Belo Details Strategic Direction for Belo Corp. and A. H. Belo Corporation at Investor Meeting in New York
January 30 2008 - 12:00PM
PR Newswire (US)
Provides Update on Spin-off, Preliminary 2007 Earnings Information
and 2008 Outlook for Newspaper and Television Businesses NEW YORK,
Jan. 30 /PRNewswire-FirstCall/ -- Belo Corp. (NYSE:BLC) today
provided the investment community an update on the Company's plan
to spin off its newspaper businesses and related assets into a
separate publicly-traded company, A. H. Belo Corporation
(NYSE:AHC). Management also gave strategic overviews of both Belo
Corp. and A. H. Belo, preliminary 2007 earnings information and a
2008 outlook for the newspaper and television businesses at its
Investor Conference in New York City. The Company's full
presentation is available at http://www.belo.com/invest. "As we
begin 2008, we are confident that Belo's industry-leading
initiative to create separate newspaper and television companies
will allow us to focus more narrowly and efficiently on our two
discrete businesses," said Robert W. Decherd, chairman and Chief
Executive Officer. "This transaction will provide shareholders with
greater insight into each business, allowing investors to make
decisions most appropriate for their portfolio. In the long term,
we believe that Belo Corp. and A. H. Belo will be better positioned
as stand-alone companies, each possessing outstanding assets in
highly-attractive markets capable of supporting future growth and
innovation, which will lead to greater shareholder value creation."
Spin-Off Transaction Update Belo Corp.'s Board of Directors
recently approved the close of business on January 25, 2008 as the
record date and set a stock dividend distribution ratio of 0.20 A.
H. Belo shares for each share of Belo Corp. Shareholders will
receive cash in lieu of any fractional shares. The distribution of
A. H. Belo common stock is expected to occur on February 8, 2008 to
Belo Corp. shareholders of record. This distribution ratio
translates into approximately 17.6 million and 2.9 million shares,
respectively, of A. H. Belo Series A and A. H. Belo Series B shares
outstanding at the spin-off. Series A common stock of A. H. Belo
will begin regular trading on the New York Stock Exchange under the
ticker symbol AHC on February 11, 2008 and Series A common stock of
Belo Corp. will continue to trade on the NYSE under the ticker
symbol BLC. There will be no trading market for the shares of A. H.
Belo Series B common stock and those shares will not be listed on
any exchange. The IRS has confirmed through a private letter ruling
that the distribution will be tax-free to shareholders for federal
income tax purposes; however, any cash received in lieu of
fractional shares will be taxable. On February 4, Belo Corp. will
mail an information statement on Form 10 to all holders of Belo
Corp. common stock, which will include information regarding the
procedures by which the distribution will be effected and other
information of interest to A. H. Belo shareholders. Overview of A.
H. Belo A. H. Belo will own and operate The Dallas Morning News,
Texas' leading newspaper and winner of eight Pulitzer Prizes since
1986; The Providence Journal, the oldest continuously-published
daily newspaper in the U.S. and winner of four Pulitzer Prizes; The
Press-Enterprise (Riverside, CA), serving southern California's
Inland Empire region and winner of one Pulitzer Prize; and various
Web sites associated with these properties. The Company also will
publish specialty publications targeting young adults and the
fast-growing Hispanic market, including Quick and Al Dia in
Dallas/Fort Worth, and La Prensa in Riverside. A. H. Belo's
combined newspaper and related online businesses reach a total
weekly audience of more than 3.8 million people in markets with
attractive long-term demographics. These businesses currently have
annual revenues of approximately $740 million. Decherd will be
chairman, president and Chief Executive Officer of A. H. Belo
Corporation. He noted, "A. H. Belo will start out with an unlevered
balance sheet, unique niche products, and strong print and online
assets in attractive growth markets. Our newspapers are
experiencing growth in total audience reach and readership. A. H.
