●

changes in Media General’s net assets between the pro forma balance sheet date of September 30, 2013 and the closing of the transaction, which could impact the preliminary estimated purchase price or the preliminary estimated fair value as of the effective date of the transaction;

●

the value of the combined company as of November 12, 2013, the effective date of the transaction; and

●

other changes in net assets that may have occurred prior to the completion of the transaction, which could cause material difference in the information presented.

Young
Historical

Media General
Historical

Pro Forma Adjustments

Adjustments for Debt Refinancing

Pro Forma Combined

ASSETS

Current assets:

Cash and cash equivalents

(1a)

(1k)

Trade accounts receivable, net

Current portion of program license rights

(1b)

Current deferred tax asset

(1c)

Prepaid expenses and other current assets

Total current assets

Property and equipment, net

(1d) (1e)

Program license rights, excluding current portion

Equity investments

Deferred tax asset long term

(1c)

Broadcast licenses

(1e)

Goodwill

(1e)

Definite lived intangible assets, net

(1e)

Other assets, net

(1d) (1f)

(1l)

Total assets

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

Current liabilities:

Trade accounts payable

Accrued salaries and wages

Other accrued expenses and other current liabilities

(1a)

(1m)

Current installments of program license liability

(1b)

Current installments of long-term debt

(1n)

Current installments of obligation under capital leases

Total current liabilities

Deferred income tax and other long-term tax liabilities

(1c)

Long-term debt

(1g)

(1n)

Long-term debt - Media General related party

(1g)

(1n)

Obligations under capital leases, excluding current installments

Other liabilities

(1h)

Total liabilities

Stockholders' equity (deficit):

Common stock

(1i) (1j)

Additional paid-in capital

(1i) (1j)

Accumulated other comprehensive loss

(1j)

Retained earnings (accumulated deficit)

(1a) (1j)

(1o)

Total stockholders’ equity (deficit)

Noncontrolling interests

(1o)

Total stockholders’ equity (deficit)

Total liabilities and stockholders' equity (deficit)

(1a)

Reflects the impact of transaction-related expenses on the condensed combined financial statements of Young and Media General. As of September 30, 2013, the combined company expects to pay total transaction-related expenses of approximately $30 million. The combined company has incurred $16 million of transaction-related expenses through September 30, 2013 which is reflected in the historical retained earnings balance. For pro forma presentation purposes, retained earnings was decreased by $14 million for transaction-related costs not yet incurred, cash was decreased by $17.8 million for transaction-related expenses which are expected but not yet paid and accrued expenses and other liabilities were decreased by $3.8 million for transaction-related expenses incurred but not yet paid as of September 30, 2013.

(1b)

Reflects an adjustment to broadcast film right asset and liability balances for certain broadcast programs to make the treatment consistent with Young’s accounting policy.

(1c)

Reflects the recordation of deferred tax assets for the difference between the book and tax basis of assets acquired as a result of purchase accounting. The preliminary purchase price allocation assumes no valuation allowance on Media General’s net operating loss carryforwards.

(1d)

Reflects the reclassification of Media General’s software costs of $4.2 million to fixed assets to make the treatment consistent with Young’s accounting policy.

(1e)

Reflects an adjustment to record identifiable tangible and intangible assets of Media General at their preliminary estimated fair value. The allocation of purchase price is subject to change as the appraisals are completed and more facts become known.

(1f)

Reflects the elimination of Media General’s existing unamortized debt issuance costs of $28.3 million in order to present the debt at fair value.

Reflects adjustments to present Media General’s long-term debt at fair value as of September 30, 2013.

(1h)

Represents a $49 million reduction in Media General’s retirement and postretirement liabilities to reflect the estimated funded status as of September 30, 2013. This reduction is offset by a $7.6 million unfavorable term loan interest liability due to a decrease in market interest rates subsequent to execution of the term loan agreement in July 2013.

(1i)

Represents estimated purchase price assuming outstanding shares of Media General common stock as of September 30, 2013, no par value (at a price of $15.06/share) and an estimate of the fair value of vested equity awards. As of September 30, 2013, Media General had 27,605,235 outstanding shares of Class A common stock, 548,564 shares of Class B common stock. Media General issued 60,193,351 shares of common stock to Young equityholders at closing. Immediately following closing, certain shareholders received 828,885 shares of Non-Voting Common Stock. The remaining shareholders received Voting Common Stock.

(1j)

Eliminate Media General’s historical stockholders’ deficit in connection with purchase accounting adjustments.

Estimated purchase price

Working capital acquired

Property, plant & equipment

FCC licenses (indefinite lived)

Network affiliations (15 year estimated useful life)

Advertiser relationships (7 year estimated useful life)

Favorable lease assets (10 year estimated useful life)

Other assets acquired

Long-term debt assumed

Pension, post-retirement and post-employment liabilities assumed

Other liabilities assumed

Deferred income tax asset recorded in conjunction with acquisition

Excess of cost over fair value of net identifiable assets of acquired businesses

(1k)

Represents net cash retained by Media General following drawdown of the term loan.

(1l)

Reflects $11 million of debt issuance costs paid by Media General upon drawdown of the term loan offset by $1 million of debt issuance costs written-off upon payoff of Young and Shield Media’s existing long-term debt.

(1n)

Represents adjustments necessary to extinguish existing long-term debt and replace with Media General’s $885 million term loan and Shield Media’s $32 million term loan, both consummated November 12, 2013.

(1o)

Represents write-off of debt issuance costs and debt discount upon payoff of Young and Shield Media’s existing long-term debt and additional interest accrued subsequent to September 30, 2013.

