Belo Reports Results for Second Quarter 2007

Belo Reports Results for Second Quarter 2007

DALLAS, July 27 /PRNewswire-FirstCall/ -- Belo Corp. (NYSE:BLC) today reported net earnings per share of $0.35 for the second quarter of 2007 as compared to $0.41 for the second quarter of 2006. The second quarter of 2006 included a $7.5 million gain related to a payment associated with a change-in-control provision in one of Belo's vendor contracts.

Robert W. Decherd, Belo's chairman and chief executive officer, said, "Belo's second quarter results reflect continued outstanding performance by the Company's premier collection of television assets, strong growth in our online businesses and excellent expense management across the Company. Belo's Newspaper Group results were affected by a soft newspaper advertising environment but improved versus the first quarter, with lesser decreases in revenue and EBITDA. We also made definitive progress in the second quarter on various components of the Yahoo!/Newspaper Consortium agreement."

   Second Quarter in Review    Consolidated  

Consolidated revenue totaled $391 million in the second quarter of 2007, a decrease of 3.2 percent versus the second quarter of 2006, with Television Group revenue up 2.5 percent and Newspaper Group revenue down 8.5 percent. The Company's total operating costs and expenses decreased 2.8 percent, benefiting from headcount reductions in 2006, lower pension expense related to the Company's decision to freeze its pension plan effective March 31, 2007, significantly lower newsprint expense from decreases in both consumption and price, and lower distribution expense related primarily to the decision to reduce the circulation perimeter of The Dallas Morning News. Consolidated EBITDA decreased eight percent. The previously noted $7.5 million gain in the second quarter of 2006 accounts for almost seven percentage points of the decline in consolidated EBITDA.

Television Group

Television Group revenue increased 2.5 percent in the second quarter, with political revenue of $2.2 million in the second quarter of 2007 versus $5.1 million in the second quarter of 2006. Total spot revenue, including political, increased 1.1 percent with a 3.9 percent increase in local spot revenue and an increase of approximately one percent in national spot revenue. Advertising revenue associated with Belo's television station Web sites continued to grow at a high rate, increasing 48 percent versus the second quarter of 2006 to $7 million.

Television Group segment costs and expenses increased 5.6 percent in the second quarter versus the same period last year. As in the first quarter of 2007, outside services expense was higher as the Television Group absorbed its portion of Belo's technology outsourcing costs. Television Group segment EBITDA was down 1.5 percent versus the prior year.

Newspaper Group

Newspaper Group total revenue decreased 8.5 percent in the second quarter of 2007, reflecting soft newspaper advertising conditions and the downturn in the Southern California housing market. Decreases were noted in retail, general and classified revenues while part-run advertising revenue increased slightly. Newspaper Group online advertising revenues increased 19 percent to $13.6 million.

Newspaper Group segment costs and expenses decreased 9.2 percent versus the second quarter of 2006, due in part to the 2006 headcount reductions at The Dallas Morning News and The Press-Enterprise, and lower newsprint and distribution expenses. Newsprint expense decreased 23 percent with a $37 per ton favorable price variance and a 19 percent decrease in consumption. Newspaper Group segment EBITDA decreased six percent versus the prior year.

Corporate

Corporate costs and expenses were $24.9 million in the second quarter of 2007 as compared to $25.5 million in the second quarter of 2006.

Other Items

Other income (expense), net was $3.2 million in the second quarter of 2007 versus $8.9 million in the second quarter of 2006, which included the $7.5 million gain associated with the change-in-control provision in one of Belo's vendor contracts. Belo's total depreciation and amortization expense increased 2.4 percent in the second quarter of 2007.

Income taxes expense includes gains related to Texas state tax reforms in the second quarter of 2007 and 2006 of $2.9 million and $3.8 million, respectively.

Total debt at June 30, 2007, was $1.248 billion. The Company repurchased 629,000 shares in the second quarter of 2007 for a total of $13.5 million and invested $14.4 million in capital expenditures. Interest expense decreased slightly in the second quarter. Belo's leverage ratio, as defined in the Company's credit facility, was 3.1 times at June 30, 2007.

Non-GAAP Financial Measures

A reconciliation of Consolidated EBITDA to net earnings is set forth in an exhibit to this release.

