Belo Reports Results for First Quarter 2008

Belo Reports Results for First Quarter 2008

DALLAS, April 29 /PRNewswire-FirstCall/ -- Belo Corp. (NYSE:BLC) today reported first quarter earnings per share of $0.10 from continuing operations, before spin-off related charges, compared to $0.15 in the first quarter of 2007.

Spin-off related charges included transaction and financing costs totaling approximately $3.2 million, net of taxes, and the previously disclosed one- time tax charge of $18.2 million related to the transfer of certain intangibles in connection with the spin-off. The reported loss per share from continuing operations, including the spin-off charges, was ($0.11) in the first quarter of 2008. The loss per share from continuing operations excludes the results of Belo's newspaper businesses and related assets, which were spun off on February 8, 2008. Those results are included in discontinued operations for the period from January 1 to the February 8 spin-off date and total ($0.04) per share. The reported net loss per share including discontinued operations was ($0.15) compared to net earnings per share of $0.15 in the first quarter of 2007. Earnings per share in the first quarter of 2007 included a credit from the settlement of the Company's Hurricane Katrina-related insurance claim totaling $0.02 per share, net of taxes.

Dunia A. Shive, Belo's president and Chief Executive Officer, said, "The completion of the spin-off marks a major transition in Belo's 166-year history. Belo is now one of the largest pure-play publicly-traded television companies in the country. With a leading collection of television assets located in attractive growth markets, the Company is ideally positioned to capitalize on both short and long-term opportunities.

"While Belo's results were highlighted by strong first quarter political revenues and continued impressive growth in its online businesses, soft advertising conditions contributed to a 2 percent decline in first quarter total revenue. In addition, the Company cycled against a very strong performance in first quarter 2007, which included the airing of the Super Bowl on our five CBS affiliates in 2007 versus our one FOX affiliate in 2008."

   First Quarter in Review    Operating Results  

Total revenues decreased 2 percent in the first quarter of 2008 versus the prior year. Total spot revenue, including political, was down 5 percent with 6.4 percent and 10 percent decreases in local and national spot, respectively. First quarter 2008 revenues were affected by a soft advertising environment, particularly in the automotive category. The Company's 2008 results were also impacted by the Super Bowl airing on its single FOX affiliate versus its five CBS affiliates in 2007, resulting in a $2 million unfavorable revenue variance.

First quarter 2008 political revenues of $5.1 million were up $4.3 million versus the first quarter of 2007. Advertising revenue associated with Belo's Web sites increased 32 percent to $6.9 million in the first quarter 2008, representing 4 percent of Belo's total revenues.

Total station expenses increased 3.8 percent in the first quarter versus the same period last year. Station EBITDA in the first quarter of 2008 was down 11.6 percent versus the prior year.

Corporate

Corporate costs and expenses were $13.3 million in the first quarter of 2008 as compared to $10.6 million in the first quarter of 2007. First quarter 2008 expenses included $4.2 million in spin-off related costs before taxes. Excluding these costs, corporate expenses were $9.1 million, a decrease of 14 percent.

Other Items

Belo's depreciation and amortization expense totaled $10.9 million in the first quarter of 2008, a 1.5 percent decrease from the first quarter of 2007. Interest expense, which included financing costs related to the spin-off, decreased $1.4 million, or 5.8 percent, in the first quarter of 2008. Other income (expense), net, decreased $4.8 million in the first quarter of 2008 due primarily to a $4 million credit from the settlement of the Company's Hurricane Katrina-related insurance claim in the first quarter of 2007.

Income tax expense increased $12.9 million in the first quarter of 2008 compared to the first quarter of 2007 due primarily to a one-time $18.2 million tax charge related to the transfer of certain intangible assets in connection with the spin-off.

Total debt at March 31, 2008 was $1.2 billion. The Company invested $6.4 million in capital expenditures and repurchased 191,000 shares for a total of $2.2 million in the first quarter of 2008 to offset share issuances under the Company's employee benefit plans.

Discontinued Operations

On February 8, 2008, Belo completed the spin-off of its newspaper businesses and related assets into a separate publicly-traded company, A. H. Belo Corporation. The results of operations of the Newspaper Group and related corporate expenses are classified as discontinued operations for all periods prior to the spin-off.

