Television Company Belo Corp. (BLC) Reports Earnings for Second Quarter 2012

News provided by

Jul 27, 2012, 08:30 ET

DALLAS, July 27, 2012 /PRNewswire/ -- Television company Belo Corp. (NYSE: BLC) today reported net earnings per share of $0.24 in the second quarter of 2012 compared to net earnings per share of $0.17 in the second quarter of 2011.

Dunia A. Shive, Belo's president and Chief Executive Officer, said, "Second quarter total revenue increased 7 percent compared to the second quarter of 2011. Political revenue totaled $9.5 million, with $5 million attributable to the Senate primary in Texas. The Company also received meaningful political revenue in Charlotte, Norfolk and St. Louis. Core spot revenue was up in many of the Company's markets in the second quarter of 2012, but was down slightly overall compared to last year due to softness in national spot in certain markets. Third quarter total spot revenue is currently pacing up in the high-teens with strong core and political revenue.

"Combined station and corporate operating costs were 1 percent lower when compared to the second quarter of last year. Our station adjusted EBITDA grew 23 percent compared to the second quarter of 2011 and our station adjusted EBITDA margin was 41 percent.

"During the second quarter, the Company opportunistically repurchased over 1 million shares in the open market at an average price of $5.81."

Second Quarter in Review

Operating Results

The Company generated total revenue of $178 million in the second quarter of 2012, which was $11 million, or 7 percent, higher than the second quarter of 2011.

Political revenue in the second quarter of 2012 totaled $9.5 million, an $8.3 million increase compared to the second quarter of 2011. Total spot revenue, including political, was up 6 percent in the second quarter of 2012 compared to the second quarter of 2011. Total spot revenue, excluding political, was down 0.5 percent with a 2.3 percent increase in local spot revenue and a 5.5 percent decrease in national spot revenue.

Other revenue, which is comprised primarily of Internet advertising, retransmission revenue, and barter and trade advertising, was up 12 percent in the second quarter of 2012 due primarily to double-digit increases in both Internet and retransmission revenue.

Station salaries, wages and employee benefits increased $1.9 million, or 3.5 percent, during the second quarter of 2012 versus the second quarter of 2011 due primarily to annual merit increases for employees and higher accrued performance-based bonus expense. Station programming and other operating costs were down $4.5 million, or 8.5 percent, in the second quarter of 2012 compared to the second quarter of 2011 due primarily to lower syndicated programming expense.

Corporate

Corporate operating costs of $8.6 million in the second quarter of 2012 were $1.9 million higher than the second quarter of 2011 due primarily to higher accrued performance-based bonus expense and investments in interactive initiatives. The Company's combined station and corporate operating costs were 1 percent lower compared to the second quarter of 2011.

Other Items

Belo's depreciation expense totaled $7.5 million in the second quarter of 2012, down from $7.7 million in the second quarter of 2011.

The Company's interest expense was $17.7 million in the second quarter of 2012 compared to $18.1 million in the second quarter of 2011.

Income tax expense increased $5.5 million in the second quarter of 2012 compared to the second quarter of 2011 due primarily to higher pre-tax earnings.

Total debt at June 30, 2012 was $887 million and consisted entirely of fixed-rate debt. Of this amount, $176 million is due May 2013 and is therefore classified as current on the Company's June 30, 2012 balance sheet. Also as of June 30, 2012, the Company had $126 million in cash and temporary cash investments and had nothing drawn on its $200 million revolving credit facility, which does not expire until August 2016. The facility may be used, along with some level of cash, to retire the May 2013 notes.

The Company's total leverage ratio, as defined in the Company's credit facility, was 3.9 times at June 30, 2012, and 3.4 times when including the Company's cash. Belo invested $6.9 million in capital expenditures in the second quarter of 2012.

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 forward, Shive said, "Third quarter total spot revenue is currently pacing up in the high-teens. We currently expect other revenue, which includes Internet and retransmission revenue, to be up in the low double-digits during the third quarter. As a result, we currently expect the percentage growth in total revenue for the third quarter of 2012 to be up in the mid-to-high teens compared to the prior year, depending on the strength of political. Combined station and corporate operating costs for the third quarter of 2012 are currently expected to be up about 6 percent compared to the prior year's quarter due primarily to higher variable costs associated with higher revenue."

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 1-800-553-5260. A replay line will be open from 12:00 noon CDT on July 27 until 11:59 p.m. CDT on August 10. To access the replay, dial 800-475-6701 or 320-365-3844. The access code for the replay is 253026.

About Belo Corp.

Television company Belo Corp. (NYSE: BLC) 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, dividends, 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 changes in capital market conditions and prospects, and other factors such as changes in advertising demand, interest and discount rates and programming and production costs; changes in viewership patterns and demography, and actions by Nielsen and its competitors; 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, including changes regarding spectrum; 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.

