Document


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, 2016
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, 2016.
Voting Common shares (no par value):       129,311,903




MEDIA GENERAL, INC.
TABLE OF CONTENTS
FORM 10-Q REPORT
September 30, 2016
 
 
 
Page
Part I.
Financial Information
 
 
 
 
 
Item 1.
Financial Statements
 
 
 
 
 
 
 
Consolidated Condensed Balance Sheets – September 30, 2016 and December 31, 2015
 
 
 
 
 
 
Consolidated Condensed Statements of Comprehensive Income – Three and nine months ended September 30, 2016 and September 30, 2015
 
 
 
 
 
 
Consolidated Condensed Statements of Cash Flows – Nine months ended September 30, 2016 and September 30, 2015
 
 
 
 
 
 
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,
2016
 
December 31,
2015
Current assets:
 
 
 
Cash and cash equivalents
$
57,822

 
$
41,091

Trade accounts receivable (less allowance for doubtful accounts 2016 - $4,966; 2015 - $4,634)
311,826

 
298,474

Prepaid expenses and other current assets
15,515

 
15,083

Total current assets
385,163

 
354,648

 
 
 


Property and equipment, net of accumulated depreciation (2016 - $196,187; 2015 - $145,274)
445,591

 
470,537

Other assets, net
30,455

 
38,070

Definite lived intangible assets, net of accumulated amortization (2016 - $206,412; 2015 - $138,072)
788,000

 
871,129

Broadcast licenses
1,097,100

 
1,097,100

Goodwill
1,451,036

 
1,544,624

Total assets (a)
$
4,197,345

 
$
4,376,108

 
 
See accompanying notes.
 

(a) Consolidated assets as of September 30, 2016 and December 31, 2015, include total assets of variable interest entities (VIEs) of $141 million and $145 million, respectively, which can only be used to settle the obligations of the VIEs. See Note 1 and Note 3.

1



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

LIABILITIES AND STOCKHOLDERS' EQUITY
 
 
September 30,
2016
 
December 31,
2015
Current liabilities:
 
 
 
Trade accounts payable
$
18,074

 
$
35,800

Accrued salaries and wages
25,084

 
21,465

Accrued expenses and other current liabilities
105,920

 
95,500

Current installments of long-term debt
3,547

 
3,804

Current installments of obligation under capital leases
797

 
859

Total current liabilities
153,422

 
157,428

 
 
 
 
Long-term debt, net
2,147,336

 
2,199,110

Deferred tax liability and other long-term tax liabilities
313,013

 
315,234

Long-term capital lease obligations
13,553

 
14,012

Retirement and postretirement plans
172,599

 
182,987

Other liabilities
26,140

 
34,920

Total liabilities (b)
2,826,063

 
2,903,691

 
 
 
 
Commitments and contingencies

 

 
 
 
 
Noncontrolling interests
4,044

 
24,447

 
 
 
 
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 2016 - 129,302,903 and 2015 - 128,600,384
1,301,269

 
1,305,155

Accumulated other comprehensive loss
(31,224
)
 
(31,224
)
Retained earnings
97,193

 
174,039

Total stockholders' equity
1,367,238

 
1,447,970

Total liabilities, noncontrolling interests and stockholders' equity
$
4,197,345

 
$
4,376,108

 
 
See accompanying notes.

(b) Consolidated liabilities as of September 30, 2016 and December 31, 2015, include total liabilities of VIEs of $31 million and $38 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 3.


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,
2016
 
September 30,
2015
 
September 30,
2016
 
September 30,
2015
Net operating revenue
$
377,356

 
$
321,736

 
$
1,083,525

 
$
938,993

Operating costs:
 
 
 
 
 
 
 
Operating expenses, excluding depreciation expense
154,815

 
143,492

 
459,557

 
403,537

Selling, general and administrative expenses
74,623

 
78,777

 
229,102

 
238,298

Amortization of program license rights
12,666

 
12,822

 
36,808

 
36,627

Corporate and other expenses
8,671

 
12,598

 
37,124

 
37,615

Depreciation and amortization
40,762

 
40,385

 
121,220

 
123,286

(Gain) loss related to property and equipment, net
143

 
96

 
(538
)
 
(328
)
Goodwill and other intangible impairment
112,511

 
52,862

 
112,511

 
52,862

Merger-related expenses
1,360

 
10,014

 
68,803

 
18,907

Restructuring (income) expenses
(45
)
 
1,132

 
4,933

 
1,132

Total operating costs
405,506

 
352,178

 
1,069,520

 
911,936

Operating income (loss)
(28,150
)
 
(30,442
)
 
14,005

 
27,057

Other income (expense):
 
 
 
 
 
 
 
Interest expense
(28,526
)
 
(29,481
)
 
(85,611
)
 
(89,792
)
Debt modification and extinguishment costs
(928
)
 
(365
)
 
(928
)
 
(2,805
)
Other, net
79

 
27

 
275

 
5,939

Total other expense
(29,375
)
 
(29,819
)
 
(86,264
)
 
(86,658
)
 
 
 
 
 
 
 
 
Loss before income taxes
(57,525
)
 
(60,261
)
 
(72,259
)
 
(59,601
)
Income tax benefit (expense)
(10,029
)
 
4,374

 
(1,780
)
 
3,915

Net loss
$
(67,554
)
 
