Television Company Belo Corp. (BLC) Reports Earnings For Second Quarter 2013

News provided by

Jul 30, 2013, 08:30 ET

DALLAS, July 30, 2013 /PRNewswire/ -- Television company Belo Corp. (NYSE: BLC) today reported net earnings per share of $0.21 in the second quarter of 2013 compared to net earnings per share of $0.24 in the second quarter of 2012. The second quarter of 2013 includes costs, net of tax, associated with the Company's previously announced and pending merger with Gannett Co., Inc. of $2.7 million, or $0.03 per share, including an increase in share-based compensation expense related to the increase in the Company's stock price after the merger announcement.

Second Quarter in Review
Operating Results
Total revenue of $174 million in the second quarter of 2013 was $4.1 million, or 2.3 percent, lower than the second quarter of 2012 as the Company cycled against political revenue, which was $8.3 million less than the second quarter of 2012. Total revenue excluding political in the second quarter of 2013 was 2.5 percent higher than the second quarter of 2012.

Core spot revenue was up 1.6 percent with increases of approximately 4 percent in national spot revenue and 1 percent in local spot revenue. Core spot revenue growth came primarily from strength in the telecommunications and automotive categories which were up 68 percent and 9 percent, respectively, partially offset by lower spending in the healthcare, restaurant and retail categories which were down 18 percent, 7 percent and 5 percent, respectively. Political revenue in the second quarter of 2013 totaled $1.2 million, compared to $9.5 million in the second quarter of 2012. Total spot revenue, including political, was down 4 percent in the second quarter of 2013 compared to the second quarter of 2012.

Other revenue, which is comprised primarily of Internet advertising, retransmission revenue, and barter and trade advertising, was up about 6 percent in the second quarter of 2013 compared to the second quarter of 2012, including a 21 percent increase in Internet advertising revenue and a 10 percent increase in retransmission revenue. Other revenue in the second quarter of 2012 included $1.7 million in royalty payments from cable copyright fees.

Station salaries, wages and employee benefits were flat in the second quarter of 2013 compared to the second quarter of 2012. Station programming and other operating costs in the second quarter of 2013 were also basically flat compared to the second quarter of 2012, with higher sales-related costs associated with the Company's increase in Internet revenue and higher reverse compensation expense mostly offset by decreases in other expense categories, including outside services and advertising and promotion. The Company's station-adjusted EBITDA margin for the second quarter of 2013 was 40 percent.

Corporate
Corporate operating costs were $4.1 million higher in the second quarter of 2013 compared to the second quarter of 2012. The increase is primarily due to costs related to the pending merger with Gannett, including higher share-based compensation expense associated with the increase in the Company's stock price following the merger announcement.

Combined station and corporate operating costs were $4.3 million, or 4 percent, higher in the second quarter of 2013 than the second quarter of 2012. Excluding costs associated with the Company's pending merger with Gannett of approximately $4.3 million, combined station and corporate operating costs were basically flat.

Other Items
Belo's depreciation expense totaled $7.1 million in the second quarter of 2013, which was down about 5 percent when compared with the second quarter of 2012.

The Company's interest expense of $14.6 million in the second quarter of 2013 was $3.2 million lower than the second quarter of 2012 due primarily to lower debt levels associated with the early redemption of the Company's May 2013 notes in November of 2012.

Other income, net, was $1.3 million lower in the second quarter of 2013 compared to the second quarter of 2012 due primarily to adjustments to investments.

Income tax expense decreased $2.3 million in the second quarter of 2013 compared to the second quarter of 2012 due primarily to lower pre-tax earnings.

Total debt at June 30, 2013 was $715 million. The Company had $2.9 million drawn on its credit facility and $7.5 million in cash and temporary cash investments at June 30, 2013. The Company's total leverage ratio, as defined in the Company's credit facility, was 2.7 times at June 30, 2013. Belo invested $6.4 million in capital expenditures and made pension contributions totaling $5.7 million in the second quarter of 2013.

Non-GAAP Financial Measures
A reconciliation of station-adjusted EBITDA to earnings from operations and a reconciliation of net earnings to pro forma net earnings are set forth in an exhibit to this release.

About Belo Corp.
Television company Belo Corp. (NYSE: BLC) owns and operates 20 television stations (nine in the top 25 markets) and their associated websites. Belo stations, which include affiliations with ABC, CBS, NBC, FOX, and the CW, reach more than 14 percent of U.S. television households in 15 markets. Belo stations rank first or second in nearly all of their local markets. Additional information is available at www.belo.com or by contacting Paul Fry, vice president/Investor Relations & Assistant Treasurer, at 214-977-4465.

Statements in this communication concerning Belo's business outlook or future economic performance, anticipated profitability, revenues, expenses, capital expenditures, dividends, investments, future financings, impairments, pension matters, 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 predicted in any such forward-looking statement. Belo undertakes no obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise.

