was pacing up 2.5% for the fourth quarter. Local was pacing stronger than national. With regard to where it’s coming from, auto is very strong again for us in terms of the pace for the fourth quarter.

Ford had its best September in 15 years, gas prices are low, Ford and Chevy in particular are selling a lot of truck and SUVs, so that’s been a driver. But also, retail is up, services are up as well.

With regard to the core measurement, excluding political, it is very difficult to make a determination around how much of that is incremental versus non-incremental. So when we talk about political we pull political out of both years. So just looking at our advertising revenue X was categorized as political for both periods.

And then with regards to digital ad revenue, 100% of our digital revenue is related to ad sales. We don’t provide technology as a service, we are not in that kind of business. We are in the marketing and advertising solution business on digital which we believe is complimentary to what our business is on television.

And then finally I think you had asked the question about what percentage of that digital ad revenue, those digitalize sales are video and I think it is about 25% or so is video and video is clearly the growth opportunity on a go forward basis we believe and given our extensive ad inventory on the video side for our owned and operated television station group.

And the focus we’ve had on video being a big part of our transformation in our national group through Federated Media, I think that’s an exciting opportunity. I think we are in the right place..

Okay, great. That’s very helpful. And then just on the spectrum what are the next milestones that we should be expecting from you on that.

I know there is filing date coming up with the FCC, should we expect to get any type of public update from you on any types of agreements you are entering into or is that prohibited, I just want to make sure that as we move toward March we are generally aware of what we should be looking for from you in terms of that process and disclosure to investors?.

Sure thing, so, what we said about the spectrum auction is we plan to participate, we continue to believe the auction could present some opportunities for us to monetize some of our spectrum, and also have a negligible impact on our ongoing ability to generate cash flow from our continuing television business.

Given the uniqueness of our portfolio in certain markets where we believe we will have high demand based on the FCCs established opening digital. But it is certainly very complex and really difficult to predict outcomes. For example we don’t even know what big clearing the FCC will set.

But we do think we have a reasonable chance in some of our markets will need to have spectrum leader and our pricing maybe cleared for us.

As far as what you would see from us, the bidding strategy is something that is very important for us to keep confidential the level of our participation in particular markets is something that’s important for us to internally evaluate and not share with folks.

So it will be a process that’s largely done internally other than the required public filings..

Okay, great and just one follow up, it might take that you at this point you are basically kind of reaffirming the range of values that you talked about at your Investor Day as far as the spectrum goes and that’s just for me thanks?.

We have not changed our view from Investor Day around the relative attractiveness of the markets and in fact opening bid prices which are certainly not the final indicator of what value will be by any means but it is a data point and the opening bid prices in many of our markets were higher than we had initially outlined.

But you know all that said we think we got a reasonable shot at some of these markets, we will need to have spectrum cleared in that and we have got a chance in having our prices cleared but in the end its impossible to know exactly where it will end up..

Great, thanks very much..

And we can take our next question from Tracy Young with Evercore ISI. Your line is now open..

Yes hi, is there any way for you to give us a political number for Q4, the primary to standard do you have a sense of what the political number could be for Q4? And then your number for digital is in line with what I expected but could you talk a little bit more about the impairment, is there any change in strategy on the digital side, thanks?.

Yes, so on a political – we don’t give a fourth quarter number but I can offer some color. Political in the third quarter over achieved our internal estimates due to certain reasons.

So when you have got a nice large footprint like we do in interesting markets where there could be a material spend, we saw things like a heated mayor’s race in Nashville that we never would’ve predicted, state-wide open seats in the Virginia markets, and even some early presidential spending in Iowa, South Carolina for Marco Rubio and Hillary, and things like the marijuana issue that was on the ballot scene in the State of Ohio.

Looking ahead to the fourth quarter, political is again pacing ahead of our internal estimates, and a good amount of that also has to do with Presidential primary spending. With regard to the digital business, look -– I mean, we have a very positive outlook for our digital business.

We've got a -– we’ve built a great team headquartered here in New York City, they’ve been working diligently with advertisers to identify marketing opportunities on the premium side through our significant digital and TV footprint.

We've been delivering campaigns that have exceeded advertiser expectations and we've got a strong pipeline of new business for the fourth quarter and the first half of 2016, which we believe is the right business line to be in, and we think will meaningfully contribute to the growth of our digital business going forward..

Okay, thank you..

Sure..

And we can take our next question from Barry Lucas with Gabelli & Company. Your line is open..

Thanks and good morning, Vince. I’ve got a couple of questions on auto, because it is such an important part of your business. So core advertising up for in Q3, pacing plus 2.5% in fourth quarter is – and auto, you did pretty well in the third quarter.

Auto is accelerating or decelerating in 4Q?.

Yes, so auto, I think I -– we mentioned was up about 7% or so in the third quarter, and it’s pacing up about the same percentage in the fourth quarter..

Okay.

And was 28% of your roughly -- of revenues coming from auto, how would that compare in the digital side of your business, are you getting a comparable share of auto business in digital and/or is that an opportunity down the road?.

The auto is significant for digital as well. We are actually running several significant campaigns for U.S. auto makers right now on our digital ad network. But it’s a smaller percentage. If I had to guess I’d say it is probably in the 10 plus percent range in terms of total ad -– digital ad dollars by the auto category..

Okay. Thanks.

Let me just switch gears quickly and maybe not specifically about the transaction but there are some rules that came out of the FCC with regard to discussions amongst the participants in the auction, and I’m just wondering how that might affect you if deals are not inked or deals are in flux? How can you discuss strategies with either Meredith or potentially with Nexstar?.

Yes, so we don’t think that the rules will impact our strategic conversations at this point. There are certain rules that have been laid out in terms of having conversations with competitors around channel sharing and when those conversations need to end.

But we believe, at the moment the strategic transaction that we've outlined with Meredith does not preclude us from having those conversations with others..

Okay. Thanks very much..

Thank you ladies and gentlemen, this does conclude the question-and-answer session, I would like to turn the program back over to Media General Inc's CEO for closing remarks..

Thank you everyone for participating today. We look forward to updating throughout the quarter. Thank you..

Thank you for your participation. This does conclude today's program. You may disconnect at any time..