$
(55,887
)
 
$
(74,039
)
 
(55,686
)
 


 
 
 
 
 
 
Net income (loss) attributable to noncontrolling interests (included above)
1,153

 
(7,394
)
 
2,360

 
(1,395
)
Net loss attributable to Media General
$
(68,707
)
 
$
(48,493
)
 
$
(76,399
)
 
$
(54,291
)
 


 
 
 
 
 
 
Other comprehensive income

 

 

 

Total comprehensive loss attributable to Media General
$
(68,707
)
 
$
(48,493
)
 
$
(76,399
)
 
$
(54,291
)
 
 
 
 
 
 
 
 
Loss per common share (basic and diluted):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net earnings (loss) per common share (basic)
$
(0.53
)
 
$
(0.38
)
 
$
(0.59
)
 
$
(0.42
)
Net earnings (loss) per common share (assuming dilution)
$
(0.53
)
 
$
(0.38
)
 
$
(0.59
)
 
$
(0.42
)
 
See accompanying notes.

3



Media General, Inc.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
 
Nine Months Ended
 
September 30,
2016
 
September 30,
2015
Cash flows from operating activities:
 
 
 
Net loss
$
(74,039
)
 
$
(55,686
)
Adjustments to reconcile net loss:
 
 
 
Deferred income tax benefit
(2,221
)
 
(5,769
)
Depreciation and amortization
121,220

 
123,286

Amortization of program license rights
36,808

 
36,627

Goodwill and intangible asset impairment
112,511

 
52,862

Amortization of debt premiums, discounts and issue costs
5,554

 
5,571

Gain on disposal of property and equipment, net
(538
)
 
(328
)
Gain on relocation of spectrum

 
(5,620
)
Stock-based compensation
5,588

 
10,292

Debt modification and extinguishment costs
928

 
2,805

Change in assets and liabilities:
 
 
 
Program license rights, net of liabilities
(37,453
)
 
(33,123
)
Trade accounts receivable
(14,949
)
 
6,698

Company owned life insurance (cash surrender value less policy loans including repayments)
(687
)
 
(275
)
Trade accounts payable, accrued expenses and other liabilities
(4,308
)
 
3,224

Retirement and postretirement plans
(10,388
)
 
(14,759
)
Other, net
3,630

 
9,691

Net cash provided by operating activities
141,656

 
135,496

Cash flows from investing activities:
 
 
 
Capital expenditures
(33,939
)
 
(40,583
)
Release of restricted cash at qualified intermediary

 
119,903

Proceeds from the sale of property and equipment
6,167

 
1,279

Proceeds from spectrum relocation

 
3,120

Other, net
(165
)
 
(78
)
Net cash (used) provided by investing activities
(27,937
)
 
83,641

Cash flows from financing activities:
 
 
 
Borrowings under Media General Revolving Credit Facility
60,000

 

Repayments under Media General Revolving Credit Facility
(60,000
)
 

Repayment of borrowings under Media General Credit Agreement
(60,000
)
 
(160,000
)
Repayment of 2021 Notes

 
(15,863
)
Repayment of borrowings under Shield Media Credit Agreement
(2,400
)
 
(1,800
)
Repayment of other borrowings
(517
)
 
(873
)
Repurchase of shares

 
(33,724
)
Payment for acquisition of noncontrolling interest
(35,305
)
 
(10,872
)
Cash paid for debt modification

 
(3,425
)
Exercise of stock options
1,935

 
1,848

Other, net
(701
)
 
(546
)
Net cash used by financing activities
(96,988
)
 
(225,255
)
Net increase (decrease) in cash and cash equivalents
16,731

 
(6,118
)
Cash and cash equivalents at beginning of period
41,091

 
43,920

Cash and cash equivalents at end of period
$
57,822

 
$
37,802

Cash paid for interest
$
77,820

 
$
85,149

Cash paid for income taxes, net
$
2,921


$
4,883

Cash paid for Meredith termination fee
$
60,000

 
$

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 Annual Report on Form 10-K of Media General, Inc. ("Media General" or the "Company") for the year ended December 31, 2015. 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.
 
In September 2015, the Company announced a merger agreement under which the Company would have acquired all of the outstanding common stock of Meredith Corporation (“Meredith”) in a cash and stock transaction. Later in September of 2015 the Company received an unsolicited proposal from Nexstar Broadcasting Group, Inc. (“Nexstar”) to acquire all of the outstanding common stock of Media General. Following discussion between the various parties, in January 2016 Media General terminated its agreement with Meredith, with Media General paying Meredith a $60 million termination fee and providing Meredith with an opportunity to negotiate for the purchase of certain broadcast and digital assets owned by the Company. Immediately thereafter, the Company entered into an agreement with Nexstar whereby Nexstar will acquire all outstanding shares of Media General for $10.55 per share in cash, 0.1249 shares of Nexstar Class A common stock for each Media General share and a contingent value right (CVR). The cash consideration and the stock consideration are fixed amounts and do not increase or decrease based upon the proceeds (if any) from the disposition of either Nexstar's or Media General's spectrum in the Federal Communications Commission's ("FCC") Incentive Auction. Upon the completion of the transaction, Nexstar will change its name to Nexstar Media Group. Each CVR will entitle Media General shareholders to a pro rata share of the net cash proceeds as received from the sale of Media General's spectrum in the FCC's Incentive Auction. It is estimated that Media General shareholders will own approximately 34% and existing Nexstar shareholders will retain approximately 66% ownership of the combined company after closing. The closing of the transaction is subject to the satisfaction of a number of conditions including, but not limited to, the approval of various matters relating to the transaction by Media General and Nexstar shareholders, the approval of the FCC, clearance under the Hart-Scott-Rodino antitrust act and certain third party consents. On September 15, 2016 the transaction received clearance under the Hart-Scott-Rodino antitrust act. Merger-related expenses for legal and professional fees for the Nexstar transaction totaled $1.4 million for the three months ended September 30, 2016. Merger-related expenses for the Meredith termination fee, legal and professional fees for the Meredith and Nexstar transactions totaled $69 million for the nine months ended September 30, 2016.

