Belo Reports Results for Second Quarter 2008

Belo Reports Results for Second Quarter 2008

Television Company's Net Earnings Per Share Total $0.26

DALLAS, July 25 /PRNewswire-FirstCall/ -- Belo Corp. (NYSE:BLC) today reported earnings per share from continuing operations of $0.26 in the second quarter of 2008 compared to $0.23 in the second quarter of 2007.

Earnings per share from continuing operations for the second quarter of 2007 exclude 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 and total $0.12 per share. The second quarter of 2008 included a non-cash expense reduction of $4.7 million, or $0.03 per share, as a result of third party funding of certain newsgathering equipment more fully described below.

Dunia A. Shive, Belo's president and Chief Executive Officer, said, "Belo's second quarter results were highlighted by excellent expense management as soft advertising conditions reflected a continuing weak economic environment. Combined local and national spot revenue declines in the second quarter improved marginally when compared to the first quarter of this year. We cannot predict the duration of the current economic downturn and are continuing to focus on cost reductions while considering the overall quality and competitive positions of our operating companies."

   Second Quarter in Review    Operating Results  

Total revenues decreased 4.7 percent in the second quarter of 2008 versus the second quarter of 2007. Total spot revenue, including political, was down 6.4 percent with 5.9 percent and 10 percent decreases in local and national spot, respectively. Second quarter 2008 revenues were affected by a weak advertising environment, particularly in the automotive category which was down 10 percent.

Second quarter 2008 political revenues of $3.6 million were up $1.4 million versus the second quarter of 2007. Advertising revenue associated with Belo's Web sites increased 7.3 percent to $7.5 million in the second quarter 2008, representing 4 percent of Belo's total revenues. Second quarter Internet revenue growth was impacted by a significant non-returning promotion in the second quarter of 2007. Importantly, third quarter Internet revenues are currently pacing at growth levels comparable to the first quarter of this year.

Retransmission revenues totaled $7.6 million in the second quarter of 2008, a 36 percent increase compared to the second quarter of 2007. The Company expects to generate approximately $30 million in retransmission revenue for full year 2008, which is slightly higher than the previous guidance of $28 to $29 million.

Total station expenses decreased 7.4 percent in the second quarter of 2008 versus the same period last year due primarily to the freezing of open positions company wide, staff reductions in certain markets, the aforementioned non-cash expense reduction and other cost-saving measures. The $4.7 million non-cash expense reduction relates to a 2005 FCC decision that allowed a major wireless provider to finance the replacement of analog newsgathering equipment with digital equipment at television stations across the country in exchange for those stations vacating the analog spectrum earlier than required. Five Belo markets received such new digital newsgathering equipment in the second quarter. As future Belo stations are converted, further expense reductions will be realized. Excluding the non-cash expense reduction, station expenses decreased 3.3 percent in the second quarter of 2008. As of June 30, 2008, the number of full-time equivalent employees at our television stations was 3 percent lower than the number of full-time equivalents at the end of 2007.

Station EBITDA for the second quarter of 2008 was down 0.8 percent versus the second quarter of 2007, and down 6.5 percent when excluding the effects of the non-cash expense reduction.

Corporate

Corporate operating costs were $6.6 million in the second quarter of 2008 as compared to $10.1 million in the second quarter of 2007, a decrease of 34 percent. The decrease was primarily due to lower share-based compensation, lower bonus expense and other cost-saving measures.

Second quarter combined station and corporate operating costs declined 9.6 percent, or 5.8 percent when excluding the effects of the non-cash expense reduction.

Other Items

Belo's depreciation and amortization expense totaled $10.3 million in the second quarter of 2008, a 6.4 percent decrease from the second quarter of 2007.

Interest expense decreased $2.8 million, or 11 percent, in the second quarter of 2008.

Income tax expense increased $4.1 million in the second quarter of 2008 compared to the second quarter of 2007 due primarily to higher 2008 pre-tax earnings and a credit related to Texas state tax reforms in 2007.

Total debt at June 30, 2008 was $1.180 billion. The Company invested $9.8 million in capital expenditures in the second quarter and expects to spend a total of $25 million for the year, down from the previous guidance of $30 million.

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.

Third Quarter Outlook

In looking to the third quarter, Shive said, "Current economic conditions make it extremely difficult to provide specific guidance for the third quarter or the balance of the year at this time. Third quarter total revenue comparisons should improve from second quarter year-over-year comparisons due to political revenues and Olympic revenues in August at our four NBC-affiliated stations.

"While we will continue to manage expenses aggressively, third quarter station expense comparisons to the prior year are not expected to be as favorable as second quarter comparisons due primarily to a $1.7 million credit in the third quarter of 2007 related to the conversion of an operating lease to a capital lease and increased programming costs at our Phoenix stations in the third quarter of 2008. Because of significant reductions in share-based compensation, bonus expense, and other cost-saving measures, full year

corporate operating costs, exclusive of spin-off charges, are projected to be under $36 million, down from our previous full year guidance of $40 million."

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 1-877-777-1973. A replay line will be open from 3:00 p.m. CDT on July 25 until 11:59 p.m. CDT on August 1, 2008. To access the replay, dial 800-475-6701 or 320-365-3844. The access code for the replay is 951969.

