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    Stock Alert for Media General Inc. (MEG)

    Media General Inc.  (NYSE: MEG) is a provider of news, information and entertainment across multiple media platforms, serving consumers and advertisers in strong local markets, primarily in the Southeastern United States. The Company is transforming itself over time to a digital media model, while continuing to effectively manage its larger, cash producing broadcast television and print platforms. MEG’s operations are organized in five geographic market segments and a sixth segment that includes the company’s interactive advertising services and certain other operations. Its operations include 18 network-affiliated television stations and their associated websites and 23 newspapers and their associated Web sites. MEG operates three digital media advertising services companies:  Blockdot, which specializes in interactive entertainment and advergaming technologies; DealTaker.com, a coupon and shopping Web site; and NetInformer, a provider of wireless media and mobile marketing services.

    Share Statistics (26-Oct-11)   FY

    2009

    FY

    2010

    %

    Chg

    Q3

    2010

    Q3

    2011

    %

    Chg

    Symbol MEG Revenue, $Mn 657.61 678.12 3.1% 163.21 144.74 -11.3%
    Current price $3.35 Gross marg. 76.5% 78.3% 2.4% 76.9% 76.1% -1.0%
    52wk Range: $1.14-$7.73 Oper. margin 10.8% -14.5%
    Avg Vol (3m): 181,985 Net margin -5.4% -3.3% -38.9% -6.5% -20.6% 219.9%
    Market Cap. 75.43M              
    Shares Outstanding 22.52M EPS, $ 0.56 -0.97 -273.2% -0.46 -0.54 17.4%

    Source: Reuters.com, SEC Filings.

    Investment Highlights

    Shares of MEG have gained 157.2% in the last five days and 82.2% in the last month. Year-to-date, the stock is down 44.2%.

    The Richmond, Virginia-based broadcaster and publisher last week announced its third-quarter results, reporting a wider loss and lower revenue.

    Net loss in the quarter, which included a non-cash impairment of $26.6 million, was $29.8 million, or $1.32 per share, compared with a net loss of $10.7 million, or $0.48 per share, in the comparable quarter last year.

    Total revenues came in at $144.7 million, down 11% from $163.2 million reported last year. Its print revenue dropped 9% while broadcast revenue dropped 13%.

    MEG president and CEO Marshall N. Morton said the Company remains committed to strong expense management.  The Company still expects to cut this year’s total operating expenses by approximately $20 million, or more than 3%, versus last year’s total operating costs of $605 million.

    Looking to next year, the Company expects significant revenues from political advertising as well as from the Summer Olympics and the Super Bowl on its eight NBC stations.

    “This positive outlook notwithstanding, as our properties develop budgets for 2012, core revenue assumptions will be appropriately conservative, and expenses will be scaled to the revenue opportunity a particular market is expected to generate,” said Morton.  “We continue to accelerate our digital strategy, including new ways to be paid for our content. We have differentiated local content that people need, top-rated local news and strong local advertiser relationships to support our plans to increase cash flow generation.”

    MEG traded as much as 43% higher on Wednesday, with over 900K shares changing hands during the session.  Over the past 52 weeks, the stock has reached a low of $1.14 and a high of $7.73.  It is currently trading above its 50-day moving average of $1.75 and above its 200-day moving average of $3.29.

    Source: http://www.mediageneral.com/press/2011/oct19_11_earnings.html

    Financial Strength (26-Oct-2011)

    Company

    Industry

    Sector

    S&P 500

    Quick Ratio (MRQ) 1.30 1.23 1.13 0.67
    Current Ratio (MRQ) 1.38 1.48 1.36 1.05
    LT Debt to Equity (MRQ) 683.89 30.49 56.55 100.24
    Total Debt to Equity (MRQ) 683.89 33.25 96.53 139.93
    Interest Coverage (TTM) 1.07 0.49 0.57 24.49

    Source: Reuters.com, SEC Filings.

    Technical Analysis

    Source: http://stockcharts.com

    MEG is above the upper Bollinger Band, implying that it is currently extended from its recent trend. Be aware, however, that a cross outside of the Bollinger Bands can sometimes be a signal of trend strength and not, necessarily, trend reversal.

    The MACD for MEG currently indicates a strong bullish signal for two reasons. First, the MACD is above the signal line, a 9-day moving average. Second, the MACD is above 0 which implies that the underlying moving averages are trending higher.

    Comparative Analysis

    Company Name Ticker Price per Mrkt. Cap. P/E P/S
    Oct26-2011 symbol Share, $ $ Mn 2011 2012 2011 2012
    The McClatchy Company MNI 1.55 132.06M 4.08 5.00 0.10 0.11
    The Washington Post Company WPO 352.55 2.80B 18.04 20.40 0.67 0.70
    Publishing – Newspaper Median       21.73 n/a 0.85 n/a
    Media General Inc. MEG 3.35 75.43M n/a 2.60 0.12 0.11

    Source: Thomson Financial

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