In connection with the Nexstar transaction, Nexstar and its respective subsidiaries, as applicable, have entered into definitive agreements to divest Nexstar's WCWJ station in Jacksonville, Florida and the Company's WSLS-TV station in Roanoke-Lynchburg, Virginia to Graham Media Group, Inc.; Nexstar's KADN-TV and KLAF-LD stations in Lafayette, Louisiana to Bayou City Broadcasting Lafayette, Inc.; Nexstar's KREG-TV station in Denver, Colorado to Marquee Broadcasting, Inc.; the Company's WBAY-TV station in Green Bay, Wisconsin and KWQC-TV station in Davenport-Moline-Rock Island, Iowa to Gray Television Group, Inc.; the Company's KIMT station in Rochester, Minnesota, WTHI-TV station in Terre Haute, Indiana, WLFI-TV station in Lafayette, Indiana, as well as Nexstar's WFFT-TV station in Ft. Wayne, Indiana and KQTV station in Saint Joseph, Missouri to USA Television MidAmerica Holdings, LLC; and the Company's KASA-TV station in Albuquerque, New Mexico to Ramar Communications, Inc. The Company expects that the sales of these stations will occur substantially concurrent with the closing of the transaction with Nexstar, which is expected to occur later this year.

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 3, the Company consolidates the results of WXXA, WLAJ, WBDT, WYTV, KTKA, KWBQ, KRWB, and KASY pursuant to the VIE accounting guidance. All of 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.


5



The Company has two reportable 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 markets, all of which are engaged principally in the sale of television advertising. The Digital segment includes the operating results of the Company's digital businesses as well as the business operations related to the television station companion websites.
 
The Company guarantees all of the debt of LIN Television Corporation ("LIN Television", a wholly owned subsidiary of the Company) 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 May 2014, the Financial Accounting Standards Board (“FASB”) and the International Accounting Standards Board (“IASB”) issued a converged standard on revenue recognition from contracts with customers, Accounting Standards Update ("ASU") 2014-09 (Topic 606 and IFRS 15). This standard will supersede nearly all existing revenue recognition guidance. In August 2015 the FASB issued ASU 2015-14, Revenue From Contracts With Customers: Deferral of the Effective Date which defers the effective date of ASU 2014-09 until fiscal years, and interim periods within those years, beginning after December 15, 2017. In April and May 2016, the Board issued accounting standard updates, 2016-10 - Identifying Performance Obligations and Licensing, and 2016-12 - Revenue From Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients, respectively. Collectively, these updates, along with ASU 2014-09 and ASU 2015-14 form the new revenue recognition standard that is to be effective for fiscal years beginning after December 15, 2017, with early adoption permitted for fiscal years beginning after December 15, 2016. The Company is currently evaluating the impact this guidance will have on its financial condition, results of operations and cash flows.

In April 2015, the FASB issued ASU 2015-03, Interest - Imputation of Interest (Subtopic 835-30): 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. The Company adopted this guidance as of January 1, 2016 and $26 million was reclassified to reduce "Long-term Debt" as of September 30, 2016. In order to conform to the presentation adopted, $32 million was reclassified from "Other assets, net" to "Long-term Debt" in the 2015 figures presented on the Consolidated Condensed Balance Sheets and in Note 10 Guarantor Financial Information. Approximately $285 thousand was reclassified from "Other assets, net" to "Long-term Debt" in the 2015 figures presented in Note 3 Variable Interest Entities.

In February 2016, the FASB issued ASU 2016-02, Leases, which requires the lease rights and obligations arising from lease contracts, including existing and new arrangements, to be recognized as assets and liabilities on the balance sheet. ASU 2016-02 is effective for reporting periods beginning after December 15, 2018 with early adoption permitted. The Company is currently evaluating the impact that this guidance will have on its consolidated financial statements.

In March 2016, the FASB released ASU 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The ASU includes multiple provisions intended to simplify various aspects of the accounting for share-based payments. The ASU is effective for public companies in annual periods beginning after December 15, 2016, and interim periods within those years. The Company is currently evaluating the impact that this guidance will have on its consolidated financial statements.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows - Classification of Certain Cash Receipts and Cash Payments. The ASU addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice. The ASU is effective for public companies in annual periods beginning after December 15, 2017, and interim periods within those years. The Company is currently evaluating the impact that this guidance will have on its consolidated financial statements.

Note 2: Segment Information
 
The Company has 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 (New Federated Media and HYFN) 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.
 