Young
Historical

Media

General
Historical

Pro Forma Adjustments

Adjustments

for Debt

Refinancing

Pro Forma
Combined

Net operating revenue

Operating expenses, excluding depreciation expense

(2a)

Amortization of program license rights

Station selling, general and administrative expenses

(2a)

Depreciation and amortization

(2b)

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

Corporate overhead, excluding depreciation and amortization expense

(2c)

Merger-related expenses

(2d)

Operating income  

Interest expense

(2e)

(2h)

Interest expense - Media General related party

(2e)

(2h)

Other, net

(2a)

Income before income taxes

Provision for income taxes

(2f)

(2f)

Income (loss)from continuing operations

Loss attributable to noncontrolling interests

(2i)

Income (loss) from continuing operations attributable to Company

Income (loss) from continuing operations per common share (basic)

(2g)

Weighted average common shares (basic)

(2g)

Income (loss) from continuing operations per common share (assuming dilution)

(2g)

Weighted average common shares (assuming dilution)

(2g)

(2a)

Reflects the reclassification of certain operating costs to make consistent with Young’s accounting policy.

(2b)

Reflects the increase in the depreciation and amortization expense resulting from purchase price adjustment of tangible and intangible assets to preliminary estimated fair value. Depreciation and amortization is based on the estimated remaining useful life.

(2c)

Reflects the recordation of estimated expense for amortization of deferred stock units issued to certain named executive officers upon consummation of the acquisition and the incremental expense attribution for the fair value of equity awards relating to post-combination service for the nine months ended September 30, 2013.

(2d)

Reflects the elimination of transaction-related expenses incurred during the nine months ended September 30, 2013, for pro forma presentation purposes.

(2e)

Replaces Media General’s existing debt issuance and debt discount expense amortization with amortization of a new debt premium as a result of recording debt at fair value in purchase accounting.

(2f)

Reflects the tax effect of pro forma adjustments using the statutory rate in effect for the period presented.

(2g)

Assumes that 89 million fully diluted shares of common stock (as of September 30, 2013) were outstanding for the entire period.

(2h)

Reflects adjustments to interest expense with the assumption that $885 million Media General term loan and $32 million Shield Media term loan, both consummated November 12, 2013, were outstanding for the entire period.

(2i)

Reflects interest savings on Shield Media term loan compared to previous facility.

Young
Historical

Media

General
Historical*

Pro Forma Adjustments

Adjustments

for Debt

Refinancing

Pro Forma
Combined

Net operating revenue

Operating expenses, excluding depreciation expense

(3a)

Amortization of program license rights

Station selling, general and administrative expenses

(3a)

Depreciation and amortization

(3b)

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

Corporate overhead, excluding depreciation and amortization expense

(3c)

Operating income

Interest expense

(3d)

(3g)

Interest expense - Media General related party

(3d)

(3g)

Debt modification and extinguishment costs

Other income (expenses), net

(3a)

Income before income taxes

Provision for income taxes

(3e)

(3e)

Income (loss) from continuing operations

Income attributable to noncontrolling interests

(3h)

Income (loss) from continuing operations attributable to Company

Income from continuing operations per common share (basic)

(3f)

Weighted average common shares (basic)

(3f)

Income from continuing operations per common share (assuming dilution)

(3f)

Weighted average common shares (assuming dilution)

(3f)

(3a)

Reflects the reclassification of certain operating costs to make consistent with Young’s accounting policy.

(3b)

Reflects the increase in the depreciation and amortization expense resulting from purchase price adjustment of tangible and intangible assets to preliminary estimated fair value. Depreciation and amortization is based on the estimated remaining useful life.

(3c)

Reflects the recordation of estimated expense for amortization of deferred stock units issued to certain named executive officers upon consummation of the acquisition and the incremental expense attribution for the fair value of equity awards relating to post-combination service for the year ended December 31, 2012.

(3d)

Replaces Media General’s existing debt issuance and debt discount expense amortization with amortization of a new debt premium as a result of recording debt at fair value in purchase accounting.

(3e)

Reflects the tax effect of pro forma adjustments using the statutory rate in effect for the period presented.

(3f)

Assumes that 89 million fully diluted shares of common stock (as of September 30, 2013) were outstanding for the entire period.

(3g)

Reflects adjustments to interest expense with the assumption that $885 million Media General term loan and $32 million Shield Media term loan were outstanding for the entire period.

(3h)

Reflects additional interest expense on Shield Media term loan as if loan were outstanding for the entire period presented.

1.

The operating results of WXXA and WLAJ – operated by Young under shared services arrangements – for periods prior to December 2012 and March 2013, respectively, have not been included in the pro forma results. Additionally, steps taken by Young management to improve the profitability of these stations by combining resources with other stations that they own have not been reflected.

2.

Total transaction costs are estimated to be $30 million, which is reflected on the balance sheet as adjustment (1a), as required by the pro forma rules. GAAP requires these costs to be recorded as period expenses.

3.

The combined company made $50 million of contributions to Media General’s qualified pension plan subsequent to the transaction. This is expected to result in an annualized $3.5 - $4 million of savings in pension expense.

4.

The pro forma condensed combined statements of operations reflect historical income tax expense of Young and Media General and the tax effect of pro forma adjustments at the statutory rate. Media General’s historical tax expense was primarily related to the need for additional valuation allowance in connection with the tax amortization of indefinite-lived intangible assets that is not available to offset existing deferred tax assets (termed a “naked credit”). As indicated in adjustment (1c) to the balance sheet, Media General expects that its deferred tax assets will not be offset by a valuation allowance in purchase price allocation. Consequently, the effective tax rate of the combined company is expected to be closer to Young’s historical effective tax rate than Media General’s historical effective tax rate.

5.

Following the transactions, operating synergies of approximately $15 million are expected to be achieved.