Non-GAAP Financial Measures

A reconciliation of station EBITDA to earnings from operations and a reconciliation of earnings per share from continuing operations to earnings per share from continuing operations, before spin-off related charges, are set forth in an exhibit to this release.

Second Quarter Outlook

In looking to the second quarter, Shive said, "While local and national spot revenues are currently pacing better than first quarter, we can't predict with certainty where the second quarter will finish given that economic conditions continue to be soft. In addition, we had $5.1 million in political revenue in the first quarter, but expect to see less political in the second quarter. As in past election cycles, we expect the majority of political revenue to come in the back half of the year. Operating expense increases for the remainder of the year will continue to be managed to lower levels if economic conditions do not improve."

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 1-800-230-1059. A replay line will be open from 3:00 p.m. CDT on April 29 until 11:59 p.m. CDT on May 6, 2008. To access the replay, dial 800-475-6701 or 320-365-3844. The access code for the replay is 917929.

About Belo Corp.

Belo Corp. is one of the nation's largest pure-play publicly-traded television companies, with annual revenue of approximately $775 million. The Company owns and operates 20 television stations reaching more than 14 percent of U.S. television households, including ABC, CBS, NBC, FOX, CW and MyNetwork TV affiliates, and their associated Web sites, in 15 highly-attractive markets across the United States. Belo stations consistently deliver distinguished journalism for which they have received significant industry recognition including nine Alfred I. duPont-Columbia University Silver Baton Awards; nine George Foster Peabody Awards; and 19 national Edward R. Murrow Awards -- all since 2000, and in each case more than any other commercial station group in the nation. Nearly all Belo stations rank first or second in their local market. Belo owns stations in seven of the top 25 markets in the nation, with six stations located in the fast-growing, top-14 markets of Dallas/Fort Worth, Houston, Seattle/Tacoma and Phoenix. Additionally, the Company has created regional cable news channels in Texas and the Northwest increasing its impact in those regions. 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, revenues, expenses, dividends, capital expenditures, investments, future financings, and 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 costs, consequences (including tax consequences) and other effects of the distribution of the newspaper businesses and related assets of Belo; changes in capital market conditions and prospects, and other factors such as changes in advertising demand, interest rates and programming and production costs; changes in viewership patterns and demography, and actions by Nielsen; changes in the network-affiliate business model for broadcast television; technological changes, including the transition to digital television and the development of new systems to distribute television and other audio-visual content; changes in the ability to secure, and in the terms of, carriage of Belo programming on cable, satellite and other program distribution methods; development of Internet commerce; industry cycles; changes in pricing or other actions by competitors and suppliers; Federal Communications Commission and other regulatory, tax and legal 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, dispositions and co-owned ventures; general economic conditions; and significant armed conflict, as well as other risks detailed in Belo's other public disclosures and filings with the SEC including Belo's Annual Report on Form 10-K.