6



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)
 
2016
 
2015
 
2016
 
2015
Revenues
 
 
 
 
 
 
 
 
Broadcast
 
$
337,443

 
$
277,992

 
$
962,697

 
$
828,846

Digital
 
39,913

 
43,744

 
120,828

 
110,147

Revenues
 
$
377,356

 
$
321,736

 
$
1,083,525

 
$
938,993

 
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
(in thousands)
2016
 
2015
 
2016
 
2015
Operating income
 
 
 
 
 
 
 
Broadcast
$
130,367

 
$
85,105

 
$
351,648

 
$
260,032

Digital
4,885

 
1,540

 
6,410

 
499

Segment operating income
135,252

 
86,645

 
358,058

 
260,531

Corporate and other expenses
(8,671
)
 
(12,598
)
 
(37,124
)
 
(37,615
)
Depreciation and amortization
(40,762
)
 
(40,385
)
 
(121,220
)
 
(123,286
)
Gain (loss) related to property and equipment, net
(143
)
 
(96
)
 
538

 
328

Goodwill and other asset impairment
(112,511
)
 
(52,862
)
 
(112,511
)
 
(52,862
)
Merger-related expenses
(1,360
)
 
(10,014
)
 
(68,803
)
 
(18,907
)
Restructuring expenses
45

 
(1,132
)
 
(4,933
)
 
(1,132
)
Operating income (loss)
$
(28,150
)
 
$
(30,442
)
 
$
14,005

 
$
27,057


 

Note 3: 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 licenses (refer to Note 5 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.

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, 2016 and December 31, 2015, were as follows:
 

7



(In thousands)
September 30,
2016
 
December 31,
2015
Assets
 
 
 
Current assets
 
 
 
Cash and cash equivalents
$
5,726

 
$
3,693

Trade accounts receivable (less allowance for doubtful accounts 2016 - $213; 2015 - $94)
9,129

 
9,798

Prepaid expenses and other current assets
666

 
796

Total current assets
15,521

 
14,287

Property and equipment, net
1,899

 
1,904

Other assets, net
781

 
3,094

Definite lived intangible assets, net
29,949

 
32,244

Broadcast licenses
71,300

 
71,300

Goodwill
21,859

 
21,859

Total assets
$
141,309

 
$
144,688

Liabilities
 
 
 
Current liabilities
 
 
 
Trade accounts payable
$
24

 
$
16

Other accrued expenses and other current liabilities
1,948

 
2,221

Current installments of long-term debt
3,547

 
3,804

Total current liabilities
5,519

 
6,041

Long-term debt, net
21,426

 
24,062

Other liabilities
4,311

 
8,310

Total liabilities
$
31,256

 
$
38,413


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, 2016, 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 May 2016, the United States Court of Appeals for the Third Circuit vacated the FCC's 2014 rule attributing JSAs for purposes of the media ownership rules if they permitted 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. On August 10, 2016, the FCC adopted a Second Report and Order that reinstated the attribution of JSAs. However, JSAs in existence before March 31, 2014 (including the Company's) were grandfathered, meaning that they will not be counted as attributable and may be transferred or assigned until September 30, 2025.


Note 4: Goodwill and Other Asset Impairment

The Company’s Digital business units were recorded at fair value in conjunction with the LIN Merger in December of 2014. 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, including the Company’s social media business.

In early 2016, the Company combined these three distinct businesses into one business, New Federated Media, under new management and made significant changes to its sales force. The Company had expected these changes would enable the

8



business to operate more effectively in the marketplace with an acceleration of growth in the second half of 2016. However, the industry-wide shift to software enabled automated buying and placement of digital advertising quickened and combined with a rapid rise in social media advertising have led to compressed margins and lowered demand for the Company’s other digital products. As a result the Company has not experienced the acceleration of revenues it had expected in the second half of 2016. Therefore the Company performed another interim impairment test as of September 30, 2016. Additionally, the dynamics of the marketplace have changed significantly due to the industry-wide shifts discussed above so that the Company’s long-term forecast now reflects margins at half the level it had previously expected. This combination of slower growth and reduced margins has resulted in both non-cash goodwill impairment and non-cash intangible asset impairment totaling a combined $113 million that was recorded in the third quarter of 2016. After recording the impairment charges, the goodwill allocated to New Federated Media was $30 million as of September 30, 2016. The total goodwill allocated to the Digital segment, which includes the Company’s social media business that was unaffected by the impairment charges, as of September 30, 2016 was $101 million. Identified intangible assets of the Digital segment include trade names, advertiser and publisher relationships, and certain existing technology assets and totaled $23 million following the impairment with a weighted average useful life of 3 years.

The estimated fair value of reporting units 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 fair value of identifiable intangible assets were determined using the relief from royalty, comparable profit margin, and reproduction new less depreciation methods. 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 5: Debt and Other Financial Instruments
 
Long-term debt at September 30, 2016 and December 31, 2015, was as follows:
 
(In thousands)
September 30, 2016
 
December 31, 2015
Media General Credit Agreement
$
1,481,000

 
$
1,541,000

2022 Notes
400,000

 
400,000

2021 Notes
275,000

 
275,000

Shield Media Credit Agreement
24,800

 
27,200

Other borrowings
433

 
950

Total debt
2,181,233

 
2,244,150

Less: net unamortized discount
(7,361
)
 
(8,992
)
Less: scheduled current maturities
(3,547
)
 
(3,804
)
Less: unamortized debt issuance fees
(22,989
)
 
(32,244
)
Long-term debt excluding current maturities
$
2,147,336

 
$
2,199,110

 
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 of $60 million principal on the term loan during the three and nine months ended September 30, 2016. 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 repayment of debt resulted in debt extinguishment costs of $0.9 million during the three and nine months ended September 30, 2016, due to the accelerated recognition of deferred debt-related items. The early repayment 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, 2016, there was just under $1.5 billion outstanding under the Credit Agreement.

