Dallas-based television group Belo Corp. reports lower profits in second quarter

by PegNews wire

DALLAS — Belo Corp., which owns 20 TV stations and websites, reported a total revenue decline of 23% in the second quarter. The company posted $10.295 million profit in second quarter 2009 as compared to $26.379 million in second quarter 2008 -- down 61%. This has happened consistently in the past, as we've noted here and here.

Dunia Shive, Belo's president and chief executive officer, said they'll still lose money in the third quarter but will lose less than before.

The company owns local ABC affiliate WFAA, TXCN (Texas Cable News), and others. If you're interested in how media is faring, check out this article that compares the state of Belo to McClatchy, both of which own local media companies. Here is Belo's financial release:

Belo Corp. (NYSE:BLC), one of the nation's largest pure-play, publicly-traded television companies, today reported net earnings per share of $0.10 in the second quarter of 2009, in line with analysts' estimates, compared to net earnings per share of $0.25 in the second quarter of 2008.

Dunia A. Shive, Belo's president and chief executive officer, said, "The company's second quarter total revenue decline of 23% was very similar to the decline experienced in the first quarter as the soft advertising environment continued, especially in the company's larger markets. However, we did see an uptick in sales activity in June that has also carried into July.

"Excluding spin-off related charges in the second quarter of 2008 and non-cash pension expense, Belo's previously announced cost-saving measures led to a reduction in combined station and corporate operating costs of 13% in the second quarter of 2009."

The company also announced the restatement of its audited fiscal 2007 and 2008 financial statements and unaudited first quarter 2009 balance sheet due to a misapplication of Statement of Financial Accounting Standards No. 142 "Goodwill and Other Intangible Assets" ("FAS 142") under GAAP. These adjustments are non-cash, do not affect Belo's liquidity or debt covenants, and do not impact the company's future operations. More detailed information on this matter is included below.

Total revenues decreased 23% in the second quarter of 2009 versus the second quarter of 2008. Total spot revenue, including political, was down 28% with 27% and 29% decreases in local and national spot, respectively. Second quarter 2009 revenues were affected by the soft advertising environment, particularly in the automotive category which was down 53% compared to the second quarter of 2008. Political revenues in the second quarter of 2009 were $1.8 million lower than the second quarter of 2008.

Advertising revenue associated with Belo's Web sites decreased 5.1% to $7.1 million in the second quarter of 2009, representing almost 5% of Belo's total revenue. Retransmission revenue totaled $11.4 million in the second quarter of 2009 and represents almost 8% of the company's total revenue. The company expects to achieve approximately $41 million in full year 2009 retransmission revenue.

Total station expenses decreased 12% in the second quarter of 2009 versus the same period last year due primarily to the continued implementation of cost-saving measures.

Station EBITDA in the second quarter of 2009 was down 39% versus the prior year. The station EBITDA margin for the second quarter of 2009 was 35% compared to 43% in the second quarter of 2008.

Corporate

Corporate operating costs were $5.2 million in the second quarter of 2009 compared to $6.6 million in the second quarter of 2008, a decrease of 21% due to an insurance reimbursement and cost-saving measures.

Other items

Belo's depreciation and amortization expense decreased 3.5% to $10 million in the second quarter of 2009, down from $10.3 million in the second quarter of 2008.

Interest expense decreased $6.2 million, or 29%, in the second quarter of 2009.

Other income, net, decreased $3.6 million in the second quarter of 2009 due primarily to the write-off of certain analog equipment following the digital television transition in June.

Income tax expense decreased $10.8 million in the second quarter of 2009 due primarily to lower pre-tax earnings.

Total debt at June 30, 2009 was $1.069 billion, a reduction of $23 million from December 31, 2008. The company's leverage and interest coverage ratios, as defined in the company's credit facility, were 5.3 and 3.0 times, respectively, at June 30, 2009. The company invested $1.7 million in capital expenditures in the second quarter of 2009, down from $9.8 million in the second quarter of 2008.

Outlook

"Looking at third quarter," Shive said, "visibility is limited due to later booking of spot advertising and uncertainty surrounding the timing of automotive spending from GM and Chrysler. However, the combined local and national spot percentage decline in June was better than May, and July will be better than June. Current pacings indicate that the third quarter combined local and national spot percentage decline will improve from second quarter. Excluding spin-off related charges in 2008, full year 2009 combined station and corporate operating costs are expected to be 12% lower than 2008, an improvement from previous guidance."

Source: Belo Corp.