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 23 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, telecommunications 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    In thousands, except       Three months ended       Six months ended    per share amounts              June 30,                June 30,    (unaudited)                2008        2007       2008         2007    Net Operating    Revenues                 188,969    $198,229    $363,796    $376,571   Operating Costs    and Expenses     Station salaries,      wages and      employee benefits       57,179      60,083     119,328     119,581     Station programming      and other operating      costs                   50,154      55,865     104,092     108,231     Corporate operating      costs                    6,618      10,051      15,708      20,601     Spin-off related      costs                      410           -       4,659           -     Depreciation             10,324      11,032      21,208      21,640     Amortization                  -           -           -         442       Total operating        costs and        expenses             124,685     137,031     264,995     270,495        Earnings from        operations            64,284      61,198      98,801     106,076    Other income and    expense     Interest expense        (21,495)    (24,248)    (44,239)    (48,399)     Other income,      net (2)                    804         320       1,073       5,407       Total other income        and expense          (20,691)    (23,928)    (43,166)    (42,992)    Earnings from    continuing    operations before    income taxes              43,593      37,270      55,635      63,084   Income taxes               17,214      13,106      40,136      23,144    Net earnings from    continuing operations     26,379      24,164      15,499      39,940    Discontinued operations,    net of tax                     -      12,257      (4,499)     11,933        Net earnings          $26,379     $36,421     $11,000     $51,873    Net earnings per share    -- Basic     Earnings per share      from continuing      operations               $0.26       $0.24       $0.15       $0.39     Earnings (loss)      per share from      discontinued      operations                   -        0.12       (0.04)       0.12     Net earnings per      share -- Basic           $0.26       $0.36       $0.11       $0.51    Net earnings per share    -- Diluted     Earnings per share      from continuing      operations               $0.26       $0.23       $0.15       $0.38     Earnings (loss)      per share from      discontinued      operations                   -        0.12       (0.04)       0.12     Net earnings per      share -- Diluted         $0.26       $0.35       $0.11       $0.50    Average shares    outstanding     Basic                   102,202     102,222     102,235     102,246     Diluted                 103,337     103,178     103,349     103,035    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)           includes $4,000 related to an insurance settlement for losses           suffered from Hurricane Katrina.      Belo Corp.   Consolidated Condensed Balance Sheets                                                     June 30,    December 31,   In thousands                                       2008          2007                                                   (unaudited)  (unaudited)    Assets     Current assets       Cash and temporary cash investments            $6,362       $11,190       Accounts receivable, net                      164,345       181,700       Other current assets                           23,479        24,789       Current assets of discontinued operations           -       126,710     Total current assets                            194,186       344,389      Property, plant and equipment, net              229,507       226,040     Intangible assets, net                        2,045,793     2,045,793     Other assets                                     62,342        51,650     Long-term assets of discontinued operations           -       511,188    Total assets                                   $2,531,828    $3,179,060    Liabilities and Shareholders' Equity     Current liabilities       Accounts payable                              $19,031       $31,153       Accrued expenses                               50,887        65,575       Other current liabilities                      37,013        46,667       Current liabilities of discontinued        operations                                         -       106,055     Total current liabilities                       106,931       249,450      Long-term debt                                1,180,361     1,168,140     Deferred income taxes                           430,597       425,652     Other liabilities                                28,146        37,183     Long-term liabilities of discontinued      operations                                           -        46,927     Total shareholders' equity                      785,793     1,251,708    Total liabilities and shareholders' equity     $2,531,828    $3,179,060     Note: Certain prior period amounts have been reclassified to conform to         current period presentation and to reflect discontinued operations.         Certain immaterial refinements to the classification of assets or         liabilities between continuing and discontinued operations have been         made to the December 31, 2007 Consolidated Condensed Balance Sheet         as presented in the Company's Form 10-Q for the quarterly period         ended March 31, 2008, based on additional information and         evaluation. The reclassification does not affect total assets or         total liabilities and shareholders' equity as previously presented.      Belo Corp.   Non-GAAP to GAAP Reconciliations    Station EBITDA                             Three months ended      Six months ended                                  June 30,                June 30,   In thousands (unaudited)  2008        2007         2008        2007    Station EBITDA (1)      $81,636     $82,281     $140,376     $148,759     Corporate operating      costs                  6,618      10,051       15,708       20,601     Spin-off related      costs                    410           -        4,659            -     Depreciation           10,324      11,032       21,208       21,640     Amortization                -           -            -          442       Earnings from        operations         $64,284     $61,198      $98,801     $106,076     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 (unaudited)                              Six Months ended        Six Months ended                              June 30, 2008           June 30, 2007                       Earnings   EPS    Shares  Earnings    EPS   Shares   Net earnings    from continuing    operations         $15,499   $0.15   103,349  $39,940    $0.38  103,035     Spin-off      related      operating      and financing      costs, net of      tax                3,502    0.03   103,349        -     Spin-off      related tax      charge            18,235    0.18   103,349        -       Net earnings        from        continuing        operations        before        spin-off        related        charges        $37,236   $0.36   103,349  $39,940    $0.38  103,035                              Three Months ended        Three Months ended                              June 30, 2008             June 30, 2007                       Earnings    EPS   Shares  Earnings     EPS    Shares   Net earnings    from continuing    operations         $26,379   $0.26   103,337  $24,164    $0.23  103,178     Spin-off      related      operating      and financing      costs, net of      tax                  351    0.00   103,337        -     Net earnings      from continuing      operations      before spin-off      related charges  $26,730   $0.26   103,337  $24,164    $0.23  103,178  

First Call Analyst: Paul Fry
FCMN Contact: mmackey@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