Belo will succeed by being highly responsive to the needs of these
audiences and advertisers, which will enable the Company to
monetize its investment in creating best-in-class content
distributed effectively across multiple platforms." Overview of
Belo Corp. After the spin-off's completion, Belo Corp. will be one
of the nation's largest pure-play, publicly-traded television
companies with annual revenues of approximately $775 million. The
Company owns and operates 20 television stations, reaching more
than 14 percent of U.S. television households, and their associated
Web sites, in 15 highly-attractive markets across the United
States. Nearly all Belo Corp. stations rank first or second in
their local markets. Additionally, the Company has leveraged its
local television assets to create regional cable news channels in
Texas and the Northwest, increasing its impact in those regions.
"Belo Corp. owns market leading and diversified assets that deliver
strong revenue, while having the ability to withstand regional
economic volatility and fluctuations in network performance," said
Dunia Shive, who will be president and Chief Executive Officer of
Belo Corp. "These highly-rated television stations have won
numerous national journalism awards and our strong local Web sites
will continue to deliver above-average revenue and audience
growth." A. H. Belo Strategy In discussing A. H. Belo's operating
strategy, Decherd emphasized the following: -- A. H. Belo will
focus on managing its core newspapers to derive maximum revenue and
EBITDA. -- A. H. Belo will continue to roll out niche products that
produce sustainable incremental revenue. -- A. H. Belo will
continue to build robust Internet businesses to improve pricing
power longer term and increase overall audience growth and
durability. -- A. H. Belo will aggressively control operating
expenses and will adjust expense profiles to actual revenue
experience as appropriate. -- A. H. Belo will invest in scalable
product ideas and/or companies with operating synergies. -- A. H.
Belo will maintain a conservative balance sheet with a bias toward
dividends. The Company's initial quarterly dividend is expected to
be $0.25 per share. "Simply put, A. H. Belo's success depends on
being highly responsive to the needs of audiences and advertisers,
which enables us to monetize our investment in creating
high-quality content that is distributed effectively across
multiple platforms," Decherd added. Belo Corp. Strategy Belo
Corp.'s operating strategy will continue to focus on localism
through expanding its local news leadership, growing market revenue
shares and building deeper community relationships with its
customers. "At the same time, we will continue to tailor product
offerings to the needs of the changing media habits of our viewers
and online users. We are not going to alter what has worked
extremely well as an operating philosophy," said Shive. Belo Corp.
will have a disciplined focus on short to intermediate-term debt
repayment. Its initial annual dividend will most likely be $0.30
cents per share, subject to Board approval. The Company expects to
manage capital expenditures to approximately $30 million annually.
Corporate expenses will reflect an appropriate margin for Belo
Corp.'s television business, while also reflecting the needs and
requirements of a publicly-held company. In the short term, Belo
expects to capitalize on this summer's Olympics in Beijing and what
should be a robust political season in the back half of 2008. 2007
Preliminary Earnings Information During the conference, management
provided preliminary 2007 earnings information for both the
newspaper and television segments. Television Group Television
Group total revenues for the full year increased 0.8 percent in
2007 while fourth quarter 2007 total revenues decreased 2.4 percent
versus the fourth quarter 2006. Total television spot revenues
decreased 1.1 percent in 2007 and five percent in the fourth
quarter. Political revenues totaled $14.6 million for the full year
2007 versus $47 million in 2006 and fourth quarter 2007 political
revenues were $8.4 million versus $31.6 million in the fourth
quarter 2006. Advertising revenues from the Television Group's Web
sites increased 41 percent in 2007 and 43 percent in the fourth
quarter. Television Group segment costs increased 3.8 percent in
2007 and 3.7 percent in the fourth quarter of 2007. Full year
segment EBITDA for the Television Group decreased 3.2 percent while
fourth quarter segment EBITDA was down 9.3 percent. Newspaper Group
Newspaper Group total revenues decreased 9.7 percent in 2007 and
11.5 percent in the fourth quarter of 2007 compared to the prior
year. Total newspaper advertising revenues were down 10.9 percent
in 2007 and 13.7 percent in the fourth quarter of 2007. The fourth
quarter of 2006 had one more Sunday than the fourth quarter of
2007. Adjusting for the additional Sunday, Newspaper Group total
advertising revenues were down approximately 12 percent in the
fourth quarter 2007. Advertising revenues associated with the
Newspaper Group's Web sites increased 19.5 percent in 2007 and 15.4
percent in the fourth quarter. For the full year, Newspaper Group
segment costs decreased 8.5 percent including a 23.9 percent
decrease in newsprint expense related primarily to a reduction in
newsprint prices and planned initiatives that reduced state
circulation at The Dallas Morning News. Newspaper Group segment
costs decreased seven percent in the fourth quarter of 2007 versus
the fourth quarter of 2006 including a 23.8 percent decrease in
newsprint expense. Newspaper Group segment EBITDA decreased 14.3
percent in 2007 and 25.6 percent in the fourth quarter of 2007.
