10-Q


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 30, 2015
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
46-5188184
(State or other jurisdiction of 
(I.R.S. Employer
incorporation or organization) 
Identification No.)
 
 
333 E. Franklin St., Richmond, VA
23219
(Address of principal executive offices) 
(Zip Code)
 
(804) 887-5000
(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 by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes          X          No               
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company (as defined in Rule 12b-2 of the Exchange Act).
 Larger accelerated filer               X       
 Accelerated filer                                      
 Non-accelerated filer                            
 Smaller reporting company                    
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes                    No          X     
Indicate the number of shares outstanding of each of the issuer's classes of common stock as of November 3, 2015.
Voting Common shares (no par value):          127,890,165



MEDIA GENERAL, INC.
TABLE OF CONTENTS
FORM 10-Q REPORT
September 30, 2015
 
 
 
Page
Part I.
Financial Information
 
 
 
 
 
Item 1.
Financial Statements
 
 
 
 
 
 
 
Consolidated Condensed Balance Sheets – September 30, 2015 and December 31, 2014
 
 
 
 
 
 
Consolidated Condensed Statements of Comprehensive Income – Three and nine months ended September 30, 2015 and September 30, 2014
 
 
 
 
 
 
Consolidated Condensed Statements of Cash Flows – Nine months ended September 30, 2015 and September 30, 2014
 
 
 
 
 
 
Notes to Consolidated Condensed Financial Statements 
 
 
 
 
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations
 
 
 
 
Item 3.
Quantitative and Qualitative Disclosure About Market Risk
 
 
 
 
Item 4.
Controls and Procedures
 
 
 
 
Part II.
Other Information
 
 
 
 
 
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
 
 
 
 
Item 5.
 
Other Information
 
 
 
 
Item 6.
Exhibits
 
 
 
 
 
 
(a)     Exhibits
 
 
 
 
Signatures



PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Media General, Inc.
CONSOLIDATED CONDENSED BALANCE SHEETS
(Unaudited, in thousands, except shares)

 
ASSETS
 
 
 
 
September 30,
2015
 
December 31,
2014
Current assets:
 
 
 
Cash and cash equivalents
$
37,802

 
$
43,920

Restricted cash at qualified intermediary
—

 
119,903

Trade accounts receivable (less allowance for doubtful accounts 2015 - $5,184; 2014 - $5,475)
271,578

 
277,985

Current deferred tax asset
51,629

 
55,754

Prepaid expenses and other current assets
17,482

 
26,282

Total current assets
378,491

 
523,844

 
 
 
 
Property and equipment, net of accumulated depreciation 2015 - $124,265; 2014 - $68,141
476,217

 
499,472

Other assets, net
73,315

 
78,999

Definite lived intangible assets, net of accumulated amortization 2015 - $115,321; 2014 - $48,485
892,418

 
956,300

Broadcast licenses
1,097,100

 
1,097,100

Goodwill
1,544,624

 
1,597,486

Total assets (a)
$
4,462,165

 
$
4,753,201

 
 
See accompanying notes.
 

(a) Consolidated assets as of September 30, 2015 and December 31, 2014, include total assets of variable interest entities (VIEs) of $145 million and $151 million, respectively, which can only be used to settle the obligations of the VIEs. See Note 1 and Note 4.

1


Media General, Inc.
CONSOLIDATED CONDENSED BALANCE SHEETS
(Unaudited, in thousands except shares)

LIABILITIES AND STOCKHOLDERS' EQUITY
 
 
September 30,
2015
 
December 31,
2014
Current liabilities:
 
 
 
Trade accounts payable
$
19,945

 
$
36,359

Accrued salaries and wages
26,997

 
36,634

Accrued expenses and other current liabilities
134,380

 
104,092

Current installments of long-term debt
3,120

 
11,781

Current installments of obligation under capital leases
876

 
815

Total current liabilities
185,318

 
189,681

 
 
 
 
Long-term debt
2,231,694

 
2,400,162

Deferred tax liability and other long-term tax liabilities
354,318

 
364,289

Long-term capital lease obligations
14,205

 
14,869

Retirement and postretirement plans
196,505

 
211,264

Other liabilities
33,284

 
38,034

Total liabilities (b)
3,015,324

 
3,218,299

 
 
 
 
Commitments and contingencies

 

 
 
 
 
Noncontrolling interests
30,147

 
34,481

 
 
 
 
Stockholders' equity:
 
 
 
Preferred stock (no par value): authorized 50,000,000 shares; none outstanding
—

 
—

Common stock (no par value):
 
 
 
Voting common stock, authorized 400,000,000 shares; issued 2015 - 127,871,465 and 2014 - 129,931,812
1,293,835

 
1,322,284

Accumulated other comprehensive loss
(36,445
)
 
(36,445
)
Retained earnings
159,304

 
214,582

Total stockholders' equity
1,416,694

 
1,500,421

Total liabilities, noncontrolling interests and stockholders' equity
$
4,462,165

 
$
4,753,201

 
 
See accompanying notes.

(b) Consolidated liabilities as of September 30, 2015 and December 31, 2014, include total liabilities of VIEs of $38 million and $43 million, respectively, for which the creditors of the VIEs have no recourse to the Company, except for certain of the debt, which the Company guarantees. See Note 1 and Note 4.


2


Media General, Inc.
CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME        
(Unaudited, in thousands, except per share amounts)        
 
Three Months Ended
 
Nine Months Ended
 
September 30,
2015
 
September 30,
2014
 
September 30,
2015
 
September 30,
2014
Net operating revenue
$
321,736

 
$
160,224

 
$
938,993

 
$
458,253

Operating costs:
 
 
 
 
 
 
 
Operating expenses, excluding depreciation expense
143,492

 
54,679

 
403,537

 
156,112

Selling, general and administrative expenses
78,777

 
39,440

 
238,298

 
123,702

Amortization of program license rights
12,822

 
5,167

 
36,627

 
15,077

Corporate and other expenses
12,598

 
5,567

 
37,615

 
19,778

Depreciation and amortization
40,385

 
15,643

 
123,286

 
48,278

(Gain) loss related to property and equipment, net
96

 
676

 
(328
)
 
897

Goodwill impairment
52,862

 
—

 
52,862

 
—

Merger-related expenses
10,014

 
3,596

 
18,907

 
13,173

Restructuring expenses
1,132

 
275

 
1,132

 
4,764

Total operating costs
352,178

 
125,043

 
911,936

 
381,781

Operating income (loss)
(30,442
)
 
35,181

 
27,057

 
76,472

Other income (expense):
 
 
 
 
 
 
 
Interest expense
(29,481
)
 
(9,826
)
 
(89,792
)
 
