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 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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