Belo Reports Results for Third Quarter 2007

Belo Reports Results for Third Quarter 2007

DALLAS, Oct. 25 /PRNewswire-FirstCall/ -- Belo Corp. (NYSE:BLC) today reported net earnings per share of $0.18 for the third quarter of 2007 as compared to $0.19 for the third quarter of 2006. The third quarter of 2007 included approximately $2.3 million in transaction costs related to the Company's previously announced spin-off of its Newspaper Group, or $0.01 per share on an after-tax basis.

Robert W. Decherd, Belo's chairman and chief executive officer, said, "Belo's results were highlighted by a third straight quarter of superior performance by the Company's Television Group, strong growth in our online businesses and excellent expense management across the Company. Belo's Newspaper Group results were affected by a soft advertising environment particularly at The Press-Enterprise in Riverside where Southern California housing and credit issues have impacted local economies. Despite lower revenues in Belo's Newspaper Group, both The Dallas Morning News and The Providence Journal delivered year-over-year EBITDA increases in the third quarter. In fact, The Dallas Morning News' EBITDA increased 26 percent in the third quarter, an improvement from its 21 percent year-over-year increase recorded in second quarter 2007."

Commenting on the recently announced plan to spin off Belo's newspapers and related assets, Decherd said, "We are very pleased with the positive response, both internally and externally, to our announcement regarding the creation of separate television and newspaper businesses. Significant progress is being made as we work through this transition period. We filed a registration statement for the spin-off with the SEC and we expect to receive comments in mid-November. The spin-off is expected to occur in first quarter 2008 and we look forward to providing more details about the spin-off at the appropriate time." Decherd also announced the New York Stock Exchange ticker symbol for the new A. H. Belo Corporation will be AHC.

   Third Quarter in Review   Consolidated  

Consolidated revenue totaled $364 million in the third quarter of 2007, a decrease of 3.2 percent versus the third quarter of 2006, with Television Group revenue up 1.8 percent and Newspaper Group revenue down 7.8 percent. The Company's total operating costs and expenses decreased 2.2 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, lower newsprint expense from decreases in both consumption and price, and lower distribution expense related primarily to the reduced circulation perimeter of The Dallas Morning News. Consolidated EBITDA decreased 1.7 percent.

Television Group

Television Group revenue increased 1.8 percent in the third quarter, with political revenue of $3.2 million in the third quarter of 2007 versus $7.5 million in the third quarter of 2006. Total spot revenue, including political, was flat with third quarter 2006 and included a 3.9 percent increase in local spot revenue and a 0.8 percent increase in national spot revenue. Advertising revenue associated with Belo's television station Web sites continued to grow at a high rate, increasing 41 percent versus the third quarter of 2006 to $6.7 million.

Television Group segment costs and expenses increased 2.3 percent in the third quarter versus the same period last year. Television Group segment EBITDA was up one percent versus the prior year.

Newspaper Group

Newspaper Group total revenue decreased 7.8 percent in the third 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 preprint revenues were up approximately three percent. Newspaper Group online advertising revenues grew an impressive 25 percent to $13.9 million.

Newspaper Group segment costs and expenses decreased 6.9 percent versus the third quarter of 2006, due in part to prior year headcount reductions at The Dallas Morning News and The Press-Enterprise, and lower newsprint and distribution expenses. Newspaper Group segment EBITDA decreased 11.7 percent versus the prior year's third quarter.

Corporate

Corporate costs and expenses decreased 2.5% to $23.7 million in the third quarter of 2007, including $2.3 million related to the spin-off transaction, compared to $24.3 million in the third quarter of 2006.

Other Items

Belo's total depreciation and amortization expense increased 9.3 percent in the third quarter of 2007 due primarily to asset additions related to new facilities at The Press-Enterprise and The Dallas Morning News.

Income tax expense decreased $1.8 million, or 13.9 percent, in the third quarter, in line with earnings results.

Total debt at September 30, 2007 was $1.203 billion. The Company's capital expenditures were $11.3 million in the third quarter of 2007. Interest expense decreased $1.3 million, or 5.4 percent, during the period. Belo's leverage ratio, as defined in the Company's credit facility, was 3.0 times at September 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, continues. Belo completed the integration of Yahoo!'s HotJobs technology to power its online employment sites in Dallas, Riverside, and Providence and launched Yahoo!'s contextual advertising and Web search capability in those markets as well.

Last month, Belo announced a new strategic investment and partnership with Mochila, Inc. that deepens Belo's commitment in new media. Mochila is a global online media marketplace for text, video and photo content for publishers, editors, content creators and advertisers. Belo will offer its local content for syndication and distribution via the Mochila marketplace. The partnership creates a new opportunity for Belo to monetize and expand the reach of its high-quality content.