(29,432
)
Debt modification and extinguishment costs
(365
)
 
—

 
(2,805
)
 
(183
)
Other, net
27

 
19

 
5,939

 
19

Total other expense
(29,819
)
 
(9,807
)
 
(86,658
)
 
(29,596
)
 
 
 
 
 
 
 
 
Income (loss) before income taxes
(60,261
)
 
25,374

 
(59,601
)
 
46,876

Income tax benefit (expense)
4,374

 
(11,525
)
 
3,915

 
(20,696
)
Net income (loss)
$
(55,887
)
 
$
13,849

 
$
(55,686
)
 
$
26,180

 
 
 
 
 
 
 
 
Net income (loss) attributable to noncontrolling interests (included above)
(7,394
)
 
454

 
(1,395
)
 
614

Net income (loss) attributable to Media General
$
(48,493
)
 
$
13,395

 
$
(54,291
)
 
$
25,566

 
 
 
 
 
 
 
 
Other comprehensive income
—

 
—

 
—

 
—

Total comprehensive income (loss) attributable to Media General
$
(48,493
)
 
$
13,395

 
$
(54,291
)
 
$
25,566

 
 
 
 
 
 
 
 
Earnings (loss) per common share (basic and diluted):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net earnings (loss) per common share (basic)
$
(0.38
)
 
$
0.15

 
$
(0.42
)
 
$
0.29

Net earnings (loss) per common share (assuming dilution)
$
(0.38
)
 
$
0.15

 
$
(0.42
)
 
$
0.29

 
See accompanying notes.

3


Media General, Inc.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
 
Nine Months Ended
 
September 30,
2015
 
September 30,
2014
Cash flows from operating activities:
 
 
 
Net income (loss)
$
(55,686
)
 
$
26,180

Adjustments to reconcile net income (loss):
 
 
 
Deferred income tax (benefit) expense
(5,769
)
 
19,922

Depreciation and amortization
123,286

 
48,278

Amortization of program license rights
36,627

 
15,077

Goodwill impairment
52,862

 
—

Non-cash interest expense
1,404

 
566

(Gain) loss on disposal of property and equipment, net
(328
)
 
897

Gain on relocation of spectrum
(5,620
)
 
—

Stock-based compensation
10,292

 
524

Debt modification and extinguishment costs
2,805

 
183

Change in assets and liabilities:
 
 
 
Program license rights, net of liabilities
(33,123
)
 
(15,271
)
Trade accounts receivable
6,698

 
4,166

Company owned life insurance (cash surrender value less policy loans including repayments)
(275
)
 
(1,151
)
Trade accounts payable, accrued expenses and other liabilities
3,224

 
(610
)
Contributions to retirement plans
(1,250
)
 
(49,009
)
Other, net
349

 
(6,390
)
Net cash provided by operating activities
135,496

 
43,362

Cash flows from investing activities:
 
 
 
Capital expenditures
(40,583
)
 
(18,621
)
Release of restricted cash at qualified intermediary
119,903

 
—

Payment for acquisition of station assets
—

 
(83,185
)
Deferred proceeds related to sale of property
—

 
24,535

Proceeds from the sale of property and equipment
1,279

 
1,157

Proceeds from spectrum relocation
3,120

 
—

Other, net
(78
)
 
980

Net cash provided by investing activities
83,641

 
(75,134
)
Cash flows from financing activities:
 
 
 
Principal borrowings under Media General Credit Agreement
—

 
75,000

Repayment of borrowings under Media General Credit Agreement
(160,000
)
 
(84,000
)
Repayment of 2021 Notes
(15,863
)
 
—

Repayment of borrowings under Shield Media Credit Agreement
(1,800
)
 
(1,800
)
Repayment of other borrowings
(873
)
 
—

Principal borrowings under revolving credit facility
—

 
10,000

Repayment of borrowings under revolving credit facility
—

 
(10,000
)
Repurchase of shares
(33,724
)
 
—

Payment for the acquisition of noncontrolling interest
(10,872
)
 
—

Cash paid for debt modification
(3,425
)
 
(2,507
)
Other, net
1,302

 
336

Net cash used by financing activities
(225,255
)
 
(12,971
)
Net decrease in cash and cash equivalents
(6,118
)
 
(44,743
)
Cash and cash equivalents at beginning of period
43,920

 
71,618

Cash and cash equivalents at end of period
$
37,802

 
$
26,875

Cash paid for interest
$
85,149

 
$
30,476

Cash paid for income taxes, net
$
4,883


$
971

See accompanying notes.

4


MEDIA GENERAL, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
 

Note 1: Basis of Presentation
 
The accompanying unaudited consolidated condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States and with applicable quarterly reporting regulations of the Securities and Exchange Commission. 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 31, 2014. 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.
 
On December 19, 2014 (the "Closing Date"), Media General, Inc., now known as MGOC, Inc. (“Old Media General”), and LIN Media LLC, a Delaware limited liability company (“LIN Media” or “LIN”) were combined in a business combination transaction (the “LIN Merger”). As a result of the LIN Merger, Media General, Inc., formerly known as Mercury New Holdco, Inc. (“New Media General”, "Media General" or the “Company”) became the parent public reporting company of the combined company; LIN Television Corporation (“LIN Television”) became a direct, wholly owned subsidiary of New Media General; and Old Media General became a direct, wholly owned subsidiary of LIN Television and an indirect, wholly owned subsidiary of New Media General. The merger was accounted for in accordance with FASB Accounting Standards Codification Topic 805, Business Combinations (“ASC 805”), and New Media General was the acquirer.
 
References to Media General, we, us, or the Company in this Item 1 that include any period at and before the effectiveness of the LIN Merger shall be deemed to refer to Old Media General as the predecessor registrant to New Media General.

On September 8, 2015 the Company announced a definitive merger agreement under which the Company will acquire all of the outstanding common stock of Meredith Corporation ("Meredith") in a cash and stock transaction. On September 28, 2015 the Company received an unsolicited proposal from Nexstar Broadcasting Group, Inc. ("Nexstar") to acquire all of the outstanding common stock of Media General for $14.50 per share in cash and stock, including $10.50 per share in cash and a fixed ratio of 0.0898 Nexstar shares per Media General share. As allowed under an October 14, 2015 agreement with Meredith and following the execution of a non-disclosure agreement with Nexstar, the Company is currently in the process of exchanging information with Nexstar.
 