9



 
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 $146 million of availability under the revolving credit facility (giving effect to $3.6 million of letters of credit which have been issued but are undrawn).
 
Shield Media Credit Agreement
 
WXXA-TV LLC (a subsidiary of Shield Media LLC) and WLAJ-TV LLC (a subsidiary of Shield Media Lansing LLC) (collectively, “Shield Media”), with which the Company has joint sales and shared services arrangements as described in Note 3, entered into a credit agreement for two of its stations 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 $0.8 million and $2.4 million of principal on the term loan during the three and nine months ended September 30, 2016, respectively. 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, the Company's predecessor, MGOC, Inc. ("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 Old Media General's combination (the "LIN Merger") with LIN Media, LLC ("LIN Media"). The net proceeds from the 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”). Media General, as the 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 (the "2021 Notes") remained outstanding as of the consummation of the LIN Merger. Following the consummation of the LIN Merger, Media General, as the 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 $15 million of principal at an $800 thousand premium during the year ended December 31, 2015. No principal payments were made during the three and nine months ended September 30, 2016. As of September 30, 2016, the aggregate principal amount outstanding under the 2021 Notes was $275 million.
 

10



Fair Value
 
The following table includes information about the carrying values and estimated fair values of the Company’s financial instruments at September 30, 2016 and December 31, 2015:
 
 
September 30, 2016
 
December 31, 2015
 
Carrying
 
Fair
 
Carrying
 
Fair
(In thousands)
Amount
 
Value
 
Amount
 
Value
Assets:
 
 
 
 
 
 
 
Investments
 
 
 
 
 
 
 
Trading securities
$
410

 
$
410

 
$
257

 
$
257

Liabilities:
 
 
 
 
 
 
 
Long-term debt:
 
 
 
 
 
 
 
Media General Credit Agreement
1,457,278

 
1,527,858

 
1,507,182

 
1,529,229

2022 Notes
393,342

 
419,000

 
392,527

 
404,344

2021 Notes
275,290

 
285,725

 
275,340

 
288,228

Shield Media Credit Agreement
24,540

 
24,800

 
26,915

 
27,200

Other borrowings
433

 
433

 
950

 
950

 
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 values of the 2021 and 2022 Notes were determined by reference to the most recent trading prices. The fair value of all other debt instruments was determined using discounted cash flow analysis and an estimate of the current borrowing rate.

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

Note 6: Taxes on Income
 
The effective tax rate was a negative 17.4% in the third quarter of 2016 as compared to 7.3% in the third quarter of 2015 and a negative 2.5% in the first nine months of 2016 as compared to 6.6% in the equivalent prior-year period. The low tax rates in both periods were due to the goodwill and other asset impairment charges that were largely non-deductible for tax purposes. 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 $1.7 million and $0.4 million for the third quarter of 2016 and 2015, respectively, and was approximately $4.0 million and $1.9 million in the first nine months of 2016 and 2015, respectively; it was attributable primarily to state income and AMT taxes.
 

11



Note 7: Earnings Per Share
 
The following tables set forth the computation of basic and diluted income per share for the three and nine months ended September 30, 2016 and 2015:
 
Three Months Ended September 30, 2016
 
Three Months Ended September 30, 2015
(In thousands, except
Income
 
Shares
 
Per Share
 
Income
 
Shares
 
Per Share
per share amounts)
(Numerator)
 
(Denominator)
 
Amount
 
(Numerator)
 
(Denominator)
 
Amount
Net loss attributable to Media General
$
(68,707
)
 
 

 
 

 
$
(48,493
)
 
 

 
 

 
 
 
 
 
 
 
 
 
 
 
 
Undistributed earnings attributable to participating securities

 
 

 
 

 

 
 

 
 

 
 
 
 
 
 
 
 
 
 
 
 
Basic EPS
 
 
 
 
 
 
 
 
 
 
 
Loss attributable to common stockholders
$
(68,707
)
 
129,116

 
$
(0.53
)
 
$
(48,493
)
 
127,903

 
$
(0.38
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Effect of dilutive securities:
 
 
 
 
 
 
 
 
 
 
 
Stock options and warrants
 

 

 
 

 
 

 

 
 

 
 
 
 
 
 
 
 
 
 
 
 
Diluted EPS
 
 
 
 
 
 
 
 
 
 
 
Loss attributable to common stockholders
$
(68,707
)
 
129,116

 
$
(0.53
)
 
$
(48,493
)
 
127,903

 
$
(0.38
)


 
Nine Months Ended September 30, 2016
 
Nine Months Ended September 30, 2015
(In thousands, except
Income
 
Shares
 
Per Share
 
Income
 
Shares
 
Per Share
per share amounts)
(Numerator)
 
(Denominator)
 
Amount
 
(Numerator)
 
(Denominator)
 
