Belo Upbeat on Future Revenue

By: Jennifer Saba Robert Decherd, Belo's CEO, opened today's Q3 earnings conference call upbeat "about Belo's prospects over the next few years" -- signaling the company has seen the worst from its recent circulation problems.

Even so, The Dallas Morning News still took a beating, with a decrease in total revenue of 0.2% and a decline of 1.6% in ad revenue.

Third-quarter retail advertising was down 4.9% at the paper because of decreased department-store spending, down 27.5%. For the newspaper group overall, retail advertising was flat, with a 19% drop in department-store advertising.

Decherd told a group of analysts that the retail decline in Dallas was more market-specific. Like his counterpart at McClatchy, Decherd said that an overall retail rebound is unlikely, but, he said, "our hope is that we've seen the worst of it."

For Q4 at the Morning News, Belo anticipates a $3 million decrease in preprint revenue, reflecting lower circulation, and a $4 million decline due to the use of the credit bank, which also partially accounts for a drop-off in department-store spending. Decherd acknowledged that there would be likely rate increases but on a "very, very targeted basis" for specific categories. More will be known by December.

As of Oct. 15, 80% of the 19,000 checks, representing advertising compensation, had been cashed.

Company-wide, newspaper revenues increased 3.3% in Q3, with growth at The Providence Journal, up 3.4%, and The Press-Enterprise in Riverside, Calif., up 16.1%. Advertising revenue for the group increased 2.9%. Revenues for the newspaper group are expected to be flat in Q4.

Costs associated with circulation problems and new product initiatives increased expenses 20.6%.

Belo expects the circulation numbers for the six-month period ending September 2004 at the Journal and Press-Enterprise to be "relatively steady."

Earnings per share for the Q3 was $0.10 compared with $0.27 for the same period last year. Third-quarter EPS concern charges related to the circulation problems ($0.13 per share), the discontinuing of Belo/Time Warner cable news venture ($0.06 per share), and the elimination of 250 jobs ($0.03 per share).

In 2005, revenue at the Morning News and Journal is expected to grow in the mid-single digits while the Press-Enterprise is expected to show increase in the high-single digits.