Such risks, uncertainties and other factors include, but are not limited to, uncertainties regarding the 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 viewership measurement services; changes in the network-affiliate business model for broadcast television; technological changes, and the development of new systems and devices to distribute and consume 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, including changes regarding spectrum; 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, co-owned ventures, and investments; pension plan matters; general economic conditions; and significant armed conflict; the ability to meet the conditions to closing the transactions with Gannett, including receipt of shareholder and regulatory approvals and clearances, within the time frame contemplated or at all; the effect of transaction-related costs and expenses; the effect of the transactions on the ability of Belo to retain employees and maintain business relationships may be difficult; 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				Six months ended
			June 30,				June 30,
In thousands, except per share amounts				2013		2012		2013		2012
				(unaudited)		(unaudited)		(unaudited)		(unaudited)

Net Operating Revenues			$	173,507	$	177,619	$	333,845	$	333,517

Operating Costs and Expenses
	Station salaries, wages and employee benefits			56,444		56,437		112,078		112,136
	Station programming and other operating costs			48,273		48,074		96,920		93,391
	Corporate operating costs			12,677		8,550		21,557		16,282
	Depreciation			7,127		7,472		14,103		14,934
		Total operating costs and expenses		124,521		120,533		244,658		236,743

		Earnings from operations		48,986		57,086		89,187		96,774

Other Income and (Expense)
	Interest expense			(14,564)		(17,714)		(29,177)		(35,376)
	Other income, net			47		1,378		729		1,879
		Total other income and (expense)		(14,517)		(16,336)		(28,448)		(33,497)

Earnings before income taxes				34,469		40,750		60,739		63,277
Income tax expense				12,597		14,917		22,200		23,152

Net earnings				21,872		25,833		38,539		40,125

Less: Net (loss) attributable to noncontrolling interests				5		(98)		-		(98)

Net earnings attributable to Belo Corp.			$	21,867	$	25,931	$	38,539	$	40,223


Net earnings per share - Basic			$	0.21	$	0.24	$	0.37	$	0.38

Net earnings per share - Diluted			$	0.21	$	0.24	$	0.37	$	0.38

Weighted average shares outstanding
	Basic			103,822		103,774		103,695		103,854
	Diluted			104,583		104,068		104,367		104,163

Dividends declared per share			$	-	$	-	$	0.08	$	0.08

Belo Corp.
Consolidated Condensed Balance Sheets


				June 30,		December 31,
In thousands				2013		2012
				(unaudited)
Assets
	Current assets
		Cash and temporary cash investments	$	7,460	$	9,437
		Accounts receivable, net		139,765		140,605
		Other current assets		16,272		17,757
	Total current assets			163,497		167,799

	Property, plant and equipment, net			143,967		146,522
	Intangible assets, net			725,399		725,399
	Goodwill			423,873		423,873
	Other assets			34,757		35,999

Total assets			$	1,491,493	$	1,499,592


Liabilities and Shareholders' Equity
	Current liabilities
		Accounts payable	$	15,654	$	20,348
		Accrued expenses		39,256		42,057
		Short-term pension obligation		20,000		20,000
		Accrued interest payable		9,118		9,123
		Income taxes payable		2,348		9,043
		Dividends payable		-		8,331
		Deferred revenue		2,628		2,911
	Total current liabilities			89,004		111,813

	Long-term debt			715,305		733,025
	Deferred income taxes			266,031		257,864
	Pension obligation			74,769		86,590
	Other liabilities			10,463		10,576
	Total shareholders' equity			335,921		299,724

Total liabilities and shareholders' equity			$	1,491,493	$	1,499,592

Belo Corp.
Non-GAAP to GAAP Reconciliations


Station-Adjusted EBITDA
		Three months ended				Six months ended
		June 30,				June 30,
In thousands (unaudited)			2013		2012		2013		2012


Station-Adjusted EBITDA ⁽¹⁾		$	68,790	$	73,108	$	124,847	$	127,990
	Corporate operating costs		(12,677)		(8,550)		(21,557)		(16,282)
	Depreciation		(7,127)		(7,472)		(14,103)		(14,934)
	Earnings from operations	$	48,986	$	57,086	$	89,187	$	96,774

Note 1:

Belo's management uses Station-Adjusted EBITDA as the primary measure of profitability to evaluate operating performance and to allocate capital resources and bonuses to eligible operating company employees. Station-Adjusted EBITDA represents the Company's earnings from operations before interest expense, income taxes, depreciation, amortization, impairment charges and corporate 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).

Pro Forma Net Earnings ⁽²⁾
In thousands, except per share amounts (unaudited)
	Three months ended				Three months ended
	June 30, 2013				June 30, 2012

		Earnings		EPS		Earnings		EPS

Net earnings attributable to Belo Corp.	$	21,867	$	0.21	$	25,931	$	0.24

Adjustment for costs associated with Merger Agreement, net of tax		2,740		0.03		-		-

Pro forma net earnings attributable to Belo Corp.	$	24,607	$	0.24	$	25,931	$	0.24


	Six months ended				Six months ended
	June 30, 2013				June 30, 2012

		Earnings		EPS		Earnings		EPS

Net earnings attributable to Belo Corp.	$	38,539	$	0.37	$	40,223	$	0.38

Adjustment for costs associated with Merger Agreement, net of tax		2,740		0.03		-		-

Pro forma net earnings attributable to Belo Corp.	$	41,279	$	0.40	$	40,223	$	0.38