Belo Is Latest to Report Sliding 1Q Earnings

By: E&P Staff The bad news on newspaper earnings performance continued Thursday as Belo Corp. reported its first-quarter net income and revenue fell on a double-digit slump in newspaper revenues.

Belo said first-quarter net income slid to $15.5 million, or 15 cents a share, from $17.3 million, or 16 cents a share, in the same period of 2006.

Total revenue slipped 4.8% to $354 million, while newspaper group revenue plummeted 11%. Belo said that the newspaper revenue decline was approximately 9.3% if the extra Sunday in the first quarter of 2006 is excluded from reporting.

Belo, publisher of The Dallas Morning News, blamed the newspaper group revenue performance on soft newspaper advertising, a slump in Southern California's housing market, and tough comparables with 2006 when newspaper advertising revenues increased 2.7% in the first quarter.

Belo said its ad revenues were weakest in January, and improved each month. March ad revenues, it said, were down 6% on the 2006 first quarter.

Print ads revenues declined in every category except part-run, which was up 3.7%. Internet advertising was up 18% to $12.3 million.

Belo said it continued to wring costs out of its newspapers, with expenses decreasing 11% in the quarter. Newsprint cost was down on lower prices and lower consumption. Belo said some consumption declined stemmed from its decisions to reduce third party paid circulation at all its papers, and to reduce state circulation of the flagship Morning News.

While newspaper group EBITDA (earnings before interest, taxes, deductions, and amortization) was down 11%, Morning News EBITDA gained on the quarter, Belo said.

CFO Dennis A. Williamson said the company expects, based on early indications, that newspaper group revenues will fall again in the second quarter of the year, "but we expect the rate of decline to be less than in the first quarter."

Belo sees cost-cutting bringing 2Q newspaper expense decreases in the low single digits. "We expect newsprint expense to continue to show favorable comparisons to the prior year, but the rate of variance should lessen as we will have cycled through the reductions in third-party and state circulation implemented on April 1, 2006," Williamson said.


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