The consolidated financial statements include the financial statements of the Company and its wholly owned subsidiaries and certain variable interest entities (“VIE”) for which the Company is considered to be the primary beneficiary. Intercompany accounts and transactions have been eliminated in consolidation. In determining whether the Company is the primary beneficiary of a VIE for financial reporting purposes, the Company considers whether it has the power to direct certain activities of the VIE that most significantly impact the economic performance of the VIE and whether it has the obligation to absorb losses or the right to receive returns that would be significant to the VIE.  Assets of consolidated VIE’s can only be used to settle the obligations of that VIE.  As discussed in Note 4, the Company consolidates the results of WXXA, WLAJ, WBDT, WYTV, KTKA, KWBQ, KRWB, and KASY pursuant to the VIE accounting guidance. All the liabilities are non-recourse to the Company, except for certain of the debt, which the Company guarantees. The Company is also the primary beneficiary of the VIE that holds the Supplemental 401(k) Plan’s investments and consolidates the plan accordingly.
 
The Company guarantees all of LIN Television's debt and the debt of its consolidated VIEs. LIN Television guarantees all of the debt of its restricted wholly owned subsidiaries and the debt of its consolidated VIEs. All of the consolidated wholly owned subsidiaries of LIN Television fully and unconditionally guarantee LIN Television's 5.875% Senior Notes due 2022 (the “2022 Notes”) and the 6.375% Senior Notes due 2021 (the "2021 Notes") on a joint-and-several basis, subject to customary release provisions.
     
In April 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs ("ASU 2015-03"). ASU 2015-03 requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability. ASU 2015-03 is effective for annual periods beginning on or after December 15, 2015. As a result the Company expects to reclassify the unamortized balance of the $34 million of debt issuance costs currently included in "Other assets, net" on the Consolidated Condensed Balance Sheet to Long-term debt upon adoption of the guidance in early 2016.


5


In order to conform to the presentation adopted in the third quarter of 2015, $12 million was reclassified from "Prepaid expenses and other current assets" to "Trade accounts receivable" in the 2014 figures presented on the Consolidated Condensed Balance Sheets, in the Initial Allocation of Fair Value table in Note 2 and in the Guarantor Financial Information in Note 12.

Note 2: Mergers, Acquisitions and Dispositions
 
LIN Merger
 
As described in Note 1, Old Media General and LIN were combined under New Media General, a newly formed holding company, that was renamed Media General. In connection with the LIN Merger, the Company issued a total of approximately 41,239,715 shares of voting common stock and paid approximately $763 million in cash to the former LIN Media shareholders. The total purchase price of the LIN Merger was approximately $2.4 billion. The LIN Merger was financed using proceeds from the Company and LIN Television’s borrowings under the credit agreement, as defined and more fully described in Note 5.
 
In connection with the LIN Merger, the Company sold WJAR-TV in Providence, RI, WLUK-TV and WCWF-TV in Green Bay-Appleton, WI, certain assets of WTGS-TV in Savannah, GA, WJCL-TV in Savannah, GA, WVTM-TV in Birmingham, AL and WALA-TV in Mobile, AL for approximately $360 million and purchased KXRM-TV and KXTU-LD in Colorado Springs, CO and WTTA-TV in Tampa, FL for approximately $93 million. The assets of the stations sold included goodwill of approximately $84 million.
 
Following the LIN Merger and the divestitures and acquisitions discussed above, the Company now owns or operates 71 stations across 48 markets. The Company also has a digital media portfolio comprised of five digital offerings: LIN Digital, ONE Mobile (formerly LIN Mobile), Federated Media, Dedicated Media and HYFN.
 
The LIN Merger closed during December 2014. The initial allocated fair value of the acquired assets and assumed liabilities of LIN (including the acquisitions of the stations in Colorado Springs and Tampa discussed above) was adjusted during the nine months ended September 30, 2015 based on information that became available to management subsequent to the acquisition date. These adjustments were retroactively applied to the December 31, 2014 balances. The fair value of the consideration paid related to the LIN Merger increased by $1.2 million as well. The initial allocated fair value, including adjustments which occurred during the six months of 2015, is presented in the table below.
 
Initial Allocation of Fair Value
(In thousands)
September 30,
2015
 
Adjustments
 
December 31,
2014
Current assets acquired
$
217,816

 
$
(700
)
 
$
218,516

Property and equipment
284,217

 
4,093

 
280,124

Other assets acquired
12,812

 
—

 
12,812

FCC broadcast licenses
588,042

 
(26,900
)
 
614,942

Definite lived intangible assets
786,705

 
46,640

 
740,065

Goodwill
1,119,957

 
(12,581
)
 
1,132,538

Deferred income tax liabilities recorded in conjunction with the acquisition
(338,535
)
 
(7,888
)
 
(330,647
)
Current liabilities assumed
(112,917
)
 
(1,400
)
 
(111,517
)
Other liabilities assumed
(79,267
)
 
(82
)
 
(79,185
)
Total
$
2,478,830

 
 

 
$
2,477,648

 
Current assets acquired included cash and cash equivalents of $26 million and trade accounts receivable of $166 million.

The amount allocated to definite-lived intangible assets represents the estimated fair values of network affiliations of $497 million, advertiser and publisher relationships of $220 million, $37 million of local marketing agreements (LMA), $16 million of technology and trade names and favorable lease assets of $17 million. These intangible assets will be amortized over their weighted-average estimated remaining useful lives of 15 years for network affiliations, 5-7 years for the advertiser relationships, 20 years for LMA agreements, 5 years for technology and trade names and 10 years for favorable lease assets. Acquired property and equipment will be depreciated on a straight-line basis over the respective estimated remaining useful lives.
 

6


None of the goodwill recognized in connection with the LIN Merger is expected to be tax deductible.

The initial allocation presented above is based upon management’s preliminary estimate of the fair values using valuation techniques including income, cost and market approaches. In estimating the fair value of the acquired assets and assumed liabilities, the fair value estimates are based on, but not limited to, expected future revenue and cash flows, expected future growth rates and estimated discount rates. Network affiliations and advertiser relationships were valued primarily using an excess earnings income approach. The broadcast licenses represent the estimated fair value of the FCC license using a “Greenfield” income approach. Under this approach, the broadcast license is valued by analyzing the estimated after-tax discounted future cash flows of an average market participant. Property and equipment was primarily valued using a cost approach. Acquired program license rights will be amortized to operating expense over the estimated broadcast period in an amount equal to the relative benefit that is expected to be derived from the airing of the program, or on a straight line basis over the life of the program where the expected useful life is one year or less.

As discussed in Note 5, the Company recorded a goodwill impairment charge of $53 million related to the LIN Digital subsidiary during the third quarter of 2015.
 
The Company incurred $0.2 million and $3.8 million of legal, accounting and other professional fees and expenses related to the merger with LIN during the three and nine month periods ended September 30, 2015, respectively, compared to professional fees and expenses of $0.8 million and $7.1 million in the equivalent periods of 2014.


