Television Company Belo Corp. (BLC) Reports Results for Second Quarter 2011

DALLAS, Aug. 4, 2011 /PRNewswire/ -- Belo Corp. (NYSE: BLC), one of the nation's largest pure-play, publicly-traded television companies, today reported GAAP net earnings per share in the second quarter of 2011 of $0.17 compared to GAAP net earnings per share of $0.19 in the second quarter of 2010.  The second quarter of 2010 included a credit of $2.6 million, net of taxes, from pension contribution reimbursements received from A. H. Belo Corporation ("A. H. Belo") related to its then-existing obligation to reimburse Belo for 60 percent of any contributions Belo made to The G. B. Dealey Retirement Pension Plan (the "Pension Plan").  Excluding the credit, pro forma earnings per share in the second quarter of 2010 were $0.16 per share.  

Dunia A. Shive, Belo's president and Chief Executive Officer, said, "Belo's spot revenue excluding political was up 2.4 percent in the second quarter of 2011 compared to the second quarter of 2010 despite disruption in the automotive category related to events in Japan.  Automotive cancellations were within our initial expectations for the quarter, and we experienced strong performance in other key categories such as retail, healthcare and telecommunications.  Excluding automotive revenue, our core spot revenue was up 5 percent in the second quarter of 2011 compared to the second quarter of 2010."    

Second Quarter in Review

Operating Results

Total revenue increased 2.1 percent in the second quarter of 2011 versus the second quarter of 2010.  Total spot revenue, excluding political, was up 2.4 percent with a 2 percent increase in local spot revenue and a 3.2 percent increase in national spot revenue.  Core local and national spot revenue was affected by a 6.6 percent decrease in automotive revenue due to the disruption in auto supply related to events in Japan.  Total spot revenue, including political, was up 1.4 percent in the second quarter of 2011 compared to the second quarter of 2010.  Political revenue in the second quarter of 2011 was $1.4 million lower than the second quarter of 2010.  

Other revenue, which includes barter and trade advertising, network compensation, Internet advertising and retransmission revenue, was up 5.6 percent in the second quarter of 2011 compared to 2010 due to double-digit percentage increases in Internet and retransmission revenue, which were partially offset by a decrease in network compensation.

Station salaries, wages and employee benefits increased $2.6 million, or 5 percent, during the second quarter of 2011 versus the second quarter of 2010 due primarily to employee merit increases, partial reinstatement of the Company's 401(k) plan matching contribution which was suspended in 2009, and higher station pension expense.

Station programming and other operating costs were up $5.6 million in the second quarter of 2011 compared to second quarter 2010 due primarily to a $3.1 million non-cash expense reduction related to third-party funding of certain newsgathering equipment in the second quarter of 2010, and increases in programming, advertising and promotion, and technology costs.

Corporate

Corporate operating costs of $6.7 million in the second quarter of 2011 were $1.2 million lower than the second quarter of 2010 due primarily to lower expenses for pension, accrued bonuses and technology support.

Excluding the $3.1 million non-cash expense reduction in the second quarter of 2010 discussed above, combined station and corporate operating costs were up 3.5 percent in the second quarter of 2011 compared to the second quarter of 2010.  On a reported basis, the Company's combined station and corporate operating costs were up 6.6 percent in the second quarter of 2011 compared to the second quarter of 2010.

Other Items

The Company recorded a reduction in operating expenses of $4.2 million in the second quarter of 2010 related to pension contribution reimbursements received from A. H. Belo pursuant to its then-existing obligation to reimburse Belo for 60 percent of any pension contributions Belo made prior to the split of the Pension Plan on January 1, 2011.

Belo's depreciation expense totaled $7.7 million in the second quarter of 2011, down from $8.8 million in the second quarter of 2010.

The Company's interest expense decreased $1.8 million in the second quarter of 2011 compared to the second quarter of 2010 due primarily to lower borrowings on its revolving credit facility and lower ongoing fees resulting from the Company's election to reduce the commitment amount under its facility in 2010.

Income tax expense decreased $3.3 million in the second quarter of 2011 compared to the second quarter of 2010 due primarily to lower pre-tax earnings and the satisfactory resolution of various pending tax matters.  

Total debt at June 30, 2011, was $887 million, which consisted entirely of fixed-rate public debt.  The Company's total leverage ratio, as defined in the Company's credit facility, was 3.7 times at June 30, 2011.  Belo invested $3.7 million in capital expenditures in the second quarter of 2011 and currently expects full year capital expenditures to be approximately $16 million.

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.

Outlook

Looking to the third quarter, Shive said, "We expect automotive spending to stabilize late in the third quarter with continued improvement in the fourth quarter.  We are currently estimating spot revenue excluding political to be flat in the third quarter of 2011 compared to the third quarter of 2010.  Our stations generated $11.2 million of political revenue in the third quarter of 2010 which we will cycle against in the third quarter of 2011.  As a result, we are currently estimating third quarter total revenue to be down mid-single digits versus the prior year.  

"Combined station and corporate operating costs are currently estimated to be up about 2 percent in the third quarter of 2011 compared to the third quarter of 2010.  Also, in July 2011, the Company received satisfactory resolution of another pending tax matter, which will result in a tax benefit of approximately $2.4 million in the third quarter of 2011.  The Company's effective tax rate for full year 2011 is now expected to be approximately 36 percent."    

A conference call to discuss this release and other matters of interest to shareholders and analysts will follow at 10:00 a.m. CDT this morning.  The conference call will be simultaneously webcast on Belo Corp.'s website (www.belo.com/invest).  Following the conclusion of the webcast, a replay of the conference call will be archived on Belo's website.  To access the listen-only conference lines, dial 1-800-288-8960.  A replay line will be open from 12:00 p.m. CDT on August 4 until 11:59 p.m. CDT August 18.  To access the replay, dial 800-475-6701 or 320-365-3844.  The access code for the replay is 210868.

About Belo Corp.

Belo Corp. (BLC), one of the nation's largest pure-play, publicly-traded television companies, 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 highly-attractive 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 & Treasury Operations, at 214-977-4465.

Statements in this communication concerning Belo's business outlook or future economic performance, anticipated profitability, revenues, expenses, capital expenditures, 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 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 Company's spin-off distribution of its newspaper businesses and related assets to A. H. Belo Corporation and the associated agreements between the Company and A. H. Belo relating to various matters; 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, 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; 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, 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.

SOURCE Belo Corp.