Belo Projects Revenue Hit, Due to Circ Shortfall, Will Linger

By: (AP) Belo Corp. said Wednesday that fourth-quarter and 2005 revenue at its flagship newspaper, The Dallas Morning News, would be hurt by lower circulation and credits given to advertisers as a compensation for overstating circulation figures.

The Dallas-based company, however, didn't update its fourth-quarter profit estimate. In December, it forecast fourth-quarter earnings of 43 cents to 44 cents a share.

Belo on Wednesday said political revenue at its television unit "far exceeded" initial expectations, totaling $52.5 million for 2004. Olympics revenue at the company's NBC affiliates contributed nearly $10 million in revenue for the year.

Belo disclosed in August that daily circulation for the Morning News had been overstated by 1.5 percent and Sunday circulation by 5 percent. The media company paid advertisers $23 million in the third quarter to compensate for the mistake as rates are usually based on circulation.

Belo said from September to December, Dallas Morning News advertisers used about $8 million in credits allotted to them. The company estimates that roughly 80 percent of these credits offset what would otherwise have been recorded as revenue in the fourth quarter.

Belo expects the advertisers to use an additional $5 million to $7 million in the first quarter, as the "credit bank" for most advertisers expires by the end of the period.

Belo, which has conducted an internal review of circulation practices at the Morning News, said lower circulation in 2005 is expected take a $7 million to $9 million bite out of annual revenue.

As a whole, the company predicts 2005 revenue to decline slightly at its television group and improve in the low single digit percentages at its newspaper unit. Operating costs are expected to increase 4 percent to 5 percent in 2005, including a $10 million increase in marketing and promotion expenses.

Belo plans to report fourth-quarter results on Feb. 10.

Belo's shares fell 13 cents to close at $24.75 on the New York Stock Exchange.

Belo's other papers include The Providence Journal, and The Press-Enterprise of Riverside, Calif.