Belo Hopes to Build on Pockets of Strength

Revenue Rises

Belo said it would have earned 32 cents a share in the second quarter had it expensed options, compared with 33 cents a share a year earlier. Earnings before interest, depreciation, amortization and taxes fell 6.8% to $64.3 million during the quarter.

Revenue climbed to $369.5 million from last year's $366.3 million, Belo said. The television group's total sales increased 0.5% to $171.9 million, and spot sales advanced 0.3%.

Belo said the quarter's revenue lacked the political spending last year's quarter had, with total revenue in that area of $1.5 million, down from the prior year's $5.1 million.

Newspaper group advertising sales inched up 0.5%, and total sales rose 0.6% to $187 million. Retail revenue declined 2.2%, and classified revenue fell 5.9%. A general newspaper revenue increase of 9.2% and a 7.7% rise in other advertising sales, however, more than offset the declines. The company said its Web sites generated $6 million in sales in the quarter, up from $4.8 last year.

Prudential's Barlow said that there are a few things that might hamper Belo's revenue in 2003. "Classified help wanted at The Dallas Morning News continues to weigh on results, and from the company's prior remarks, there is no way for us to predict an upswing in employment in that market," he wrote in his research note. Prudential doesn't do any banking for Belo.

Barlow is also concerned that automotive and real-estate classified advertising will "begin to roll over facing difficult comparisons to 2002 before a meaningful uptrend in help-wanted materializes." Additionally, local retail revenue, which had been strong, seems to be getting weaker, especially at department stores, the analyst said.

Dividend Boost

Belo said total operating costs and expenses in the third quarter will probably rise 3%, assuming newsprint prices don't increase. Benefit costs also are expected to climb.

In a separate announcement Friday, the company said June newspaper group revenue fell 0.7% to $64.4 million and television group revenue decreased 2.8% to $54.2 million. Sales at The Dallas Morning News fell 2.5% in June, with classified revenue down 5.8%. Help-wanted volumes declined 23%.

Additionally, Belo said it will increase its quarterly dividend by 26.7% to 9.5 cents a share from the old rate of 7.5 cents. The next dividend will be paid Sept. 5 to shareholders of record on Aug. 15.

Shares of Belo were gaining 18 cents, or 0.8%, to $22.12. Belo's stock is currently up 2.9% for the year to date.

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