Political helps Belo rise above comp results (audio)


BeloTelevision group Belo Corp. was up a bit in local revenue, but a bit of a tailspin in national spot resulted in total results being a shade below flat – but that’s all non-political revenue. Add in campaign spending, and the black ink flows freely.

Belo’s results underscored one of the great truths of the business in general and for broadcasters, the political category in particular: Location is everything. In Belo’s case, its strong presence in Texas, where a hot Republican primary race for the US Senate seat being vacated by Kay Bailey Hutchison (R-TX) has been going on, accounted for over half of Belo’s political income.

We’ll let President/CEO Dunia A. Shive walk us through the highlights of Belo’s Q2 2012. “Second quarter total revenue increased 7 percent compared to the second quarter of 2011, she said. “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.

Shive continued, “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.

Shive also said the company bought over a million shares of its own stock for an average of $5.81 a pop.

Hear the rest of the Q2 call here:

[audio:Belo-Q2-072712.mp3|titles=Dunia Shive, CEO, Belo]

Earnings were at the $0.24 per share, seven cents better than during Q2 2011.

The $9.5M political take compared favorably to $1.2M during the same period a year earlier. Local spot excluding political increased a modest 2.3%, but a 5.5% decline in non-political national spot brought total non-political spot revenue in at minus 0.5%.

Internet and retransmission consent income were up a combined 12%.

Looking ahead, Shive commented, “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.”

Marci Ryvicker of Wells Fargo Securities said that non-political results came in below expectations, but political blew expectations out of the water by precisely $5M (WFS predicted $4.5M). (RBR-TVBR cannot help but notice that the $5M in found money is precisely the amount spent on the Texas senatorial primary – perhaps a nice thank you note is in order for all of the ad-buying participants in that contest).

Ryvicker likes the company’s outlook and its commitment to increasing shareholder value as expressed by its stock repurchases. It is expected to outperform.

During the question and answer period, Shive said that Belo looked at recent acquisition opportunities, but the right one just hasn’t surfaced yet. If it does, Belo may make a move.
The non-political sluggishness may be due in part to displacement from political, but both local and national are both pacing up.

Looking at Q3, Shive said automobile is strong, but a lot of categories are going up against strong comps from last year. August is 90% spoken for, and although there is still some selling to do to fill out September, she’s expecting a strong quarter.

The Olympics is expected to bring in over $12M, even without any top-ten-market NBC affiliates.

Shive said retransmission is working – even if negotiations get testy, they are almost invariably resolved and she said no government intervention is needed in the process.