July 24, 2002
Belo reports results for Second Quarter 2002
Dallas, TX --Belo
Corp. (NYSE: BLC) today reported second quarter earnings per share of $0.34
before a non-recurring credit, versus $0.29 per share on a comparable basis (as
described below) for the second quarter of 2001, an increase of 17.2
percent. Analysts' consensus estimate
Reported earnings per share
of $0.36 in the second quarter of 2002 include a non-recurring credit of $0.02
per share primarily related to the resolution of certain contingencies associated with the Company's sales of KOTV in Tulsa, Oklahoma, the Messenger-Inquirer in Owensboro, Kentucky, The Gleaner in Henderson, Kentucky and The Eagle in
Bryan/College Station, Texas at the end of 2000.
At the beginning of 2002, Belo adopted Statement of Financial Accounting Standards No. 142, which changes the accounting for goodwill and intangible assets. The Company's reported breakeven earnings per share for the second quarter of 2001 included $0.10 for goodwill amortization expense, net of tax, that would not have been required had the new Statement been in effect and $0.19 of non-recurring charges related to the writedown of Belo's investments in Internet-related companies and early retirement and corporate staff reductions. Comparable earnings per share in the second quarter of 2001, therefore, would have been $0.29.
Results of Operations
The following table summarizes Belo's second quarter
Three months ended June 30,
Net operating revenues
Operating cash flow
Segment operating cash flow
Earnings per share
Note: Certain amounts for the prior year have
been reclassified to conform to the current year presentation.
Robert W. Decherd,
Belo's chairman, president, and chief executive officer, said, "Belo had a
solid second quarter with improved operating performance in each of our
business segments. We saw sequential
revenue improvement in each month during the quarter in both our Television
Group and Newspaper Group when adjusting for like Sundays. Television Group and Newspaper Group
revenues finished slightly better than expected and Newspaper Group cash expenses
were better than expected when we presented at the Mid-Year Media Review in
mid-June. The advertising recovery has
definitely begun for our television stations.
While newspaper revenues will come back at a slower rate than television
revenues, we believe we are seeing the beginning signs of recovery at our
For the second
quarter, Belo's consolidated revenues increased 1.2 percent. Segment cash expenses were better by 2.8
percent, resulting in an increase in segment operating cash flow of 9.5
Group revenues increased 3.9 percent in the second quarter with a 4.5 percent
increase in spot revenue. Local and
national revenues were up 1.0 percent and 4.7 percent, respectively. Political revenues were $5.1 million
compared to $1.7 million in the prior year.
Cash expenses for the Television Group were 2.7 percent higher than last
year. Operating cash flow for the
Television Group increased 5.3 percent for the quarter.
In the Newspaper
Group, total revenue decreased 2.1 percent in the second quarter, with
advertising revenue down 2.7 percent.
Newspaper Group cash expenses were 6.0 percent better in the second
quarter of 2002 compared to the second quarter of 2001. Newsprint expense was 28.6 percent better
than last year while all other cash expenses increased less than 1.0
percent. Operating cash flow increased
9.1 percent versus the prior year.
Total revenue at The
Dallas Morning News was down 3.3 percent in the second quarter with
advertising revenue down 4.1 percent.
The revenue decline was the result of continued weakness in classified
employment advertising. Excluding
classified Employment, revenue at The Morning News increased 1.6 percent in the second quarter of 2002, with significant strength in preprints and TMC. Retail revenue was down 1.7 percent in the second quarter and classified auto and real estate revenues were up 1.0 percent and 5.0 percent,
respectively. General advertising
revenue was down 4.8 percent.
Belo Interactive generated $4.8 million in revenue during the second quarter, compared to $3.4 million in the second quarter of 2001, an increase of 43.9 percent. Cash expenses were $7.4 million compared with $8.6 million in the second quarter of last year. The Company's net investment in Belo Interactive operations in
the second quarter was $2.6 million compared with $5.2 million in the second
quarter of 2001.