Note 3: Segment Information
 
During 2015, as a result of the LIN Merger discussed in Note 2, the Company began assessing and internally reporting financial information for the broadcast business and the digital business separately. As a result, we now have two reportable operating segments, “Broadcast” and “Digital” that are disclosed separately from our corporate activities. The Broadcast segment includes 71 television stations that are either owned, operated or serviced by the Company in 48 U.S. markets, all of which are engaged principally in the sale of television advertising. The Digital segment includes the operating results of the digital companies (LIN Digital, ONE Mobile, HYFN, Dedicated Media, and Federated Media) as well as the business operations related to the television station companion websites. Unallocated corporate expenses primarily include costs to operate as a public company and to operate corporate locations.
 
The Company identifies operating segments based on how the chief operating decision maker (“CODM”) allocates resources, assesses performance and makes decisions. The CODM is the President, and Chief Executive Officer. The CODM evaluates performance and allocates resources based on operating income or loss for the Broadcast and Digital segments, excluding non-segment expenses.
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
(in thousands)
2015
 
2014
 
2015
 
2014
Revenues
 
 
 
 
 
 
 
Broadcast
$
277,992

 
$
153,877

 
$
828,846

 
$
441,027

Digital
43,744

 
6,347

 
110,147

 
17,226

Revenues
$
321,736

 
$
160,224

 
$
938,993

 
$
458,253

 
 

7


 
Three Months Ended September 30,
 
Nine Months Ended September 30,
(in thousands)
2015
 
2014
 
2015
 
2014
Operating income
 
 
 
 
 
 
 
Broadcast
$
85,105

 
$
60,628

 
$
260,032

 
$
161,533

Digital
1,540

 
310

 
499

 
1,829

Segment operating income
86,645

 
60,938

 
260,531

 
163,362

Corporate and other expenses
(12,598
)
 
(5,567
)
 
(37,615
)
 
(19,778
)
Depreciation and amortization
(40,385
)
 
(15,643
)
 
(123,286
)
 
(48,278
)
Gain (loss) related to property and equipment, net
(96
)
 
(676
)
 
328

 
(897
)
Goodwill impairment
(52,862
)
 
—

 
(52,862
)
 
—

Merger-related expenses
(10,014
)
 
(3,596
)
 
(18,907
)
 
(13,173
)
Restructuring expenses
(1,132
)
 
(275
)
 
(1,132
)
 
(4,764
)
Operating income (loss)
$
(30,442
)
 
$
35,181

 
$
27,057

 
$
76,472


(in thousands)
September 30,
2015
 
December 31,
2014
Assets
 
 
 
Broadcast
$
3,965,346

 
$
4,062,428

Digital
305,985

 
373,718

Segment assets
4,271,331

 
4,436,146

Corporate
190,834

 
317,055

Total assets
$
4,462,165

 
$
4,753,201

 

Note 4: Variable Interest Entities
 
Certain of the Company's broadcast stations provide services to other station owners within the same market via Joint Sales Agreements ("JSA") and/or Shared Service Agreements ("SSA"). The Company has JSA and/or SSA agreements with 8 stations. Depending on the specific terms of these agreements, the Company may provide a variety of operational and administrative services, assume an obligation to reimburse certain expenses of the stations and guarantee certain external borrowings by the station parent companies (refer to Note 6 for guaranteed borrowings). The Company is compensated for these services through performance based and/or administrative fees. Under certain JSAs, the Company has an option to acquire the related station at any time, subject to FCC consent, until the expiration of the applicable JSA. The Company has determined that the stations with which it has JSAs and/or SSAs, and certain of their parent companies, are VIEs as a result of the terms of the agreements.

The Company is the primary beneficiary of the VIEs, because (a) subject to the ultimate control of the broadcast licensees, the Company has the power to direct the activities which significantly impact the economic performance of the VIEs through the services the Company provides and (b) the Company absorbs returns and losses which would be considered significant to the VIEs. Therefore, the financial results and financial position of these entities have been consolidated by the Company in accordance with the VIE accounting guidance.

8



The carrying amounts and classification of the assets and liabilities of the consolidated VIE entities described above, which have been included in the consolidated balance sheets as of September 30, 2015, and December 31, 2014, were as follows:
 
(In thousands)
September 30,
2015
 
December 31,
2014
Assets
 
 
 
Current assets
 
 
 
Cash and cash equivalents
$
3,727

 
$
3,846

Trade accounts receivable (less allowance for doubtful accounts 2015 - $102; 2014 - $99)
9,010

 
10,442

Prepaid expenses and other current assets
886

 
1,050

Total current assets
13,623

 
15,338

Property and equipment, net
1,890

 
5,402

Other assets, net
3,498

 
2,011

Definite lived intangible assets, net
33,011

 
34,885

Broadcast licenses
71,300

 
71,300

Goodwill
21,859

 
21,859

Total assets
$
145,181

 
$
150,795

Liabilities
 
 
 
Current liabilities
 
 
 
Trade accounts payable
$
119

 
$
56

Other accrued expenses and other current liabilities
2,414

 
6,839

Current installments of long-term debt
3,120

 
3,562

Total current liabilities
5,653

 
10,457

Long-term debt
25,920

 
28,150

Other liabilities
6,802

 
3,914

Total liabilities
$
38,375

 
$
42,521


The December 31, 2014 balances included above were adjusted to reflect the purchase price adjustment discussed in Note 2.

The assets of the Company’s consolidated VIEs can only be used to settle the obligations of the VIEs and may not be sold, or otherwise disposed of, except for assets sold or replaced with others of like kind or value. At September 30, 2015, the Company has an option to acquire the assets or member's interest of the VIE entities that it may exercise if the FCC attribution rules change to permit the Company to acquire such interest. The option exercise price is of nominal value and significantly less than the carrying value of their tangible and intangible net assets. The options are carried at zero on the Company’s consolidated balance sheet, as any value attributable to the options is eliminated in the consolidation of the VIEs. In an order adopted in March 2014, the FCC concluded that JSAs should be “attributable” for purposes of the media ownership rules if they permit a television licensee to sell more than 15% of the commercial inventory of a television station owned by a third party in the same market. Stations with JSAs that would put them in violation of the new rules have until December 19, 2016 to amend or terminate those arrangements, unless they are able to obtain a waiver of such rules. Accordingly, absent further developments, or the grant of waivers, the Company will be required to modify or terminate its existing JSAs no later than December 19, 2016. The Company continues to monitor regulatory developments and evaluate potential changes to its JSA and SSA arrangements.

In July 2015 the Company received bonus payments of $9 million from its consolidated VIEs and these funds became available to settle the obligations of the Company.


