Political ads push up Belo profits

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DALLAS -- Media owner Belo Corp. said Thursday that fourth-quarter earnings jumped 29% on strong sales of political advertising on its television stations during last fall's election season, helping overcome weak results at its newspapers.

Belo, which publishes The Dallas Morning News and owns 19 television stations, said TV revenue will grow slightly but newspaper revenue will decline in the first three months of 2007 from a year ago.

In the fourth quarter, Belo's net income rose to $51.3 million, or 50 cents per share. That included a net gain of 2 cents per share from one-time credits and charges.

Analysts had expected profit of 43 cents per share, according to a survey by Thomson Financial. The results also beat year-ago earnings of $39.9 million, or 36 cents per share.

Revenue grew to $436.6 million from $411.9 million, beating Wall Street's forecast of $434.5 million.

Shares of Dallas-based Belo rose 5 cents to close at $18.77 in trading on the New York Stock Exchange.

Belo's stock has been rising for several months after a two-year slide that cut its value nearly in half. The company's newspapers, like others around the country, have struggled with competition from the Internet for advertising dollars, and the Dallas paper is also trying to recover from overstating its circulation.

The company also boosted the value of its shares during 2006 by spending $144 million to buy back 7.6 million shares at an average price of $19.13 -- above their current level.

Fourth-quarter sales at Belo's TV stations jumped 17% thanks to $32 million in political ads. A year earlier, when there were few elections, political advertising brought in just $3.3 million.

Belo's newspaper group, including four dailies, reported a 3% drop in revenue as demand for advertising weakened. Advertising revenue fell 4.1% in December despite an extra Sunday, when papers are usually larger and carry more ads.

The company has responded by cutting costs, including employee buyouts last year in Dallas and The Press-Enterprise in Riverside, Calif. Newsprint expenses fell 18% in the fourth quarter, partly because Dallas cut sales outside its home turf.

Revenue at Belo's Web sites grew rapidly, although they are still a small portion of the company's sales.

"It was a pretty good quarter, with a lot of help from broadcasting and cost reductions," said Edward Atorino, an analyst with The Benchmark Co. He said salary and interest expenses were lower than he had expected.

Atorino said the cautious first-quarter outlook was in line with other media companies, as newspapers are seeing weak post-holiday advertising from retailers and a decline in real estate help-wanted classified ads.

Chairman and CEO Robert W. Decherd said investors value TV companies differently than newspaper businesses, and that the Belo board has discussed splitting the company but sees obstacles to a breakup.

Decherd suggested that the newspaper side would be too small to stand on its own and that breaking up would cost the company its grandfathered newspaper-TV cross ownership in Dallas.

For the full year, Belo earned $130.5 million, or $1.26 per share, compared with $127.7 million, or $1.12 per share, in 2005. Revenue rose to $1.59 billion from $1.53 billion.

Belo announced last fall that it would provide less specific financial guidance beginning in 2007. While it gave some outlook for TV and newspaper revenue in the first quarter, the company didn't forecast earnings.

Belo is also considering halting its monthly sales reports.
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