Belo Q2 profit drops, but tops expectations

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DALLAS -- Media owner Belo Corp. said Friday its second-quarter profit fell 15% and sales also slipped as the company struggled with weak newspaper advertising.

The results still beat Wall Street expectations, however.

Belo gave a cautious outlook for the third quarter, similar to recent comments from other newspaper companies. It said television revenue would be slightly higher but newspaper revenue would fall compared to a year ago. Newspaper companies have been hurt by competition from online outlets for both readers and advertising.

Net income for the second quarter dropped to $36.4 million, or 35 cents per share, compared with $42.7 million, or 41 cents per share, a year earlier. The 2006 results included a $7.5 million gain from a vendor payment.

Quarterly revenue fell 3% to $390.5 million from $403.6 million in the previous year.

Analysts surveyed by Thomson Financial predicted earnings of 31 cents per share on sales of $396.5 million.

David Clark, an analyst for Deutsche Bank, said Belo beat expectations entirely because of a low effective tax rate. Belo said income taxes fell 15.3%.

The company trimmed costs 2.8% mostly due to job cuts last year at The Dallas Morning News and The Press-Enterprise in Riverside, Calif. The company also saved money by freezing its pension plan on March 31.

Television group revenue rose 2.5%, while newspaper group revenue declined 8.5% on weak newspaper advertising conditions and a slowdown in the Southern California housing market.

Belo also said Douglas Carlston, 60, chairman of Public Radio International, was elected to its board. Carlston was one of the founders and chief executive of Broderbund Software.

Dallas-based Belo owns four daily newspapers and 20 TV stations.

Shares of Belo slipped 6 cents to $18.58 in midday trading Friday. They have traded in a 52-week range of $14.93 to $22.94.
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