9


Note 5: Goodwill Impairment
 
Due to a projected decrease in operating results of the Company's digital businesses, the Company performed an interim impairment assessment as of September 30, 2015 on three digital reporting units acquired as part of the LIN Merger. The turnover of key sales personnel and the industry-wide shift to software enabled automated buying and placement of digital advertising led to a decrease in projected operating results for the Company's historical arbitrage media placement businesses.  As a result of the impairment review, two of the three reporting units passed the first step of the evaluation as their fair values exceeded their carrying values by more than 10%.  The fair value of the third reporting unit, LIN Digital, did not exceed its carrying value.  As a result, the Company performed the second step of the impairment test and recorded a non-cash pretax goodwill impairment charge at its LIN Digital reporting unit of $53 million in the third quarter of 2015. After recording the impairment charge, the goodwill allocated to the LIN Digital reporting unit was $80 million at September 30, 2015. The total goodwill allocated to the Digital segment at September 30, 2015 was $195 million.

The estimated fair value of each reporting unit was determined using a combination of an income approach and a market comparable method. The income approach utilizes the estimated discounted cash flows expected to be generated by the reporting unit assets. The market comparable method employs comparable company information, and where available, recent transaction information for similar assets. The determination of fair value requires the use of significant judgment and estimates that management believes are appropriate in the circumstances although it is reasonably possible that actual performance will differ from these estimates and the effect of any differences could be material. These estimates include those relating to revenue growth, compensation levels, digital advertising placement prices, capital expenditures, discount rates and market trading multiples for digital advertising assets.

Note 6: Debt and Other Financial Instruments
 
Long-term debt at September 30, 2015, and December 31, 2014, was as follows:
 
(In thousands)
2015
 
2014
Media General Credit Agreement
$
1,541,000

 
$
1,701,000

2022 Notes
400,000

 
400,000

2021 Notes
275,000

 
290,000

Shield Media Credit Agreement
27,800

 
29,600

Other borrowings
1,240

 
2,111

Total debt
2,245,040

 
2,422,711

Less: net unamortized discount
(10,226
)
 
(10,768
)
Less: scheduled current maturities
(3,120
)
 
(11,781
)
 
 
 
 
Long-term debt excluding current maturities
$
2,231,694

 
$
2,400,162

 
Media General Credit Agreement
 
In July 2013, the Company entered into a credit agreement with a syndicate of lenders to provide the Company with a term loan and access to a revolving credit facility. The funds borrowed under the credit agreement and subsequent amendments (together the "Credit Agreement") have been used by the Company to facilitate acquisitions and mergers. The term loan under the Credit Agreement matures in July 2020 and bears interest at LIBOR (with a floor of 1%) plus a margin of 3%.
 
The Company repaid $25 million and $160 million of principal on the term loan during the three and nine months ended September 30, 2015, respectively. The early repayments of debt resulted in debt extinguishment costs of $0.4 million and $2.8 million during the three and nine months ended September 30, 2015, respectively, due to the accelerated recognition of deferred debt-related items. As of September 30, 2015, there was $1.541 billion outstanding under the Credit Agreement.
 
The revolving credit facility under the Credit Agreement also includes revolving credit commitments of $150 million. The revolving credit facility matures in October 2019, bears an interest rate of LIBOR plus a margin of 2.50% and is subject to a 0.5% commitment fee per annum with respect to the undrawn portion of the facility. The Company has $147 million of availability under the revolving credit facility (giving effect to $3 million of letters of credit which have been issued but are undrawn).
 

10


Shield Media Credit Agreement
 
Shield Media LLC (and its subsidiary WXXA) and Shield Media Lansing LLC (and its subsidiary WLAJ) (collectively, “Shield Media”), companies that control subsidiaries with which the Company has joint sales and shared services arrangements for 2 stations as described in Note 4, entered into a new credit agreement with a syndicate of lenders, dated July 31, 2013. The term loans outstanding under this agreement mature in July 2018 and bear interest at LIBOR plus a margin of 3%. The Shield Media term loans are guaranteed by the Company and are secured by liens on substantially all of the assets of the Company, on a pari passu basis with the Credit Agreement. The Company repaid $0.6 million and $1.8 million of principal on the term loan during the three and nine months ended September 30, 2015, respectively.

2022 Notes
 
On November 5, 2014, a wholly owned subsidiary of Old Media General completed the issuance of $400 million in aggregate principal amount of 5.875% Senior Unsecured Notes due in 2022 (the “2022 Notes”) in connection with the financing of the LIN Merger. The net proceeds from offering of the 2022 Notes were used to repay certain indebtedness of LIN Media in connection with the LIN Merger, including the satisfaction and discharge of LIN Television’s $200 million aggregate principal amount of 8.375% Senior Notes due 2018 and the payment of related fees and expenses. The 2022 Notes were issued under an indenture, dated as of November 5, 2014 (the “2022 Notes Indenture”). New Media General, as the new direct parent of LIN Television, and certain of the wholly owned subsidiaries of LIN Television provide full and unconditional guarantees to the 2022 Notes, on a senior basis.
 
2021 Notes
 
LIN Television’s previously issued 6.375% Senior Notes due 2021 remained outstanding as of the Closing Date (the “2021 Notes”). Following the consummation of the LIN Merger, New Media General, as the new direct parent of LIN Television, and certain of the wholly owned subsidiaries of LIN Television provide full and unconditional guarantees of the 2021 Notes, on a senior basis. The Company received an unsolicited offer and repaid $16 million of principal and unamortized premium on the 2021 Notes during the three and nine months ended September 30, 2015. As of September 30, 2015, the aggregate principal amount outstanding under the 2021 Notes was $275 million.
 
Fair Value
 
The following table includes information about the carrying values and estimated fair values of the Company’s financial instruments at September 30, 2015, and December 31, 2014:
 
 
September 30, 2015
 
December 31, 2014
 
Carrying
 
Fair
 
Carrying
 
Fair
(In thousands)
Amount
 
Value
 
Amount
 
Value
Assets:
 
 
 
 
 
 
 
Investments
 
 
 
 
 
 
 
Trading securities
$
232

 
$
232

 
$
449

 
$
449

Liabilities:
 
 
 
 
 
 
 
Long-term debt:
 
 
 
 
 
 
 
Media General Credit Agreement
1,532,129

 
1,519,513

 
1,690,753

 
1,686,000

2022 Notes
398,225

 
398,659

 
398,038

 
397,000

2021 Notes
275,420

 
286,000

 
291,442

 
289,000

Shield Media Credit Agreement
27,800

 
27,800

 
29,600

 
29,600

Other borrowings
1,240

 
1,240

 
2,111

 
2,111

 
Trading securities held by the Supplemental 401(k) Plan are carried at fair value and are determined by reference to quoted market prices.
 