Amount
Net loss attributable to Media General
$
(76,399
)
 
 

 
 

 
$
(54,291
)
 
 

 
 

 
 
 
 
 
 
 
 
 
 
 
 
Undistributed earnings attributable to participating securities

 
 

 
 

 

 
 

 
 

 
 
 
 
 
 
 
 
 
 
 
 
Basic EPS
 
 
 
 
 
 
 
 
 
 
 
Loss attributable to common stockholders
$
(76,399
)
 
128,918

 
$
(0.59
)
 
$
(54,291
)
 
128,844

 
$
(0.42
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Effect of dilutive securities:
 
 
 
 
 
 
 
 
 
 
 
Stock options and warrants
 

 

 
 

 
 

 

 
 

 
 
 
 
 
 
 
 
 
 
 
 
Diluted EPS
 
 
 
 
 
 
 
 
 
 
 
Loss attributable to common stockholders
$
(76,399
)
 
128,918

 
$
(0.59
)
 
$
(54,291
)
 
128,844

 
$
(0.42
)




12



For the three months ended September 30, 2016 and 2015, we have excluded from the calculation of diluted earnings per share 946 thousand and 1.5 million, respectively, of common shares issuable for share options and restricted shares, because the net loss causes these shares to be anti-dilutive. For the nine months ended September 30, 2016 and 2015, we have excluded from the calculation of diluted earnings per share 1.1 million and 1.3 million, respectively, of common shares issuable for share options and restricted shares, because the net loss causes these shares to be anti-dilutive.

Note 8: 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 along with defined benefit retirement plans for KRON-TV and LIN that were merged into the Media General qualified plan on December 31, 2014 and December 31, 2015, respectively. Additionally the Company also has non-contributory unfunded supplemental executive retirement and ERISA excess plans which supplement the coverage available to certain executives. All of these retirement plans are frozen. The Company has a retiree medical savings account plan which reimburses eligible retired employees for certain medical expenses and 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 (income) cost for the Company’s benefit plans for the three and nine month periods ended September 30, 2016 and 2015:

 
Three Months Ended
 
Pension Benefits
 
Other Benefits
(In thousands)
September 30,
2016
 
September 30,
2015
 
September 30,
2016
 
September 30,
2015
Service cost
$

 
$

 
$

 
$
25

Interest cost
4,650

 
5,729

 
125

 
250

Expected return on plan assets
(6,950
)
 
(7,727
)
 

 

Amortization of net loss

 
200

 
(25
)
 

Net periodic benefit (income) cost
$
(2,300
)
 
$
(1,798
)
 
$
100

 
$
275


 
Nine Months Ended
 
Pension Benefits
 
Other Benefits
(In thousands)
September 30,
2016
 
September 30,
2015
 
September 30,
2016
 
September 30,
2015
Service cost
$

 
$

 
$

 
$
75

Interest cost
13,950

 
17,185

 
525

 
750

Expected return on plan assets
(20,850
)
 
(23,180
)
 

 

Amortization of net loss

 
600

 
(75
)
 

Net periodic benefit (income) cost
$
(6,900
)
 
$
(5,395
)
 
$
450

 
$
825



13



Note 9: Stockholders’ Equity
 
The following table shows the components of the Company’s stockholders’ equity as of and for the nine months ended September 30, 2016:
 
 
 
 
Accumulated
 
 
 
 
 
 
 
Other
 
 
 
Total
 
Common
 
Comprehensive
 
Retained
 
Stockholders'
(In thousands)
Stock
 
Loss
 
Earnings
 
Equity
Balance at December 31, 2015
$
1,305,155

 
$
(31,224
)
 
$
174,039

 
$
1,447,970

Net loss attributable to Media General

 

 
(76,399
)
 
(76,399
)
Exercise of stock options
1,935

 

 

 
1,935

Stock-based compensation
5,588

 

 

 
5,588

Revaluation of redeemable noncontrolling interest
(12,094
)
 

 
(447
)
 
(12,541
)
Other
685

 

 

 
685

Balance at September 30, 2016
$
1,301,269

 
$
(31,224
)
 
$
97,193

 
$
1,367,238


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
 
Comprehensive
 
Retained
 
Stockholders'
(In thousands)
Stock
 
Income
 
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

 
 
Note 10: Other

Restructuring activities

In September 2015 the Company adopted a plan to restructure certain Digital segment operations. Additional steps were taken on that plan in the first quarter of 2016. The plan is expected to save the Company approximately $14.7 million in operating costs annually based on the steps completed since plan inception and the cumulative expense incurred is $3.9 million. The Company recorded restructuring expense of $2.3 million related to the plan during the nine months ended September 30, 2016. The restructuring income for the period was a result of adjustments within the period to lease termination liability due to a recently signed sublease. Year-to-date restructuring expense was comprised of $1.8 million of severance and $501 thousand of asset impairment charges.