Belo Corp.
Consolidated Statements of Operations

				Three months ended				Six months ended
				June 30,				June 30,
In thousands, except per share amounts				2012		2011		2012		2011
				(unaudited)		(unaudited)		(unaudited)		(unaudited)

Net Operating Revenues			$	177,619	$	166,379	$	333,517	$	317,849

Operating Costs and Expenses
	Station salaries, wages and employee benefits			56,437		54,525		112,136		108,361
	Station programming and other operating costs			48,074		52,565		93,391		102,761
	Corporate operating costs			8,550		6,692		16,282		12,991
	Pension settlement charge and contribution
	reimbursements			-		-		-		20,466
	Depreciation			7,472		7,707		14,934		15,631
		Total operating costs and expenses		120,533		121,489		236,743		260,210

		Earnings from operations		57,086		44,890		96,774		57,639

Other Income and (Expense)
	Interest expense			(17,714)		(18,050)		(35,376)		(36,033)
	Other income, net			1,378		649		1,879		829
		Total other income and (expense)		(16,336)		(17,401)		(33,497)		(35,204)

Earnings before income taxes				40,750		27,489		63,277		22,435
Income tax expense				14,917		9,402		23,152		8,662

Net earnings				25,833		18,087		40,125		13,773

Less: Net (loss) attributable to noncontrolling interests				(98)		-		(98)		-

Net earnings attributable to Belo Corp.			$	25,931	$	18,087	$	40,223	$	13,773


Net earnings per share - Basic			$	0.24	$	0.17	$	0.38	$	0.13

Net earnings per share - Diluted			$	0.24	$	0.17	$	0.38	$	0.13

Weighted average shares outstanding
	Basic			103,774		103,626		103,854		103,515
	Diluted			104,068		104,022		104,163		103,917

Dividends declared per share			$	-	$	0.05	$	0.08	$	0.05

Belo Corp.
Consolidated Condensed Balance Sheets


				June 30,		December 31,
In thousands				2012		2011
				(unaudited)
Assets
	Current assets
		Cash and temporary cash investments	$	125,669	$	61,118
		Accounts receivable, net		140,018		149,584
		Income tax receivable		14		31,629
		Other current assets		20,591		16,692
	Total current assets			286,292		259,023

	Property, plant and equipment, net			151,356		157,115
	Intangible assets, net			725,399		725,399
	Goodwill			423,873		423,873
	Other assets			40,355		46,195

Total assets			$	1,627,275	$	1,611,605


Liabilities and Shareholders' Equity
	Current liabilities
		Current portion of long-term debt	$	175,810	$	-
		Accounts payable		17,839		19,677
		Accrued expenses		36,468		34,961
		Short-term pension obligation		19,737		19,300
		Accrued interest payable		10,106		10,378
		Income taxes payable		5,814		12,922
		Dividends payable		-		5,189
		Deferred revenue		5,427		3,435
	Total current liabilities			271,201		105,862

	Long-term debt			711,638		887,003
	Deferred income taxes			251,977		244,361
	Pension obligation			83,968		93,012
	Other liabilities			11,763		14,164
	Total shareholders' equity			296,728		267,203

Total liabilities and shareholders' equity			$	1,627,275	$	1,611,605

Belo Corp.
Non-GAAP to GAAP Reconciliations


Station Adjusted EBITDA
			Three months ended				Six months ended
			June 30,				June 30,
In thousands (unaudited)				2012		2011		2012		2011


Station Adjusted EBITDA ⁽¹⁾			$	73,108	$	59,289	$	127,990	$	106,727
	Corporate operating costs			(8,550)		(6,692)		(16,282)		(12,991)
	Depreciation			(7,472)		(7,707)		(14,934)		(15,631)
	Pension settlement charge and contribution reimbursements			-		-		-		(20,466)
	Earnings from operations		$	57,086	$	44,890	$	96,774	$	57,639

Note 1:		Belo's management uses Station Adjusted EBITDA as the primary measure of profitability to evaluate operating performance and to allocate capital resources and bonuses to eligible operating company employees. Station Adjusted EBITDA represents the Company's earnings from operations before interest expense, income taxes, depreciation, amortization, impairment charges, pension settlement charge and contribution reimbursements, and corporate operating costs. Other income (expense), net is not allocated to television station earnings from operations because it consists primarily of equity in earnings (losses) from investments in partnerships and joint ventures and other non-operating income (expense).



Pro Forma Net Earnings
In thousands, except per share amounts (unaudited)
			Six months ended				Six months ended
			June 30, 2012				June 30, 2011

				Earnings		EPS		Earnings		EPS

Net earnings attributable to Belo Corp.			$	40,223	$	0.38	$	13,773	$	0.13

	Pension settlement charge and contribution reimbursements, net of tax			-		-		13,323		0.13

Pro forma net earnings attributable to Belo Corp.			$	40,223	$	0.38	$	27,096	$	0.26

Note 2:		There were no pro forma adjustments for the three months ended June 30, 2012 or 2011.