Other Matters

Implementation of the various components of the agreement between Yahoo! and the Newspaper Consortium, of which Belo is a part, is on schedule. Decherd noted, "On June 27, we completed the integration of Yahoo!'s HotJobs technology to power our online employment sites in Dallas and Riverside, which will allow us to deliver even more robust solutions to employers and job seekers. Next week, we expect to launch Yahoo!'s contextual advertising and Web search capability on http://dallasnews.com/. The contextual ad component will allow the placement of text-based ads next to relevant information on dallasnews.com. Web search will allow users to search the entire Internet via Yahoo!'s search engines from dallasnews.com. Target launch dates for all other components have now been set."

Decherd added, "While we expect to see some incremental revenue related to search and content integration this year, the most significant revenue opportunity is related to the ad-serving technology and cross-selling opportunities that we expect to drive online revenues beginning in the second half of 2008. Yahoo! and the Newspaper Consortium have already made considerable progress in establishing the technology standards needed to develop the ad technology platform, and that work is ongoing."

Third Quarter Outlook

Regarding Belo's outlook for the third quarter of 2007, Dennis A. Williamson, executive vice president/Chief Financial Officer, said, "We expect the Company's third quarter performance to be much like that of the second quarter, with Television Group revenues slightly higher than the third quarter of 2006 and newspaper revenues down versus the prior year. We again expect expenses to be less than the prior year."

About Belo

Belo Corp. is one of the nation's largest media companies with a diversified group of market-leading television, newspaper, cable and interactive media assets. A Fortune 1000 company with 7,100 employees and $1.6 billion in annual revenues, Belo operates in some of America's most dynamic markets in Texas, the Northwest, the Southwest, the Mid-Atlantic and Rhode Island. Belo owns 20 television stations, six of which are in the 15 largest U.S. broadcast markets. The Company also owns or operates six cable news channels and manages one television station through a local marketing agreement. Belo's daily newspapers are The Dallas Morning News, The Providence Journal, The Press-Enterprise (Riverside, CA) and the Denton Record-Chronicle (Denton, TX). The Company also publishes specialty publications targeting young adults, and the fast-growing Hispanic market, including Quick and Al Dia in Dallas/Fort Worth, and El D and La Prensa in Riverside. Belo operates more than 30 Web sites associated with its operating companies. Additional information is available at http://www.belo.com/ or by contacting Carey Hendrickson, vice president/Investor Relations & Corporate Communications, at 214-977-6626.

Statements in this communication concerning Belo's business outlook or future economic performance, anticipated profitability, revenue, expenses, dividends, capital expenditures, investments, future financings, or other financial and non-financial items that are not historical facts, are "forward- looking statements" as the term is defined under applicable federal securities laws. Forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results to differ materially from those statements.

Such risks, uncertainties and factors include, but are not limited to, changes in capital market conditions and prospects, and other factors such as changes in advertising demand, interest rates and newsprint prices; newspaper circulation matters, including changes in readership patterns and demography, and audits and related actions by the Audit Bureau of Circulations; technological changes, including the transition to digital television and the development of new systems to distribute television and other audio-visual content; development of Internet commerce; industry cycles; changes in pricing or other actions by competitors and suppliers; Federal Communications Commission and other regulatory changes; adoption of new accounting standards or changes in existing accounting standards by the Financial Accounting Standards Board or other accounting standard-setting bodies or authorities; the effects of Company acquisitions and dispositions; the recovery of the New Orleans market (where the Company owns and operates market-leading television station WWL-TV, the CBS affiliate) from the effects of Hurricane Katrina; general economic conditions; and significant armed conflict, as well as other risks detailed in Belo's other public disclosures, and filings with the Securities and Exchange Commission ("SEC") including the Annual Report on Form 10-K.