The fair value of the 2021 Notes was determined by reference to the most recent trading prices. The fair value of all other debt instruments were determined using discounted cash flow analysis' and an estimate of the current borrowing rate.
 

11


Under the fair value hierarchy, the Company’s trading securities fall under Level 1 (quoted prices in active markets), the 2021 Notes fall under Level 2 (other observable inputs) and the Media General Credit Agreement, 2022 Notes, Shield Media Credit Agreement and the Other Borrowings fall under Level 3 (unobservable inputs).

Note 7: Taxes on Income
 
The effective tax rate was 7.3% in the third quarter of 2015 as compared to 45.4% in the third quarter of 2014 and 6.6% in the first nine months of 2015 as compared 44.2% in the equivalent prior-year period.  The low tax rates in the current periods were due primarily to the Goodwill impairment and other permanent book-tax differences not deductible for tax purposes as compared to much higher levels of pre-tax loss.  The tax expense in both years was predominantly non-cash due to the Company’s significant net operating loss carryover.  Current tax expense was approximately $0.4 million and $0.5 million in the third quarter of 2015 and 2014 respectively and was approximately $1.9 million and $0.8 million in the first nine months of 2015, and 2014, respectively; it was attributable primarily to state income taxes.

 
Note 8: Earnings Per Share
 
The following table sets forth the computation of basic and diluted income per share for the three and nine months ended September 30, 2015, and 2014:
 
 
Three Months Ended September 30, 2015
 
Three Months Ended September 30, 2014
(In thousands, except
Income
 
Shares
 
Per Share
 
Income
 
Shares
 
Per Share
per share amounts)
(Numerator)
 
(Denominator)
 
Amount
 
(Numerator)
 
(Denominator)
 
Amount
Net income (loss) attributable to Media General
$
(48,493
)
 
 

 
 

 
$
13,395

 
 

 
 

 
 
 
 
 
 
 
 
 
 
 
 
Undistributed earnings attributable to participating securities
—

 
 

 
 

 
(75
)
 
 

 
 

 
 
 
 
 
 
 
 
 
 
 
 
Basic EPS
 
 
 
 
 
 
 
 
 
 
 
Income (loss) attributable to common stockholders
$
(48,493
)
 
127,903

 
$
(0.38
)
 
$
13,320

 
88,535

 
$
0.15

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Effect of dilutive securities:
 
 
 
 
 
 
 
 
 
 
 
Stock options and warrants


 
—

 


 
 
 
492

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Diluted EPS
 
 
 
 
 
 
 
 
 
 
 
Income (loss) attributable to common stockholders
$
(48,493
)
 
127,903

 
$
(0.38
)
 
$
13,320

 
89,027

 
$
0.15

 

12


 
Nine Months Ended September 30, 2015
 
Nine Months Ended September 30, 2014
(In thousands, except
Income
 
Shares
 
Per Share
 
Income
 
Shares
 
Per Share
per share amounts)
(Numerator)
 
(Denominator)
 
Amount
 
(Numerator)
 
(Denominator)
 
Amount
Net income (loss) attributable to Media General
$
(54,291
)
 
 

 
 

 
$
25,566

 
 

 
 

 
 
 
 
 
 
 
 
 
 
 
 
Undistributed earnings attributable to participating securities
—

 
 

 
 

 
(165
)
 
 

 
 

 
 
 
 
 
 
 
 
 
 
 
 
Basic EPS
 
 
 
 
 
 
 
 
 
 
 
Income (loss) attributable to common stockholders
$
(54,291
)
 
128,844

 
$
(0.42
)
 
$
25,401

 
88,444

 
$
0.29

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Effect of dilutive securities:
 
 
 
 
 
 
 
 
 
 
 
Stock options and warrants
 

 
—

 
 

 
 

 
499

 
 

 
 
 
 
 
 
 
 
 
 
 
 
Diluted EPS
 
 
 
 
 
 
 
 
 
 
 
Income (loss) attributable to common stockholders
$
(54,291
)
 
128,844

 
$
(0.42
)
 
$
25,401

 
88,943

 
$
0.29


We have excluded 1.5 million and 1.3 million of common shares issuable for share options and restricted shares from the calculation of diluted earnings per share for the three and nine months ended September 30, 2015, respectively, because the net loss causes these shares to be anti-dilutive.

Note 9: Retirement and Postretirement Plans
 
The Company has a funded, qualified non-contributory defined benefit retirement plan which covers substantially all Legacy Media General employees hired before 2007 and IBEW Local 45 employees of KRON-TV with benefits which vested prior to 2006, as well as a non-contributory unfunded supplemental executive retirement and ERISA excess plans which supplement the coverage available to certain executives. These retirement plans are frozen.
 
In conjunction with the LIN Merger, the Company assumed liability for an additional defined benefit retirement plan as well as a supplemental retirement plan. Both plans are frozen. The Company is required to make contributions to the supplemental retirement plan for the then eligible employees and certain other employees based on 5% of each participant’s eligible compensation.
 
The Company also has a retiree medical savings account plan which reimburses eligible employees who retire for certain medical expenses. In addition, the Company has an unfunded plan that provides certain health and life insurance benefits to retired employees who were hired prior to 1992.
 
The following tables provide the components of net periodic benefit cost (income) for the Company’s benefit plans for the third quarters and first nine months of 2015 and 2014:

 
Three Months Ended
 
Pension Benefits
 
Other Benefits
(In thousands)
September 30,
2015
 
September 30,
2014
 
September 30,
2015
 
September 30,
2014
Service cost
$
—

 
$
43

 
$
25

 
$
20

Interest cost
5,729

 
5,530

 
250

 
269

Expected return on plan assets
(7,727
)
 
(6,717
)
 
—

 
—

Amortization of net loss
200

 
—

 
—

 
—

Net periodic benefit (income) cost
$
(1,798
)
 
$
(1,144
)
 
$
275

 
$
289



13


 
Nine Months Ended
 
Pension Benefits
 
Other Benefits
(In thousands)
September 30,
2015
 
September 30,
2014
 
September 30,
2015
 
September 30,
2014
Service cost
$
—

 
$
128

 
$
75

 
$
60

Interest cost
17,185

 
16,590

 
750

 
807

Expected return on plan assets
(23,180
)
 
(20,150
)
 
—

 
—

Amortization of net loss
600

 
—

 
—

 
—

Net periodic benefit (income) cost
$
(5,395
)
 
$
(3,432
)
 
$
825

 
$
867



Note 10: Stockholders’ Equity
 
The following table shows the components of the Company’s stockholders’ equity as of and for the nine months ended September 30, 2015:
 
 
 
 
 
 
Accumulated
 
 
 
 
 
 
 
 
 
