Media General (MEG) shares were lower after the company missed second-quarter earnings estimates due in part to poor performance at its newsprint operations.In a press release Tuesday, the newspaper and broadcasting operator said net income rose to $18.5 million, or 78 cents a share, from $17.5 million, or 75 cents a share, in the same period last year. The second-quarter results were below analysts' estimate of 84 cents a share. Revenue rose to $224.9 million from $210.7 million earned in the previous year same quarter, but missed the consensus of $225.4 million. Shares of Media General were down recently 26 cents, or 0.4%, to $62.34. Media General said broadcasting profits rose 22% from last year, driven by robust political advertising and increased local time sales, while its publishing unit continued to benefit from classified advertising revenue growth, up nearly 10% for the quarter, led by increased help-wanted advertising. However, the company said the low performance by its SP Newsprint division was mostly responsible for the quarter not meeting expectations. Newsprint price increases so far this year have not materialized as quickly as anticipated, while the division is also experiencing pressure on the expense side, especially for raw materials and energy costs. To a lesser extent, nonrecurring corporate expenses for several projects, including Sarbanes-Oxley matters, also hampered higher second-quarter profit growth. The company believes the presidential race and summer Olympics will provide a boost to advertising revenue and it foresees growth across all its divisions, as well as strong equity income from its one-third ownership of SP Newsprint. Media General expects third-quarter earnings to come in at the middle of the current analysts' estimated range of 55 cents to 74 cents a share. The Street's consensus estimate is 67 cents a share.
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