Belo comes up short


Revenues and earnings were below Wall Street expectations as Belo Corporation reported Q3 results. The TV group is also projecting a sharp drop in Q4 revenues and CEO Dunia Shive is talking about toughing it out for the “eventual recovery.” So, the company is focusing on controlling costs and paying down debt. To that end, Belo announced the retirement of $350 million in senior notes.

“The lack of consumer confidence and continued weak economic indicators point to a prolonged soft advertising environment. Current pacing trends indicate about an 8% decline in total revenue in the fourth quarter. We expect political revenues to finish around $36 million in the fourth quarter of 2008 and $56 million for the year,” Shive told analysts in her quarterly conference. “Because of these extraordinary market conditions, we will continue to focus on cost reduction and debt pay-down for the foreseeable future,” she added. The company has imposed a hiring freeze and made some staff reductions. That’s reduced headcount by 5% since the end of December.

For Q3 revenues were down 6.4% to $170.8 million. Total ad sales fell 8.8% to $146.2 million. Excluding political, local was down 13% and national 18%. Belo also had $2.6 million in advertising displaced by Hurricanes Ike and Gustav for its stations in Houston and New Orleans in the quarter, some of which may be recouped from insurance coverage. Excluding that, revenues for the quarter fell 4.9% and total spot was down 7.2%.

On the plus side, Belo reported that retransmission consent revenues were up 41% to $8.4 million. The company is expecting total retrans revenues of more than $31 million this year.

Belo’s $350 million in 8% senior notes came due Monday, so it was no surprise that the company was prepared to redeem them in full. It used cash previously drawn from its revolving credit facility. The good news there was that the interest rate under the revolver is currently less than the notes were bearing. Shive also noted that Belo had paid down its debt load by $42 million in Q3 using cash from operations.