14



On October 16, 2009, Media General entered into a Joint Sales Agreement (“JSA”) and Shared Services Agreement (“SSA”) with Schurz Communications, Inc and WAGT Television, Inc.   Pursuant to the JSA and SSA, Media General provided certain services and sold advertising time for WAGT. In February 2016, Schurz Communications, Inc. sold WAGT to Gray Television Group, Inc., ("Gray") and assigned the JSA and SSA to Gray. However, upon the closing of the station sale, WAGT ceased performance of the agreements. For the nine months ended September 30, 2016, the Company recorded restructuring charges of $2.6 million for WAGT. As of September 30, 2016, Media General has pending legal causes of action against Gray, Schurz Communications, Inc. and WAGT Television, Inc., including but not limited to, causes of action for breach of contract. The Company agreed to stay this litigation pending the closing of the Nexstar merger and the divestiture of certain stations with Gray (as discussed in Note 1). If the transactions close, the parties will dismiss all claims and counterclaims with no additional consideration for either party. If not, the parties may resume the litigation. During the third quarter, the Company paid $700 thousand to the FCC to settle issues related to WAGT.

The following tables present the activity associated with the September 30, 2016 balance of the restructuring liability and the nature and amount of exit charges incurred in the nine months ended September 30, 2016:
 
As of September 30, 2016
(In thousands)
Digital
WAGT
Total
Accrued restructuring as of December 31, 2015
$
1,312

$

$
1,312

Severance charges
1,780

383
2,163

Contract termination and other accruals

86
86

Cash severance and contract termination payments
(2,997
)
(407
)
(3,404
)
Accrued restructuring as of September 30, 2016
$
95

$
62

$
157





 
Nine months ended September 30, 2016
(In thousands)
Digital
WAGT
Total
Severance charges
$
1,780

$
383

$
2,163

Contract termination charges

128

128

Asset impairment
501

298

799

Legal fees

940

940

Other
42

861

903

Total restructuring expense
$
2,323

$
2,610

$
4,933


Acquisition of HYFN

In April 2016, the Company acquired the remaining shares of HYFN, a full service digital advertising agency for a purchase price of approximately $35 million plus a one-time compensation expense of $7 million related to the transaction for a total cash outflow of $42 million. The $7 million one-time compensation expense is included in "Corporate and other expenses" on the Consolidated Condensed Statement of Comprehensive Income for the nine months ending September 30, 2016. Prior to the transaction, the Company held 50.1% of the outstanding shares of HYFN. As a result of the transaction, HYFN is 100% owned by the Company beginning with the second quarter of 2016.
 
Share repurchase

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 expired on December 31, 2015.


15



Note 11: Guarantor Financial Information
 
LIN Television, a 100% owned subsidiary of Media General, is the primary obligor of the 2021 Notes and 2022 Notes. 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 Media General. The following financial information presents condensed consolidating balance sheets, statements of comprehensive income, and statements of cash flows for Media General, LIN Television (as the issuer), the Guarantor Subsidiaries, and the Non-Guarantor Subsidiaries, together with certain eliminations.


16



Media General, Inc.
Condensed Consolidating Balance Sheet
September 30, 2016
(in thousands)
 
Media General
 
LIN Television Corporation
 
Guarantor Subsidiaries
 
Non-Guarantor Subsidiaries
 
Eliminations
 
Consolidated
ASSETS
 
 
 
 
 
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$

 
$

 
$
52,096

 
$
5,726

 
$

 
$
57,822

Trade accounts receivable, net

 
79,293

 
223,404

 
9,129

 

 
311,826

Prepaid expenses and other current assets

 
2,451

 
12,398

 
666

 

 
15,515

Total current assets

 
81,744

 
287,898

 
15,521

 

 
385,163

Property and equipment, net

 
148,182

 
295,510

 
1,899

 

 
445,591

Other assets, net

 
676

 
28,592

 
1,187

 

 
30,455

Definite lived intangible assets, net

 
343,143

 
414,908

 
29,949

 

 
788,000

Broadcast licenses

 

 
1,025,800

 
71,300

 

 
1,097,100

Goodwill

 
527,077

 
902,100

 
21,859

 

 
1,451,036

Advances to consolidated subsidiaries

 
(222,832
)
 
220,431

 
2,401

 

 

Investment in consolidated subsidiaries
1,367,238

 
1,260,899

 

 

 
(2,628,137
)
 

Total assets
$
1,367,238

 
$
2,138,889

 
$
3,175,239

 
$
144,116

 
$
(2,628,137
)
 
$
4,197,345

 
 
 
 
 
 
 
 
 
 
 
 
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
 
 
 
 
 
 
 
 
Current liabilities:
 
 
 
 
 
 
 
 
 
 
 
Trade accounts payable
$

 
$
1,153

 
$
16,897

 
$
24

 
$

 
$
18,074

Accrued salaries and wages

 
4,549

 
20,368

 
167

 

 
25,084

Accrued expenses and other current liabilities

 
22,384

 
81,755

 
1,781

 

 
105,920

Current installments of long-term debt

 

 

 
3,547

 

 
3,547

Current installments of obligation under capital leases

 
607

 
190

 

 

 
797

Total current liabilities

 
28,693

 
119,210

 
5,519

 

 
153,422

Long-term debt, net

 
668,632

 
1,457,278

 
21,426

 

 
2,147,336

Deferred tax liability and other long-term tax liabilities

 
60,473

 
252,540

 

 

 
313,013

Long-term capital lease obligations

 
12,636

 
917

 

 

 
13,553

Retirement and postretirement plans

 

 
172,599

 

 

 
172,599

Other liabilities

 
1,217

 
20,123

 
4,800

 

 
26,140

Total liabilities

 
771,651

 
2,022,667

 
31,745

 

 
2,826,063

 
 
 
 
