Belo Reports Results for Third Quarter 2008

Belo Reports Results for Third Quarter 2008

Television Company's EPS from Continuing Operations Down $0.01 Due to Weak Economy, Hurricanes Ike and Gustav

DALLAS, Nov. 3 /PRNewswire-FirstCall/ -- Belo Corp. (NYSE:BLC) , one of the nation's largest pure-play, publicly-traded television companies, today reported earnings per share from continuing operations of $0.14 in the third quarter of 2008 compared to $0.15 in the third quarter of 2007.

Earnings per share from continuing operations for the third quarter of 2007 exclude the results of Belo's former newspaper businesses and related assets, which were spun off on February 8, 2008. Those results are included in discontinued operations and total $0.03 per share for the third quarter of 2007.

Dunia A. Shive, Belo's president and Chief Executive Officer, said, "Belo's third quarter results were impacted by worsening economic conditions that led to a total revenue decline of 6.4 percent. Third quarter results were also negatively impacted by Hurricanes Ike and Gustav, which hit our Houston and New Orleans markets, respectively. The financial impact related to the hurricanes totaled approximately $3.5 million, including an estimated $2.6 million in advertising revenue displaced due to continuous news coverage and lower audience levels stemming from lengthy power outages. Excluding the effects of the hurricanes and spin-off related costs from the third quarter of 2007, the Company's earnings from operations decreased just 3.4 percent, largely due to expense reductions. In addition, the Company reduced its debt by $42 million using cash generated from operations in the third quarter."

Shive continued, "Belo's operating margins and cash flows remain strong. While the difficult advertising environment is expected to continue, I'm confident we are taking the necessary steps to be an even stronger company when the eventual recovery takes hold."

   Third Quarter in Review    Operating Results  

Total revenues decreased 6.4 percent in the third quarter of 2008 versus the third quarter of 2007 as declines in Belo's core local and national spot business offset incremental gains from political and Olympics revenue. Total spot revenue, including political, was down 8.8 percent with 13 percent and 18 percent decreases in local and national spot, respectively. Third quarter 2008 revenues were affected by the hurricanes and more importantly a weak advertising environment, particularly in the automotive category which was down 26 percent.

Excluding the $2.6 million in displaced revenue due to the hurricanes, total revenue decreased 4.9 percent and total spot revenue, including political, decreased 7.2 percent. Approximately one-half of the 4.9 percent total revenue decline came from the Company's stations in Phoenix as that market continues to experience significant economic issues related to the housing crisis.

Third quarter Olympics revenue totaled $9.7 million. Political revenues in the third quarter were $11.7 million, up $8.4 million over the third quarter of 2007.

Advertising revenue associated with Belo's Web sites increased 18 percent to $7.9 million in the third quarter 2008, representing 4.6 percent of Belo's total revenues. Retransmission revenues totaled $8.4 million in the third quarter of 2008, a 41 percent increase compared to the third quarter of 2007. The Company expects to generate more than $31 million in retransmission revenue for full year 2008.

Total station expenses decreased 2.4 percent in the third quarter of 2008 versus the same period last year due primarily to the freezing of open positions company wide, staff reductions in certain markets and other cost- saving measures. Station expenses decreased 3.2 percent in the third quarter of 2008 when excluding one-time costs related to Hurricanes Ike and Gustav, which totaled almost $1 million. The Company's total employment at September 30, 2008 was about 5 percent lower than at December 31, 2007.

Station EBITDA for the third quarter of 2008 was down 13 percent versus the third quarter of 2007, and down 7.6 percent when excluding the effects of Hurricanes Ike and Gustav. Despite the current economic climate, the station EBITDA margin for the third quarter of 2008 was 36.1 percent, and 37.6 percent when excluding the effects of Hurricanes Ike and Gustav.

Corporate

Corporate operating costs were $6 million in the third quarter of 2008 as compared to $8.4 million in the third quarter of 2007, a decrease of 29 percent. The decrease was primarily due to lower share-based compensation, lower bonus expense and other cost-saving measures.

Third quarter combined station and corporate operating costs declined 4.3 percent, or 5 percent when excluding the effects of Hurricanes Ike and Gustav.

The Company's earnings from operations decreased 5.1 percent, or 3.4 percent when excluding the effects of Hurricanes Ike and Gustav in the third quarter of 2008 and spin-off related costs from the third quarter of 2007.

Other Items

Belo's depreciation and amortization expense totaled $11 million in the third quarter of 2008, a 9.6 percent decrease from the third quarter of 2007.