Belo Interactive recorded an average of 99 million page views per month in the second quarter of 2002. This is up from an average of 90 million page views in the first quarter of 2002 and 84 million page views in
the second quarter of 2001. The average
number of unique visits per month in the second quarter was 6.0 million, an increase of 20 percent over the average of 5.0 million unique visits in the second quarter of last year.
Revenue at Belo's cable news operations increased 9.7 percent in the second quarter of 2002 to $4.6 million. Total cash expenses were 7.7 percent higher than the prior year, resulting in a net investment that was slightly less than the prior year.
Corporate expenses in the second quarter of 2002 were $1.5 million higher than the prior year due to an increase in bonus accruals. Bonus expense is accrued quarterly but will only be paid if full-year financial targets are met. Excluding bonuses, corporate expenses were flat.
Diluted average shares outstanding are higher than last year due to stock option exercises and the incremental effect of unexercised stock options as a result of the
Company's higher share price in the second quarter of 2002.
Third Quarter 2002 Outlook
Dunia A. Shive, Belo's executive vice president and chief financial officer, said, "In July, we believe the Television Group's spot revenues will be up low-double digits.
Current pacings indicate August revenues will be up mid-single digits. September is
expected to be a strong month as we cycle against lost revenue related to coverage of the September 11 tragedy last year. We estimate that Belo lost about $9 million in television revenue in September 2001 specifically related to the terrorist attacks.
Political revenue will also ramp up in the
third quarter with particular strength expected in our Texas markets,
Charlotte, Portland and St. Louis.
"In the Newspaper Group, we currently expect revenue in the third quarter to increase slightly versus the prior year after adjusting for one less Sunday in the third quarter of 2002. We expect modest improvement in classified employment volume declines in the third quarter, mostly due to easier comparisons. Classified auto,
classified real estate, preprints and TMC are expected to continue strong in the third quarter while retail should remain stable.
"On the expense side, Belo continues to benefit from the comprehensive cost-reduction measures implemented during 2001 and lower newsprint expense.
Increases in benefits costs, insurance costs, bonuses (which will only be paid if full-year financial targets are met), marketing and promotion costs and the assumed filling of critical vacancies will cause total cash expenses in the third quarter of 2002 to be about 2 percent higher than the third quarter of last year.
"Using these revenue and expense assumptions, Belo's third quarter earnings per share could reach $0.19, which is in line with the current analysts' consensus estimate. The Company will give further
guidance with respect to revenues, expenses and earnings per share for the
third quarter as the quarter progresses."
Belo 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 approximately 7,800 employees and $1.4 billion in annual revenues, Belo operates news and information franchises in some of America's most dynamic markets and regions, including Texas, the Northwest, the Southwest, Rhode Island, and the Mid-Atlantic region. Belo owns 19 television stations (six in the top 16 markets) reaching 13.9 percent of U.S. television households; owns or operates six cable news channels; and manages one television station through a local marketing agreement. Belo publishes four daily newspapers: The Dallas Morning News, The Providence Journal, The Press-Enterprise
(Riverside, CA.) and the Denton Record-Chronicle (Denton, TX.). Belo Interactive's new media businesses include 34 Web sites, several interactive alliances, and a broad range of Internet-based products.
For more information, contact Dunia Shive, Belo's executive vice president and chief financial officer, or Carey Hendrickson,
Belo's vice president of investor relations, at 214-977-6606. Additional information, including earnings releases, is available online at http://www.belo.com.
in this communication concerning the Company's business outlook or future
economic performance, anticipated profitability, revenues, expenses, capital
expenditures or other financial items and other statements 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
risks, uncertainties and factors include, but are not limited to, changes in
advertising demand, interest rates and newsprint prices; technological changes;
development of Internet commerce; industry cycles; changes in pricing or other
actions by competitors and suppliers; regulatory changes; the effects of
Company acquisitions and dispositions; and general economic conditions, as well
as other risks detailed in the Company's filings with the Securities and
Exchange Commission ("SEC"), including the Annual Report on Form 10-K.>