September 9, 2005
Belo affirms commitment to New Orleans market and provides insight into financial implications of Hurricane Katrina
Dallas, TX - Belo Corp. (NYSE: BLC) said today that it is assessing the operational and financial impact of Hurricane Katrina on its market-leading New Orleans television station, WWL-TV, and on the Company as a whole. Robert W. Decherd, chairman, president and chief executive officer, and Jack Sander, president/media operations, visited WWL's temporary broadcast studio and operation center in Baton Rouge on Wednesday, and reassured WWL's leaders and employees that Belo is committed to supporting WWL and the City of New Orleans as the aftermath of Katrina unfolds. WWL is the only Belo operating company located in the Katrina storm path.
Decherd sent a letter to all Belo employees today describing the general impact of Katrina on WWL and the Company, and praising the exemplary performance of the WWL team which has broadcast without interruption throughout the hurricane and continuously ever since from various makeshift locations. A copy of Decherd's letter is attached to this press release. WWL has played a critical role both as a news organization and as the most reliable and effective means of conveying news, information and relief services to residents of southern Louisiana who remain in the area, particularly those who are now beginning to return to their homes in parishes that sustained comparatively minor damage. WWL resumed limited broadcast activities at its main studios in the French Quarter of New Orleans on Thursday, but will maintain its operations center in Baton Rouge for the foreseeable future.
Decherd said, "To the fullest extent possible, WWL will play a leading role in the rebuilding of New Orleans as that process evolves in the months and years ahead. No undertaking of this magnitude has ever been accomplished in the United States without the active participation and leadership of the press, and we are determined to meet our obligations as a journalistic organization and as a corporate citizen."
In fulfilling these journalistic and community obligations, the Company currently anticipates that WWL's operating expenses will remain at the pre-Katrina level of approximately $22 million per annum for the next 12 to 15 months. Decherd said that it is not presently possible to estimate how long it will take for the market to stabilize and for predictable revenue patterns to be defined. The Company encourages analysts and investors to take a conservative approach toward the recovery of the New Orleans advertising market. As a point of reference, WWL's revenues for the year ended December 31, 2004 were approximately $35 million, which represented 2.3 percent of Belo's consolidated revenues. The Company believes that WWL's longtime news leadership position in New Orleans, and its singular performance over the past fortnight, constitute a valuable competitive advantage that will contribute significantly to the station's ability to rebuild its advertising base as the New Orleans market recovers.
Decherd noted that WWL is incurring incremental costs as it continues to cover Hurricane Katrina, as are most other Belo operating companies. Incremental costs associated with covering this news event by Belo operating companies other than WWL are not projected to continue beyond the end of September. However, ongoing costs for maintaining an operations center for WWL in Baton Rouge will continue until WWL can resume full operations at its New Orleans facility. Decherd noted that the Company will manage controllable expenses to the extent possible to minimize the impact of incremental Katrina expenses on Belo's total operating costs.
The Company is working to evaluate the condition of its French Quarter facility. However, the extent of operations located there will depend on many factors beyond the Company's control. As for the new facility planned for WWL, Decherd said the Company remains committed to this project, but has postponed it indefinitely while a design and engineering review of the new building is conducted in light of what has occurred with Katrina. The Company has accelerated other non-WWL capital projects into 2005 to maintain and smooth out the previously-announced $120 million per annum capital expenditure estimate Company-wide for 2005 through 2009.
Belo has insurance coverage, including business interruption insurance, which is expected to mitigate near-term financial impacts of Katrina on the Company. In addition, the Company will assess the carrying value of WWL assets as a result of the impact of Hurricane Katrina. The timing of any potential impairment charge will depend on when the Company is able to reasonably estimate the impact of this event on WWL's future revenue.
Decherd added, "Until we are able to quantify the impact of these matters, we are withdrawing the Company's previous third quarter revenue and expense guidance as well as our full-year guidance for earnings per share. When the various financial impacts are estimable, we will provide appropriate quarterly and full-year guidance. We'll also provide the financial community with regular updates on the financial model being developed for WWL's ongoing operation."
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 7,600 employees and $1.5 billion in annual revenues, Belo operates in some of America's most dynamic markets in Texas, the Northwest, the Southwest, Rhode Island, and the Mid-Atlantic. Belo owns 19 television stations, six of which are in the 15 largest U.S. broadcast markets. The Company also owns or operates seven cable news channels 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, affluent populations and the fast-growing Hispanic market, including Quick and al dia in Dallas/Fort Worth, and the d, El D and La Prensa in Riverside. Belo operates more than 30 Web sites associated with its operating companies. Additional information is available at www.belo.com or by contacting Carey Hendrickson, vice president/Investor Relations & Corporate Communications, at 214-977-6626.
Statements in communication concerning Belo's business outlook or future economic performance, anticipated profitability, revenues, expenses, 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, 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, and audits and related actions (including the censure of The Dallas Morning News) 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; 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; the effects of Hurricane Katrina; general economic conditions; and significant armed conflict, as well as other risks detailed in Belo's other public disclosures, and filings with the Securities and Exchange Commission ("SEC") including the Annual Report on Form 10-K.
View letter to employees
View the attachments