May 9, 2006
Belo Updates Capital Allocation Strategy at Annual Meeting of Shareholders
Dallas -- Belo Corp. (NYSE: BLC) announced today at its Annual Meeting of Shareholders an updated capital allocation strategy which includes a 25 percent increase to the Company's annual cash dividend rate, a significant reduction in forward capital spending, and an emphasis on opportunistic share repurchases rather than a fixed-rate approach. The Company also announced the re-election of four members of its Board of Directors and the ratification of the appointment of Ernst & Young LLP as Belo's independent registered public accounting firm.
Robert W. Decherd, Belo's chairman, president, and chief executive officer, said, "This capital allocation strategy is an important step that reflects the Company's focus on shareholder value, our strategic priorities, and market realities. The reduction in our forward capital spending will more than fund the dividend increases and share repurchase emphasis described today."
Decherd further noted, "Performance against metrics that are meaningful in the current and future competitive environment is the only sure prescriptive to the current negative perception of our traditional sectors. Belo must be able to grow revenues at or above industry averages and maintain the much higher growth rates we are achieving in our Internet businesses. We must allocate Belo's human, financial and capital resources to match the Company's forward strategy and find ways to take costs out of our business overall on a consistent basis. Strict discipline in managing and reducing expenses is essential. We're in the process of re-engineering the Company's expense structure in certain functions through steps such as outsourcing non-core technology functions and business accounting processes. But there is more work to be done."
Capital Allocation Strategy
Belo's Board of Directors approved an increase in the Company's dividend to an annual rate of $0.50 per share, a 25 percent increase from the current level of $0.40 per share, effective in the third quarter of 2006. The last dividend increase was in the fourth quarter of 2004, and raised the annual rate by 5.3 percent from $0.38 to $0.40 per share. The Company said the Board will consider additional dividend increases at least every six quarters, as is its current practice.
An ongoing review of the Company's major capital spending plans will result in a reduction in the annual capital spending target to $75 million per year in 2007 through 2009, down from $120 million per year. The Company also said that 2006 capital spending will be somewhat less than the previously announced $120 million target for this year.
With respect to share repurchases, Belo will take an opportunistic rather than a fixed-rate approach, with an eventual target for 2007/2008 of about 100 million shares outstanding. Through April 30, the Company has repurchased 3.3 million shares in 2006 and expects to repurchase that amount at least over the next eight months. At April 30, 2006, there were 105 million shares outstanding.
Decherd also reviewed Belo's 2005 financial performance, noted significant progress made on important strategic initiatives in 2005, and highlighted the outstanding achievements of Belo journalists, including the team at WWL-TV in New Orleans, winner of the George Foster Peabody Award; the photography staff of The Dallas Morning News, winner of the 2006 Pulitzer Prize for Breaking News Photography; and KTVB in Boise, winner of the national Edward R. Murrow Award for Spot News Coverage.
Decherd said, "Belo operates some of the strongest market-leading media properties in the nation with a wonderful group of professionals who consistently create award-winning content. Our journalistic teams are committed to delivering quality content -- no matter in what format -- that attracts audiences and advertisers alike. We will remain the content provider of choice as our audience needs change in today's digital world. We have the resources, the strategy and the people to make this happen. I'm confident that we are positioned for solid results in 2006 and beyond."
Shareholder Matters Approved
At the Annual Meeting, Belo shareholders re-elected four members of Belo's Board of Directors. The directors are: Henry P. Becton, Jr., a director since 1997 and President of WGBH Educational Foundation and lead director of Becton Dickinson and Company; Roger A. Enrico, a director since 1995 and chairman of the board of DreamWorks Animation SKG; William T. Solomon, a director since 1983 and chairman of the board of Austin Industries, Inc.; and Lloyd D. Ward, a director since 2001 and chairman of BodyBlocks Nutrition Systems, Inc. These Class II directors are eligible to serve a three-year term until 2009.
Belo shareholders also ratified the appointment of Ernst & Young LLP as Belo's independent registered public accounting firm.
A replay of the meeting will be available online for 30 days beginning today at 1 p.m. CDT on the Investor Relations section of Belo's Web site at www.belo.com.
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 7,700 employees and more than $1.5 billion in annual revenues, Belo operates in some of America's most dynamic markets in Texas, the Northwest, the Southwest, the Mid-Atlantic and Rhode Island. 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, and the fast-growing Hispanic market, including Quick and Al Dia in Dallas/Fort Worth, and 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 this communication concerning Belo's business outlook or future economic performance, anticipated profitability, revenues, expenses, dividends, 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 recovery of the New Orleans market (where the Company owns and operates market-leading television station WWL-TV, the CBS affiliate) from 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.