Fourth Quarter Outlook

Regarding Belo's outlook for the fourth quarter of 2007, Dennis A. Williamson, executive vice president/Chief Financial Officer, said, "While we expect spot revenue excluding political to be up in the mid-single digits, we expect total Television Group revenues to be down in the mid-single digits as we cycle against $31.6 million of political revenue in the fourth quarter of 2006. Adjusting for one less Sunday in the fourth quarter, we expect Newspaper Group revenues to be down consistent with what we've experienced during the first nine months of 2007. We again expect operating expenses to be less than the prior year after adjusting for anticipated charges related to the spin-off."

A conference call to discuss this earnings release and other matters of interest to shareholders and analysts will follow at 1:00 p.m. CDT this afternoon. The conference call will be simultaneously Webcast on the Company's Web site (http://www.belo.com/invest). Following the conclusion of the Webcast, a replay of the conference call will be archived on Belo's Web site.

To access the listen-only conference lines, dial 1-888-428-4480. A replay line will be open from 4:30 p.m. CDT on October 25 until 11:59 p.m. CDT November 1. To access the replay, dial 800-475-6701 or 320-365-3844. The access code for the replay is 888496.

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 7,000 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 stations 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 Paul Fry, vice president/Investor Relations & Corporate Communications, at 214-977-6835.

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, uncertainties regarding the execution, timing, costs, consequences (including tax consequences), and other effects of the spin-off of the newspaper business of Belo; 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; 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      Nine months ended   In thousands, except per           September 30,          September 30,    share amounts (unaudited)        2007      2006        2007        2006     Net Operating Revenues         $364,349  $376,395  $1,108,909  $1,151,675    Operating Costs and Expenses      Salaries, wages and       employee benefits           136,861   145,098     415,776     435,936      Other production,       distribution and       operating costs             124,712   120,313     367,811     355,739      Newsprint, ink and other       supplies                     25,234    30,715      78,413     101,620      Depreciation                  24,227    21,575      70,318      65,663      Amortization                   1,625     2,087       5,316       6,261         Total operating costs          and expenses             312,659   319,788     937,634     965,219          Earnings from          operations                51,690    56,607     171,275     186,456    Other income and expense      Interest expense             (23,608)  (24,944)    (72,007)    (73,036)      Other income, net (1)          1,618       260      10,231       9,960         Total other income and          expense                  (21,990)  (24,684)    (61,776)    (63,076)    Earnings      Earnings before income       taxes                        29,700    31,923     109,499     123,380      Income taxes                  10,942    12,705      38,868      44,203          Net earnings              $18,758   $19,218     $70,631     $79,177    Net earnings per share      Basic                           $.18      $.19        $.69        $.76      Diluted                         $.18      $.19        $.69        $.76    Average shares outstanding      Basic                        102,228   102,153     102,240     104,186      Diluted                      102,735   102,251     102,887     104,472    Cash dividends declared per    share                            $0.25     $0.25      $0.375       $0.35     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                                                  September 30,  December 31,   In thousands                                        2007          2006                                                   (unaudited)   Assets      Current assets         Cash and temporary cash investments         $13,867       $46,291         Accounts receivable, net                    251,275       276,825         Other current assets                         63,960        61,047      Total current assets                           329,102       384,163       Property, plant and equipment, net             537,091       560,494      Intangible assets, net                       2,573,466     2,574,218      Other assets                                   101,575        95,403    Total assets                                   $3,541,234    $3,614,278     Liabilities and Shareholders' Equity      Current liabilities         Accounts payable                            $47,786       $79,605         Accrued expenses                            103,668       102,004         Other current liabilities                    71,543        77,303      Total current liabilities                      222,997       258,912       Long-term debt                               1,202,811     1,283,434      Deferred income taxes                          434,206       435,154      Other liabilities                              117,871       109,630      Total shareholders' equity                   1,563,349     1,527,148    Total liabilities and shareholders' equity     $3,541,234    $3,614,278      Belo Corp.   Segment Information                                       Three months ended  Nine months ended                                         September 30,       September 30,   In thousands (unaudited)             2007      2006      2007      2006    Television Group      Net operating revenues          $182,409  $179,137  $558,980  $547,155      Segment costs and expenses       111,827   109,284   339,648   327,144        Segment EBITDA                 $70,582   $69,853  $219,332  $220,011    Newspaper Group      Net operating revenues          $181,940  $197,258  $549,929  $604,520      Segment costs and expenses       151,273   162,527   452,054   496,974        Segment EBITDA                 $30,667   $34,731   $97,875  $107,546    Corporate      Costs and expenses               $23,707   $24,315   $70,298   $69,177    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         Nine months ended   In thousands                   September 30,             September 30,    (unaudited)                 2007        2006          2007         2006    Consolidated EBITDA (1)    $79,160     $80,529      $257,140     $268,340     Depreciation and      Amortization            (25,852)    (23,662)      (75,634)     (71,924)     Interest Expense         (23,608)    (24,944)      (72,007)     (73,036)     Income Taxes             (10,942)    (12,705)      (38,868)     (44,203)       Net Earnings           $18,758     $19,218       $70,631      $79,177       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:

Source: Belo Corp.

CONTACT: Paul Fry, vice president|Investor Relations & Corporate
Communications of Belo Corp., +1-214-977-6835

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

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Profile: International Entertainment