Interest expense decreased $2.4 million, or 10 percent, in the third quarter of 2008.

The Company paid down $42 million of debt during the third quarter and its total debt at September 30, 2008 was $1.138 billion. The Company's leverage and interest coverage ratios, as defined in the Company's credit facility, were 4.4 and 3.0 times, respectively, at September 30, 2008. The Company invested $3.6 million in capital expenditures in the third quarter bringing year-to-date expenditures to $20 million. The Company expects to invest a total of $25 million in capital expenditures for the year.

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 and pro forma earnings from operations 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.

Other Matters

The Company announced that later today it is funding the retirement of $350 million in 8 percent senior notes due November 1, 2008 from funds drawn on its credit facility. The Company's credit facility currently has a lower interest rate than the 8 percent notes.

Fourth Quarter Outlook

In looking to the fourth quarter, Shive said, "The lack of consumer confidence and continued weak economic indicators point to a prolonged soft advertising environment. Current pacing trends indicate about an 8 percent decline in total revenue in the fourth quarter. We expect political revenues to finish around $36 million in the fourth quarter of 2008 and $56 million for the year.

"Because of these extraordinary market conditions, we will continue to focus on cost reduction and debt pay-down for the foreseeable future. We expect year-over-year fourth quarter station expense declines similar to what we experienced in the second and third quarters of this year. Full year corporate operating costs, exclusive of spin-off charges, are projected to be approximately $32 million, down from our previous guidance of $36 million, and a decrease of 21 percent from pro forma 2007 corporate operating expenses."

A conference call to discuss this earnings release and other matters of interest to shareholders and analysts will follow at 1:00 p.m. CST 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 1-800-230-1074. A replay line will be open from 3:00 p.m. CST on November 3 until 11:59 p.m. CST on November 10, 2008. To access the replay, dial 800-475-6701 or 320-365- 3844. The access code for the replay is 965609.

About Belo Corp.

