Herald-Courier's owner makes deal with lenders, gets financial breathing room

Associated Press • Dec 10, 2008 at 12:00 AM

Media General Inc., which ownes WJHL-TV and publishes the Bristol Herald-Courier and other newspapers, said Wednesday it has reached new terms with lenders, giving it breathing room as its peers continue to contend with high debt and weak ad prospects.

Its shares rose 10 percent.

The new financing terms adjust the lender-imposed financial targets that the company said in October it might narrowly miss, based on its long-term forecasts. Details of the new agreements are to be disclosed when the deals are completed next week.

In a statement issued ahead of remarks at a UBS investors conference, Media General's chief financial officer, John Schauss, said the new terms "will provide us with the flexibility we desire, and at a cost that will be manageable."

Concerns about the future of newspaper publishers grew this week after Tribune Co., owner of the Los Angeles Times, Chicago Tribune, The Sun of Baltimore and other dailies, filed for Chapter 11 bankruptcy protection Monday.

Several publishers have been negotiating with their lenders for greater flexibility on the financial targets defined in their loans.

McClatchy Co., A.H. Belo Corp., Lee Enterprises Inc. and now Media General are among the publishers that have successfully negotiated new terms, giving them greater freedom to operate. Media General has been selling broadcast stations to pay down its debt, which stood at $750 million on Sept. 30, down from nearly $900 million at the start of the year.

Schauss said Wednesday the debt should fall to about $730 million by year's end and to $710 million at the end of 2009, even without proceeds from any asset sales.

In 2008, Media General reduced its debt by $135 million by selling assets, primarily four broadcast stations. A fifth station sale is pending.

Chief Executive Marshall N. Morton said the company's newsprint costs should decline 10 percent in 2008. Although the price of newsprint has been increasing, the company's newspapers have been using less because of reduced advertising, circulation and page widths.

The company also said its online revenue is expected to account for 5 percent of total revenue in 2008 and 7 percent next year.

Media General said it has reduced its overall work force by 17 percent since the start of 2007 and expects to see the full savings in 2009. The Times-Dispatch paper laid off 18 employees Monday, including an unspecified number in the newsroom.

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