Corporate Corporate costs were $102.6 million in 2007 as compared
to $100.1 million in 2006, including shared-based compensation
expense of $13.4 million and $10.7 million in 2007 and 2006,
respectively, and approximately $9.3 million in spin-off related
costs in 2007. In the fourth quarter of 2007, corporate costs and
expenses totaled $32.3 million as compared to $30.9 million in the
fourth quarter of 2006. Fourth quarter 2007 expenses included
spin-related costs of approximately $6.6 million and share-based
compensation expense of $6.4 million as compared to $3.4 million in
the fourth quarter of 2006. Belo Corp. will issue a news release
regarding fourth quarter and full year 2007 earnings on Wednesday,
February 13, 2008, at approximately 7:30 a.m. Central Standard
Time. A conference call to discuss the earnings release and other
matters of interest to shareholders and analysts will follow at
1:00 p.m. CST that afternoon. 2008 Outlook A. H. Belo Corporation
Decherd said A. H. Belo Corporation was not in a position to
provide specific revenue guidance for 2008 but he did provide some
perspective for the coming year. He prefaced his comments by saying
that his assumptions are dependent upon economic conditions and
related advertiser responses to consumer spending patterns. Decherd
continued by saying: -- Newspaper advertising revenues will be down
in 2008 but not at the levels experienced in 2007, with declines at
The Providence Journal and The Press-Enterprise more substantial
than at The Dallas Morning News. -- Operating expenses will be flat
or slightly lower than 2007 as long as newsprint prices do not
exceed our assumptions. -- Corporate expenses will be around $50
million. -- Capital expenditures will be approximately $25 million.
Belo Corp. Shive said, "As for first quarter 2008, total revenues
are currently pacing flat with first quarter 2007. In the first
quarter of 2008, we will air the Super Bowl on our single FOX
affiliate versus our five CBS affiliates in 2007 and we don't
expect meaningful political revenue until the back half of the
year. In addition, we had industry-leading revenue performance in
the first quarter of 2007. As for full year 2008 guidance, we
expect total revenues to be up in the mid-to-high single digits
depending on the strength of political in our markets. We expect
Internet revenue growth to be less than the rate experienced in
2007 but still to be up strong double-digits. We expect operating
expense to be up in the mid-single digits. Corporate expense will
be approximately $40 million, excluding spin-related costs that
will be incurred in the first quarter of 2008. Capital expenditures
will be approximately $30 million. "Belo will incur a one-time $18
million tax charge and payment in 2008 related to the transfer of
certain intangible assets from Belo Corp. to A. H. Belo from the
spin-off. We expect the tax rate to be around 39 percent, excluding
the $18 million payment. While Belo's leverage ratio at the time of
the spin-off is projected to be about 4.4 times, we expect the
leverage ratio to be below 4.0 times at year end 2008," added
Shive. The news media and public are invited to listen to a Webcast
of today's Investor Conference by logging into
http://www.belo.com/invest and clicking on the Investor Conference
link. A replay of the Webcast will be posted approximately three
hours after the event and will be available on the Web site for two
weeks. 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 approximately $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 A. H. Belo's and
Belo's other public disclosures, and filings with the Securities
and Exchange Commission ("SEC") including Belo's Annual Report on
Form 10-K and A. H. Belo's information statement on Form 10.
DATASOURCE: 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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