Other
 
 
 
Total
 
Common Stock
 
Comprehensive
 
Retained
 
Stockholders'
(In thousands)
Voting
 
Non-Voting
 
Loss
 
Earnings
 
Equity
Balance at December 31, 2014
$
1,322,284

 
$
—

 
$
(36,445
)
 
$
214,582

 
$
1,500,421

Net loss attributable to Media General
—

 
—

 
—

 
(54,291
)
 
(54,291
)
Exercise of stock options
1,848

 
—

 
—

 
—

 
1,848

Stock-based compensation
10,292

 
—

 
—

 
—

 
10,292

Revaluation of redeemable noncontrolling interest
(6,920
)
 
—

 
—

 
(987
)
 
(7,907
)
Repurchases of voting common stock
(33,724
)
 
—

 
—

 
—

 
(33,724
)
Other
55

 
—

 
—

 
—

 
55

Balance at September 30, 2015
$
1,293,835

 
$
—

 
$
(36,445
)
 
$
159,304

 
$
1,416,694


The following table shows the components of the Company’s stockholders’ equity as of and for the nine months ended September 30, 2014:

 
 
 
 
 
Accumulated
 
 
 
 
 
 
 
 
 
Other
 
 
 
Total
 
Common Stock
 
Comprehensive
 
Retained
 
Stockholders'
(In thousands)
Voting
 
Non-Voting
 
Income
 
Earnings
 
Equity
Balance at December 31, 2013
$
557,754

 
$
12,483

 
$
5,668

 
$
161,076

 
$
736,981

Net income attributable to Media General
—

 
—

 
—

 
25,566

 
25,566

Conversion of non-voting to voting common stock
6,305

 
(6,305
)
 
—

 
—

 
—

Exercise of stock options
483

 
—

 
—

 
—

 
483

Stock-based compensation
2,431

 
—

 
—

 
—

 
2,431

Director deferred stock units
7,361

 
—

 
—

 
—

 
7,361

Other
(65
)
 
—

 
—

 
—

 
(65
)
Balance at September 30, 2014
$
574,269

 
$
6,178

 
$
5,668

 
$
186,642

 
$
772,757

 

14



Note 11: Other
 
The Company repurchased 0.9 million and 2.1 million shares of its outstanding voting common stock at an average price of $15.80, and $16.16 during the three and nine months ended September 30, 2015, respectively, under the share repurchase program approved by the Board of Directors of the Company. The total cost of the repurchases was $15 million and $34 million for the three and nine month periods ended September 30, 2015, respectively. The share repurchase program expires on December 31, 2015.

In September 2015 the Company adopted a plan to restructure certain digital segment operations which is expected to save the Company $5 million in operating costs annually. The Company recorded severance expense of $1.1 million related to the plan in the third quarter of 2015. Accrued severance costs related to the digital operations restructuring are included in the "Accrued salaries and wages" line item on the consolidated condensed balance sheet. No severance payments related to the digital segment restructuring were made during the third quarter of 2015. In April of 2014, the Company adopted a plan to restructure certain corporate and shared service operations intended to save $10 million in operating costs annually. The Company recorded severance expense of $0.3 million in the third quarter of 2014. Accrued severance costs related to the corporate and shared service operations restructuring are included in the “Accrued salaries and wages” line item on the consolidated condensed balance sheet. Following severance payments of $0.1 million, the remaining severance liability related to the corporate restructuring was approximately $3.7 million as of September 30, 3014.

At September 30, 2015, the Company held a 50.1% ownership position in its consolidated HYFN subsidiary. Due to higher than initially projected revenue and other metrics impacting the purchase price of the outstanding interest in HYFN, the Company increased the value of noncontrolling interest in HYFN by $6.9 million during the third quarter of 2015.

The Company received $120 million of restricted cash in a qualified intermediary (a consolidated entity) from the 2014 sale of the WJAR-TV station discussed in Note 2. In June of 2015, the restricted cash was released from the qualified intermediary and remitted to the Company.

In April 2015, the Company acquired the remaining noncontrolling interest in the Dedicated Media subsidiary for a purchase price of $11 million. As a result of the transaction, Dedicated Media was 100% owned by the Company during the second and third quarters of 2015.

The Company also recorded $5.6 million of non-operating gains in the nine month period ended September 30, 2015 related to the relocation of broadcast channels in the Lansing, Michigan and Austin, Texas markets.
 

Note 12: Guarantor Financial Information
 
LIN Television, a 100% owned subsidiary of New Media General, is the primary obligor of the 2021 Notes and 2022 Notes. New Media General fully and unconditionally guarantees all of LIN Television’s obligations under the 2021 Notes and the 2022 Notes on a joint and several basis. Additionally, all of the consolidated 100% owned subsidiaries of LIN Television fully and unconditionally guarantee LIN Television’s obligations under the 2021 Notes and 2022 Notes on a joint and several basis. There are certain limitations in the ability of the subsidiaries to pay dividends to New Media General. The following financial information presents condensed consolidating balance sheets, statements of operations, and statements of cash flows for New Media General, LIN Television (as the issuer), the Guarantor Subsidiaries, and the Non-Guarantor Subsidiaries, together with certain eliminations.


15


Media General, Inc.
Condensed Consolidating Balance Sheet
September 30, 2015
(in thousands)
 
New Media General
 
LIN Television Corporation
 
Guarantor Subsidiaries
 
Non-Guarantor Subsidiaries
 
Eliminations
 
Consolidated
ASSETS
 
 
 
 
 
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
—

 
$
9,028

 
$
23,927

 
$
4,847

 
$
—

 
$
37,802

Trade accounts receivable, net
—

 
59,699

 
181,081

 
30,798

 
—

 
271,578

Current deferred tax asset
—

 
—

 
51,589

 
40

 
—

 
51,629

Prepaid expenses and other current assets
—

 
4,662

 
10,990

 
1,830

 
—

 
17,482

Total current assets
—

 
73,389

 
267,587

 
37,515

 
—

 
378,491

Property and equipment, net
—

 
175,712

 
298,199

 
2,306

 
—

 
476,217

Other assets, net
—

 
13,209

 
56,362

 
3,744

 
—

 
73,315

Definite lived intangible assets, net
—

 
376,323

 
471,328

 
44,767

 
—

 
892,418

Broadcast licenses
—

 
—

 
1,025,800

 
71,300

 
—

 
1,097,100

Goodwill
—

 
527,077

 
924,708

 
92,839

 
—

 
1,544,624

Advances to consolidated subsidiaries
—

 
(196,301
)
 
216,231

 
(19,930
)
 
—

 
—

Investment in consolidated subsidiaries
1,416,694

 
1,283,894

 
—

 
—

 
(2,700,588
)
 