Belo Corp. is one of the nation's largest pure-play, publicly-traded television companies, with 2007 annual revenue of $777 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                                       Three months ended    Nine months ended   In thousands, except per share        September 30,         September 30,    amounts (unaudited)                2008        2007      2008        2007     Net Operating Revenues           $170,823    $182,409  $534,619  $558,980    Operating Costs and Expenses     Station salaries, wages      and employee benefits           56,523      59,188   175,851   178,769     Station programming and      other operating costs           52,567      52,638   156,659   160,869     Corporate operating costs         5,954       8,401    21,662    29,002     Spin-off related costs                -       2,805     4,659     2,805     Depreciation                     11,025      12,198    32,233    33,838     Amortization                          -           -         -       442        Total operating costs         and expenses                126,069     135,230   391,064   405,725         Earnings from operations      44,754      47,179   143,555   153,255    Other income and expense     Interest expense                (21,188)    (23,609)  (65,427)  (72,007)     Other income, net (2)               543       1,188     1,616     6,594        Total other income and         expense                     (20,645)    (22,421)  (63,811)  (65,413)    Earnings from continuing    operations before income    taxes                             24,109      24,758    79,744    87,842   Income taxes                        9,672       9,804    49,808    32,948    Net earnings from continuing    operations                        14,437      14,954    29,936    54,894    Discontinued operations, net    of tax                                 -       3,804    (4,499)   15,737         Net earnings                 $14,437     $18,758   $25,437   $70,631    Net earnings per share - Basic     Earnings per share from      continuing operations            $0.14       $0.15     $0.29     $0.53     Earnings (loss) per share      from discontinued operations         -        0.03     (0.04)     0.16     Net earnings per share - Basic    $0.14       $0.18     $0.25     $0.69    Net earnings per share - Diluted     Earnings per share from      continuing operations            $0.14       $0.15     $0.29     $0.53     Earnings (loss) per share      from discontinued operations         -        0.03     (0.04)     0.16     Net earnings per share - Diluted  $0.14       $0.18     $0.25     $0.69    Average shares outstanding     Basic                           102,204     102,228   102,224   102,240     Diluted                         103,336     102,735   103,357   102,887    Cash dividends declared per    share                              $0.15       $0.25    $0.225    $0.375    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                                                        September    December                                                           30,         31,   In thousands                                           2008        2007                                                      (unaudited) (unaudited)   Assets     Current assets       Cash and temporary cash investments                $5,924     $11,190       Accounts receivable, net                          143,593     181,700       Other current assets                               22,472      24,789       Current assets of discontinued operations               -     126,710     Total current assets                                171,989     344,389      Property, plant and equipment, net                  223,608     226,040     Intangible assets, net                            2,045,793   2,045,793     Other assets                                         80,188      51,650     Long-term assets of discontinued operations               -     511,188    Total assets                                       $2,521,578  $3,179,060     Liabilities and Shareholders' Equity     Current  liabilities       Accounts payable                                  $19,279     $31,153       Accrued expenses                                   51,241      65,575       Other current liabilities                          43,560      46,667       Current liabilities of discontinued operations          -     106,055     Total current liabilities                           114,080     249,450      Long-term debt                                    1,137,867   1,168,140     Deferred income taxes                               440,260     425,652     Other liabilities                                    38,485      37,183     Long-term liabilities of discontinued operations          -      46,927     Total shareholders' equity                          790,886   1,251,708    Total liabilities and shareholders' equity          $2,521,578 $3,179,060    Note:  Certain prior period amounts have been reclassified to conform to          current period presentation and to reflect discontinued operations.      Belo Corp.   Non-GAAP to GAAP Reconciliations     Station EBITDA and   Pro forma Earnings from Operations   In thousands (unaudited)                                    Three months ended September 30,                              2008      2008           2008         2007                        As Reported   Hurricanes(2)  Adjusted   As Reported     Total spot revenue       $146,221    $2,640       $148,861     $160,372   Other revenue              24,602         -         24,602       22,037       Total revenue         170,823     2,640        173,463      182,409   Station expenses          109,090      (875)       108,215      111,826   Station EBITDA (1)         61,733     3,515         65,248       70,583       Corporate operating        costs                  5,954         -          5,954        8,401       Depreciation           11,025         -         11,025       12,198       Amortization                -         -              -            -   Earnings from operations    before spin-off    related costs(3)          44,754     3,515         48,269       49,984       Spin-off related costs      -         -              -        2,805          Earnings from          operations         $44,754    $3,515        $48,269      $47,179    Station EBITDA margin       36.1%                    37.6%        38.7%                                      Nine months ended September 30,                              2008      2008           2008         2007                         As Reported  Hurricanes(2)  Adjusted   As Reported     Total spot revenue       $461,589    $2,640       $464,229     $495,051   Other revenue              73,030         -         73,030       63,929       Total revenue         534,619     2,640        537,259      558,980   Station expenses          332,510      (875)       331,635      339,638   Station EBITDA (1)        202,109     3,515        205,624      219,342       Corporate operating        costs                 21,662         -         21,662       29,002       Depreciation           32,233         -         32,233       33,838       Amortization                -         -              -          442   Earnings from operations    before spin-off    related costs(3)         148,214     3,515        151,729      156,060       Spin-off related        costs                  4,659         -          4,659        2,805          Earnings from          operations        $143,555    $3,515       $147,070     $153,255    Station EBITDA margin       37.8%                    38.3%        39.2%    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).    Note 2:  Represents estimated revenues lost and incremental expenses            incurred specifically related to Hurricanes Gustav and Ike, which            affected Belo television stations in Houston and New Orleans.    Note 3:  Belo's management believes pro forma earnings from operations            before the effects of Hurricanes Gustav and Ike and before            spin-off related costs is a useful measure for investors as it            provides a meaningful basis for comparison of core operating            results for the three months and nine months ended September 30,            2008 to the same periods in the prior year.      Net Earnings From Continuing Operations Before Spin-Off Related Charges   In thousands (unaudited)                                 Nine months ended      Nine months ended                                September 30, 2008     September 30, 2007                             Earnings  EPS   Shares  Earnings   EPS   Shares   Net earnings from    continuing operations    $29,936  $0.29  103,357  $54,894  $0.53  102,887     Spin-off related      operating and      financing costs,      net of tax               3,151   0.03  103,357    1,683   0.02  102,887     Spin-off related tax      charge                  18,235   0.18  103,357        -       Net earnings        from continuing        operations before        spin-off related        charges              $51,322  $0.50  103,357  $56,577  $0.55  102,887                                  Three months ended      Three months ended                                September 30, 2008     September 30, 2007                             Earnings  EPS   Shares  Earnings   EPS   Shares   Net earnings from    continuing operations    $14,437  $0.14  103,336  $14,954  $0.15  102,735     Spin-off related      operating and      financing costs,      net of tax                   -                    1,683   0.02  102,735       Net earnings        from continuing        operations before        spin-off  related        charges              $14,437  $0.14  103,336  $16,637  $0.16  102,735  

First Call Analyst: Paul Fry
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/

---

Profile: International Entertainment