UPDATE 3-Media General April revenue falls, cutting jobs

(Adds CEO comment)

By Robert MacMillan

NEW YORK May 22 (Reuters) - Media General Inc (MEG.N) reported an 11 percent drop in monthly revenue on Thursday and said it is cutting jobs as the company struggles with falling advertising sales at its newspapers.

Media General, which owns papers and local television stations in the southeastern United States, said revenue fell to $78.7 million, mostly because of poor classified advertising results in Tampa, Florida, one of the markets hardest hit by a downturn in the housing market.

The company also said it will cut 11 percent of its jobs to 6,150 by the third quarter as it reins in expenses. That number is based on a peak employment number of 6,900 in 2007, it said.

Media General, which started shedding the jobs last year, plans to expense severance costs of $4 million to $4.5 million for the cuts in the second quarter.

"We had the 2007 budget scheduled in the fourth quarter of 2006," Chief Executive Marshall Morton said in an interview. "Even by January, we realized there was no chance of attaining because Florida was already headed into a downturn."

Most of the cuts are coming at its newspapers, which include the Richmond Times-Dispatch in its hometown of Richmond, Virginia, and the Tampa Tribune.

The company will trim jobs in its corporate and broadcast divisions and add about 60 jobs to its interactive unit, a common move among newspaper publishers rushing to build their presence and revenue on the Internet.

"I think everybody understands that this is not something that we're doing with any choice," Morton said. "Frankly, in our business, I think the path to success is growth, not expense cuts. [But] we need to expense smartly."

The job losses come as papers such as the flagships of New York Times Co (NYT.N) and Washington Post Co (WPO.N) offer buyouts or lay off staff.

Some of Media General's cuts come after dissident investor Harbinger Capital Partners won a battle in April to get three of its nominees elected to the board in an attempt to force various changes on the company to boost its performance.

The company eliminated 250 jobs in 2007, with the rest happening this year, a Media General spokeswoman said.

A sharp drop in house prices and a spike in the number of people defaulting on their home loans has hit markets such as Florida particularly hard and that in turn has damaged the financial results of publishers there, including New York Times and Tribune Co.

Publishing revenue at Media General fell 14.3 percent in April, compared with a year before. The results were weighed down by Florida, where revenue fell 27 percent. Excluding that, publishing revenue would have fallen 8.1 percent.

Classified ad revenue dropped by nearly a third.

Broadcast gross time sales fell 3.8 percent to $1.3 million, while online local advertising revenue rose 42 percent. Media General said its membership in a newspaper consortium with Yahoo Inc (YHOO.O) brought in higher revenue than last year, but it did not release a number.

Media General shares rose 10.74 percent to close at $16.40 on the New York Stock Exchange. (Editing by Gerald E. McCormick and Andre Grenon)