Dallas Paper Cuts Circ Area, Belo Tells Analysts ’07 Will Outdo ’06

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By: E&P Staff

Belo Corp. newspapers should rebound next year from their rocky performance in the second half of 2006, but could still show a “slight decline” in revenues for the full year, the Dallas media giant’s executive vice president and CFO, Dennis Williamson, told analysts at Credit Suisse’s media week conference in New York City Tuesday.

“Segment costs and expenses should increase in the low-single digits for 2007. Newsprint expense should decrease due to lower consumption associated with the reduced distribution area for The Dallas Morning News which began in the second quarter of 2006, and a stabilization of newsprint prices,” Williamson said.

Meanwhile, Belo’s flagship, The Dallas Morning News, which in April stopped distributing newspapers to most areas beyond a 200-mile radius, will probably cut its circulation area again next year.

“Further refinements to The Morning News’ distribution areas will occur in the first half of 2007, reducing the circulation perimeter to 100 miles in certain areas,” Robert W. Decherd, Belo chairman, president and chief executive, said at a Credit Suisse Group media and telecommunications investment conference in New York.

Decherd said, according to the paper’s own account, that changes in Belo’s circulation practices at The News and its other three daily newspapers are saving the company about $8 million annually.

With television group results expected to be flat next year, Belo is currently projecting “single-digit” declines in consolidated EBITDA (earnings before interest, taxes, deductions and amortization), and earnings from operations, Williamson said.

Because of the way costs will be allocated among segments in 2007, EBITDA margins are expected to fall by one to two percentage points in both the newspaper and television groups, he added.

Reuters reported Tuesday that in an interview during the conference Belo CEO Robert Decherd said the company plans to remain publicly traded.

“I’m interested in stability, consistency and aggressive transformation, and that’s done best staying just the way we are,” Decherd told Reuters reporter Robert MacMillan. Going private is “a distraction our company doesn’t need” and has “very onerous aspects,” Belo added in the interview.

In his formal presentation, Decherd said Belo, which this year aggressively cut costs by such methods as discontinuing its pension and buying out newsroom employees, is making progress.

“We are focusing our businesses to compete effectively in an increasingly Internet-centric marketplace,” he said. “We are aggressively reshaping Belo’s operations to pursue revenue growth while prudently managing expenses. We’re determined to remain the content provider of choice in our local markets and we have the resources, strategy and people to make this happen.”

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