 
 
 
 
 
 
 
 
Noncontrolling interests

 

 

 
4,044

 

 
4,044

 
 
 
 
 
 
 
 
 
 
 
 
Total stockholders' equity (deficit)
1,367,238

 
1,367,238

 
1,152,572

 
108,327

 
(2,628,137
)
 
1,367,238

Total liabilities, noncontrolling interest and stockholders' equity (deficit)
$
1,367,238

 
$
2,138,889

 
$
3,175,239

 
$
144,116

 
$
(2,628,137
)
 
$
4,197,345



17



Media General, Inc.
Condensed Consolidating Balance Sheet
December 31, 2015
(in thousands)
 
Media General
 
LIN Television Corporation
 
Guarantor Subsidiaries
 
Non-Guarantor Subsidiaries
 
Eliminations
 
Consolidated
ASSETS
 
 
 
 
 
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$

 
$
1,103

 
$
35,925

 
$
4,063

 
$

 
$
41,091

Trade accounts receivable, net

 
75,866

 
192,306

 
30,302

 

 
298,474

Prepaid expenses and other current assets

 
3,264

 
10,441

 
1,378

 

 
15,083

Total current assets

 
80,233

 
238,672

 
35,743

 

 
354,648

Property and equipment, net

 
158,627

 
309,160

 
2,750

 

 
470,537

Other assets, net

 
7,199

 
27,523

 
3,348

 

 
38,070

Definite lived intangible assets, net

 
368,011

 
458,261

 
44,857

 

 
871,129

Broadcast licenses

 

 
1,025,800

 
71,300

 

 
1,097,100

Goodwill

 
527,077

 
924,708

 
92,839

 

 
1,544,624

Advances to consolidated subsidiaries

 
(206,396
)
 
223,051

 
(16,655
)
 

 

Investment in consolidated subsidiaries
1,447,970

 
1,319,392

 

 

 
(2,767,362
)
 

Total assets
$
1,447,970

 
$
2,254,143

 
$
3,207,175

 
$
234,182

 
$
(2,767,362
)
 
$
4,376,108

 
 
 
 
 
 
 
 
 
 
 
 
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
 
 
 
 
 
 
 
 
Current liabilities:
 
 
 
 
 
 
 
 
 
 
 
Trade accounts payable
$

 
$
2,010

 
$
30,689

 
$
3,101

 
$

 
$
35,800

Accrued salaries and wages

 
2,022

 
19,016

 
427

 

 
21,465

Accrued expenses and other current liabilities

 
23,237

 
68,101

 
4,162

 

 
95,500

Current installments of long-term debt

 

 

 
3,804

 

 
3,804

Current installments of obligation under capital leases

 
575

 
256

 
28

 

 
859

Total current liabilities

 
27,844

 
118,062

 
11,522

 

 
157,428

Long-term debt, net

 
667,867

 
1,507,181

 
24,062

 

 
2,199,110

Deferred tax liability and other long-term tax liabilities

 
62,785

 
253,232

 
(783
)
 

 
315,234

Long-term capital lease obligations

 
12,953

 
1,059

 

 

 
14,012

Retirement and postretirement plans

 
25,917

 
157,070

 

 

 
182,987

Other liabilities

 
8,807

 
20,999

 
5,114

 

 
34,920

Total liabilities

 
806,173

 
2,057,603

 
39,915

 

 
2,903,691

 
 
 
 
 
 
 
 
 
 
 
 
Noncontrolling interests

 

 

 
24,447

 

 
24,447

 
 
 
 
 
 
 
 
 
 
 
 
Total stockholders' equity (deficit)
1,447,970

 
1,447,970

 
1,149,572

 
169,820

 
(2,767,362
)
 
1,447,970

Total liabilities, noncontrolling interest and stockholders' equity (deficit)
$
1,447,970

 
$
2,254,143

 
$
3,207,175

 
$
234,182

 
$
(2,767,362
)
 
$
4,376,108


18



Media General, Inc.
Condensed Consolidating Statement of Comprehensive Income
For the Three Months Ended September 30, 2016
(in thousands)
 
Media General
 
LIN Television Corporation
 
Guarantor Subsidiaries
 
Non-Guarantor Subsidiaries
 
Eliminations
 
Consolidated
Net operating revenue
$

 
$
107,474

 
$
270,832

 
$
7,168

 
$
(8,118
)
 
$
377,356

 
 
 
 
 
 
 
 
 
 
 
 
Operating costs:
 
 
 
 
 
 
 
 
 
 
 
Operating expenses, excluding depreciation expense

 
42,888

 
113,099

 
3,253

 
(4,425
)
 
154,815

Selling, general and administrative expenses

 
21,793

 
51,512

 
1,335

 
(17
)
 
74,623

Amortization of program licenses rights

 
4,745

 
7,978

 
444

 
(501
)
 
12,666

Corporate and other expenses

 

 
8,666

 
5



 
8,671

Depreciation and amortization

 
14,749

 
25,153

 
860

 

 
40,762

Loss related to property and equipment, net

 
100

 
41

 
2

 

 
143

Goodwill and other asset impairment

 

 
112,511

 

 

 
112,511

Merger-related expenses

 

 
1,360

 

 

 
1,360

Restructuring expenses

 

 
(45
)
 

 

 
(45
)
Operating income (loss)

 
23,199