   Belo Corp.   Consolidated Statements of Earnings                                       Three months ended    Six months ended   In thousands, except per share           June 30,             June 30,    amounts (unaudited)                  2007      2006      2007      2006    Net Operating Revenues            $390,505  $403,557   $744,560  $775,280    Operating Costs and Expenses     Salaries, wages and employee      benefits                        138,538   142,472    278,915   290,838     Other production, distribution      and operating costs             125,752   123,596    243,099   235,426     Newsprint, ink and other      supplies                         26,332    34,227     53,179    70,905     Depreciation                      23,325    22,272     46,091    44,088     Amortization                       1,625     2,087      3,691     4,174       Total operating costs and        expenses                      315,572   324,654    624,975   645,431        Earnings from operations        74,933    78,903    119,585   129,849    Other income and expense     Interest expense                 (24,248)  (24,430)   (48,399)  (48,092)     Other income, net (1)              3,245     8,852      8,613     9,700       Total other income and expense (21,003)  (15,578)   (39,786)  (38,392)    Earnings     Earnings before income taxes      53,930    63,325     79,799    91,457     Income taxes                      17,508    20,666     27,926    31,498        Net earnings                   $36,422   $42,659    $51,873   $59,959    Net earnings per share     Basic                               $.36      $.41       $.51      $.57     Diluted                             $.35      $.41       $.50      $.57    Average shares outstanding     Basic                            102,222   104,307    102,246   105,219     Diluted                          103,178   104,474    103,035   105,523    Cash dividends declared per share     $ --      $ --     $0.125     $0.10    Note 1:  Other income (expense), net consists primarily of equity earnings            (losses) from partnerships and joint ventures and other            miscellaneous income (expense).      Belo Corp.   Consolidated Condensed Balance Sheets    In thousands                             June 30,           December 31,                                              2007                2006                                           (unaudited)   Assets     Current assets       Cash and temporary cash        investments                          $26,544             $46,291       Accounts receivable, net              257,011             276,825       Other current assets                   56,972              61,047     Total current assets                    340,527             384,163      Property, plant and equipment, net      547,572             560,494     Intangible assets, net                2,575,091           2,574,218     Other assets                             94,274              95,403    Total assets                           $3,557,464          $3,614,278     Liabilities and Shareholders' Equity     Current liabilities       Accounts payable                      $47,330             $79,605       Accrued expenses                       92,212             102,004       Other current liabilities              59,695              77,303     Total current liabilities               199,237             258,912      Long-term debt                        1,247,982           1,283,434     Deferred income taxes                   432,466             435,154     Other liabilities                       110,292             109,630     Total shareholders' equity            1,567,487           1,527,148    Total liabilities and shareholders'    equity                                $3,557,464          $3,614,278      Belo Corp.   Segment Information                                      Three months ended    Six months ended                                           June 30,            June 30,   In thousands (unaudited)             2007      2006      2007      2006    Television Group     Net operating revenues          $198,229  $193,326   $376,571  $368,018     Segment costs and expenses       115,954   109,815    227,821   217,860       Segment EBITDA                 $82,275   $83,511   $148,750  $150,158    Newspaper Group     Net operating revenues          $192,276  $210,231   $367,989  $407,262     Segment costs and expenses       149,734   164,992    300,781   334,447       Segment EBITDA                 $42,542   $45,239    $67,208   $72,815    Corporate     Costs and expenses               $24,934   $25,488    $46,591   $44,862    Note 1: Belo's management uses segment EBITDA as the primary measure of           profitability to evaluate operating performance and to           allocate capital resources and bonuses to eligible operating           company employees.  Segment EBITDA represents a segment's earnings           before interest expense, income taxes, depreciation and           amortization.  Other income (expense), net is not allocated to the           Company's operating segments because it consists primarily of           equity earnings (losses) from investments in partnerships and           joint ventures and other non-operating income (expense).      Belo Corp.   Consolidated EBITDA                                Three months ended      Six months ended                                   June 30,                 June 30,   In thousands (unaudited)    2007         2006       2007         2006    Consolidated EBITDA (1)   $103,128     $112,114   $177,980     $187,811     Depreciation and      Amortization            (24,950)     (24,359)   (49,782)     (48,262)     Interest Expense         (24,248)     (24,430)   (48,399)     (48,092)     Income Taxes             (17,508)     (20,666)   (27,926)     (31,498)       Net Earnings           $36,422      $42,659    $51,873      $59,959    Note 1: The Company defines Consolidated EBITDA as net earnings before           interest expense, income taxes, depreciation and amortization.           Consolidated EBITDA is not a measure of financial performance           under accounting principles generally accepted in the United           States.  Management uses Consolidated EBITDA in internal analyses           as a supplemental measure of the financial performance of the           Company to assist it with determining performance comparisons           against its peer group of companies, as well as capital spending           and other investing decisions.  Consolidated EBITDA is also a           common alternative measure of performance used by investors,           financial analysts, and rating agencies to evaluate financial           performance.  Consolidated EBITDA should not be considered in           isolation or as a substitute for net earnings, operating income,           cash flows provided by operating activities or other income or           cash flow data prepared in accordance with U.S. GAAP and this           non-GAAP measure may not be comparable to similarly titled           measures of other companies.  

First Call Analyst: Carey P. Hendrickson
FCMN Contact: scoleman@belo.com

Source: Belo Corp.

CONTACT: Carey Hendrickson, Vice President-Investor
Relations & Corporate Communications of Belo Corp., +1-214-977-6626

Web site: http://www.belo.com/

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Profile: International Entertainment