   Belo Corp.   Consolidated Statements of Operations                                                        Three months ended                                                            March 31,   In thousands, except per share amounts    (unaudited)                                     2008              2007    Net Operating Revenues                         $174,827          $178,341    Operating Costs and Expenses      Station salaries, wages and employee       benefits                                     62,149            59,498      Station programming and other operating       costs                                        53,938            52,366      Corporate operating costs                      9,090            10,550      Spin-off related costs                         4,249                 -      Depreciation                                  10,884            10,608      Amortization                                       -               442           Total operating costs and expenses      140,310           133,464            Earnings from operations                 34,517            44,877    Other income and expense      Interest expense                             (22,744)          (24,151)      Other income, net (2)                            269             5,087           Total other income and expense          (22,475)          (19,064)    Earnings from continuing operations    before income taxes                             12,042            25,813   Income taxes                                     22,922            10,038    Net earnings (loss) from continuing    operations                                     (10,880)           15,775    Discontinued operations, net of tax              (4,499)             (324)            Net earnings (loss)                    $(15,379)          $15,451    Net earnings (loss) per share - Basic      Earnings (loss) per share from       continuing operations                        $(0.11)            $0.15      Earnings (loss) per share from       discontinued operations                       (0.04)                -      Net earnings (loss) per share -       Basic                                        $(0.15)            $0.15    Net earnings (loss) per share -    Diluted      Earnings (loss) per share from       continuing operations                        $(0.11)            $0.15      Earnings (loss) per share from       discontinued operations                       (0.04)              $ -      Net earnings (loss) per share -       Diluted                                      $(0.15)             0.15    Average shares outstanding       Basic                                       102,267           102,271       Diluted (3)                                 102,267           102,862    Cash dividends declared per share                $0.075            $0.125    Note 1:  Certain prior period amounts have been reclassified to conform to            current year presentation and to reflect discontinued operations.    Note 2:  Other income (expense), net consists primarily of equity earnings            (losses) from partnerships and joint ventures and other            miscellaneous income (expense).  In 2007, other income (expense)            included $4,000 related to an insurance settlement from losses            suffered from Hurricane Katrina.    Note 3:  Potential dilutive common shares were antidilutive as a result            of the Company's net loss for the three months ended            March 31, 2008.  As a result, basic and diluted average shares            outstanding were the same for this period.      Belo Corp.   Consolidated Condensed Balance Sheets                                                   March 31,       December 31,   In thousands                                     2008              2007                                                 (unaudited)      (unaudited)   Assets       Current assets          Cash and temporary cash investments       $6,545           $11,190          Accounts receivable, net                 155,873           181,755          Other current assets                      24,542            26,875          Current assets of discontinued           operations                                    -           124,569       Total current assets                        186,960           344,389        Property, plant and equipment, net          225,907           228,012       Intangible assets, net                    2,045,793         2,045,793       Other assets                                 63,335            60,799       Long-term assets of discontinued        operations                                       -           500,067    Total assets                                 $2,521,995        $3,179,060     Liabilities and Shareholders' Equity       Current liabilities          Accounts payable                         $17,686           $34,267          Accrued expenses                          59,639            84,754          Other current liabilities                 53,425            49,100          Current liabilities of discontinued           operations                                    -            81,331       Total current liabilities                   130,750           249,452        Long-term debt                            1,186,475         1,168,140       Deferred income taxes                       426,745           425,613       Other liabilities                            29,163            49,741       Long-term liabilities of discontinued        operations                                       -            34,406       Total shareholders' equity                  748,862         1,251,708    Total liabilities and shareholders'    equity                                      $2,521,995        $3,179,060    Note 1:  Certain prior period amounts have been reclassified to reflect            discontinued operations.      Belo Corp.   Non-GAAP to GAAP Reconciliations     Station EBITDA                                                       Three months ended                                                             March 31,   In thousands (unaudited)                           2008            2007    Station EBITDA (1)                              $58,740           $66,477      Corporate operating costs                      9,090            10,550      Spin-off related costs                         4,249                 -      Depreciation                                  10,884            10,608      Amortization                                       -               442        Earnings from operations                   $34,517           $44,877    Note 1:  Belo's management uses Station EBITDA as the primary measure of            profitability to evaluate operating performance and to allocate            capital resources and bonuses to eligible operating company            employees. Station EBITDA represents the Company's earnings from            operations before interest expense, income taxes, depreciation,            amortization, corporate expense and spin-off related operating            costs.  Other income (expense), net is not allocated to            television station earnings from operations because it consists            primarily of equity in earnings (losses) from investments in            partnerships and joint ventures and other non-operating income            (expense).      Earnings From Continuing Operations Before Spin-Off Related Charges    In thousands             Three Months ended           Three Months ended    (unaudited)               March 31, 2008               March 31, 2007                           Earnings    EPS   Shares(2) Earnings   EPS   Shares    Net earnings (loss)    from continuing    operations            $(10,880)  $(0.11) 102,267  $15,775   $0.15 102,862      Spin-off related       operating and       financing costs,       net of tax            3,151     0.03  102,267        -      Spin-off related       tax charge           18,235    $0.18  102,267        -         Net earnings          from continuing          operations          before spin-off          related charges  $10,506    $0.10  103,388  $15,775   $0.15 102,862     Note 2:  Potential dilutive common shares were antidilutive as a result of            the Company's net loss from continuing operations for the three            months ended March 31, 2008.  As a result, basic weighted average            shares were used in the calculation of net loss per share from            continuing operations for this period.  In the absence of the net            loss from continuing operations, potential dilutive common shares            were added to weighted average common shares outstanding in the            calculation of net earnings per share from continuing operations            before spin-off related charges.  

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

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