—

Total assets
$
1,416,694

 
$
2,253,303

 
$
3,260,215

 
$
232,541

 
$
(2,700,588
)
 
$
4,462,165

 
 
 
 
 
 
 
 
 
 
 
 
LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIT)
 
 
 
 
 
 
 
 
Current liabilities:
 
 
 
 
 
 
 
 
 
 
 
Trade accounts payable
$
—

 
$
1,726

 
$
17,080

 
$
1,139

 
$
—

 
$
19,945

Accrued salaries and wages
—

 
4,593

 
21,923

 
481

 
—

 
26,997

Accrued expenses and other current liabilities
—

 
34,319

 
93,260

 
6,801

 
—

 
134,380

Current installments of long-term debt
—

 
—

 
—

 
3,120

 
—

 
3,120

Current installments of obligation under capital leases
—

 
561

 
279

 
36

 
—

 
876

Total current liabilities
—

 
41,199

 
132,542

 
11,577

 
—

 
185,318

Long-term debt
—

 
673,645

 
1,532,129

 
25,920

 
—

 
2,231,694

Deferred tax liability and other long-term tax liabilities
—

 
71,216

 
283,315

 
(213
)
 
—

 
354,318

Long-term capital lease obligations
—

 
13,096

 
1,106

 
3

 
—

 
14,205

Retirement and postretirement plans
—

 
30,039

 
166,466

 
—

 
—

 
196,505

Other liabilities
—

 
7,414

 
24,071

 
1,799

 
—

 
33,284

Total liabilities
—

 
836,609

 
2,139,629

 
39,086

 
—

 
3,015,324

 
 
 
 
 
 
 
 
 
 
 
 
Noncontrolling interests
—

 
—

 
—

 
30,147

 
—

 
30,147

 
 
 
 
 
 
 
 
 
 
 
 
Total stockholders (deficit) equity
1,416,694

 
1,416,694

 
1,120,586

 
163,308

 
(2,700,588
)
 
1,416,694

Total liabilities, noncontrolling interest and stockholders' equity (deficit)
$
1,416,694

 
$
2,253,303

 
$
3,260,215

 
$
232,541

 
$
(2,700,588
)
 
$
4,462,165



16


Media General, Inc.
Condensed Consolidating Balance Sheet
December 31, 2014
(in thousands)
 
New Media General
 
LIN Television Corporation
 
Guarantor Subsidiaries
 
Non-Guarantor Subsidiaries
 
Eliminations
 
Consolidated
ASSETS
 
 
 
 
 
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
2,388

 
$
9,658

 
$
27,371

 
$
4,503

 
$
—

 
$
43,920

Restricted cash at qualified intermediary
—

 
—

 
119,903

 
—

 
—

 
119,903

Trade accounts receivable, net
—

 
84,355

 
172,574

 
21,056

 
—

 
277,985

Current deferred tax asset
—

 
3,492

 
52,222

 
40

 
—

 
55,754

Prepaid expenses and other current assets
—

 
17,278

 
7,684

 
1,320

 
—

 
26,282

Total current assets
2,388

 
114,783

 
379,754

 
26,919

 
—

 
523,844

Property and equipment, net
—

 
179,057

 
314,534

 
5,881

 
—

 
499,472

Other assets, net
—

 
8,565

 
67,961

 
2,473

 
—

 
78,999

Definite lived intangible assets, net
—

 
403,866

 
506,619

 
45,815

 
—

 
956,300

Broadcast licenses
—

 
—

 
1,025,800

 
71,300

 
—

 
1,097,100

Goodwill
—

 
527,077

 
977,570

 
92,839

 
—

 
1,597,486

Advances to consolidated subsidiaries
2,021

 
(456,741
)
 
456,359

 
(1,639
)
 


 
—

Investment in consolidated subsidiaries
1,496,012

 
1,319,033

 
—

 
—

 
(2,815,045
)
 
—

Total assets
$
1,500,421

 
$
2,095,640

 
$
3,728,597

 
$
243,588

 
$
(2,815,045
)
 
$
4,753,201

 
 
 
 
 
 
 
 
 
 
 
 
LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIT)
 
 
 
 
 
 
 
 
Current liabilities:
 
 
 
 
 
 
 
 
 
 
 
Trade accounts payable
$
—

 
$
4,014

 
$
31,794

 
$
551

 
$
—

 
$
36,359

Accrued salaries and wages
—

 
9,384

 
26,536

 
714

 
—

 
36,634

Accrued expenses and other current liabilities
—

 
43,901

 
53,042

 
7,149

 
—

 
104,092

Current installments of long-term debt
—

 
—

 
8,218

 
3,563

 
—

 
11,781

Current installments of obligation under capital leases
—

 
441

 
303

 
71

 
—

 
815

Total current liabilities
—

 
57,740

 
119,893

 
12,048

 
—

 
189,681

Long-term debt
—

 
291,442

 
2,080,570

 
28,150

 
—

 
2,400,162

Deferred tax liability and other long-term tax liabilities
—

 
193,293

 
168,171

 
2,825

 
—

 
364,289

Long-term capital lease obligations
—

 
13,529

 
1,312

 
28

 
—

 
14,869

Retirement and postretirement plans
—

 
33,031

 
178,233

 
—

 
—

 
211,264

Other liabilities
—

 
10,593

 
22,037

 
5,404

 
—

 
38,034

Total liabilities
—

 
599,628

 
2,570,216

 
48,455

 
—

 
3,218,299

 
 
 
 
 
 
 
 
 
 
 
 
Noncontrolling interests
—

 
—

 
10,981

 
23,500

 
—

 
34,481

 
 
 
 
 
 
 
 
 
 
 
 
Total stockholders (deficit) equity
1,500,421

 
1,496,012

 
1,147,400

 
171,633

 
(2,815,045
)
 
1,500,421

Total liabilities, noncontrolling interest and stockholders' equity (deficit)
$
1,500,421

 
$
2,095,640

 
$
3,728,597

 
$
243,588

 
$
(2,815,045
)
 
$
4,753,201


17


Media General, Inc.
Condensed Consolidated Statement of Comprehensive Income
For the Three Months Ended September 30, 2015
(in thousands)
 
New Media General
 
LIN Television Corporation
 
Guarantor Subsidiaries
 
Non-Guarantor Subsidiaries
 
Eliminations
 
Consolidated
Net operating revenue
$
—

 
$
91,179

 
$
215,524

 
$
22,405

 
$
(7,372
)
 
$
321,736

 
 
 
 
 
 
 
 
 
 
 
 
Operating costs:
 
 
 
 
 
 
 
 
 
 
 
Operating expenses, excluding depreciation expense
—

 
40,149

 
93,562