Belo Corp. Series A Reports Operating Results (10-Q)

Author's Avatar
Oct 28, 2010
Belo Corp. Series A (BLC, Financial) filed Quarterly Report for the period ended 2010-09-30.

Belo Corp. Series A has a market cap of $625.8 million; its shares were traded at around $6.08 with a P/E ratio of 11 and P/S ratio of 1.1. BLC is in the portfolios of Mario Gabelli of GAMCO Investors, John Keeley of Keeley Fund Management, Kenneth Fisher of Fisher Asset Management, LLC, George Soros of Soros Fund Management LLC, Steven Cohen of SAC Capital Advisors.

Highlight of Business Operations:

Non-political advertising revenues increased $12,517, or 10.2 percent, in the three months ended September 30, 2010, compared to the three months ended September 30, 2009. This increase is primarily due to a $11,011, or 9.8 percent, increase in local and national spot revenue. Spot revenue increased primarily in the automotive, telecommunications, financial services, retail and travel categories. Internet advertising revenues increased $1,674, or 22.7 percent. Political advertising revenues increased $9,083 in the third quarter 2010 as compared with the third quarter 2009. Political revenues impacted stations in all Belo markets during the third quarter of 2010. Three of those markets made up a significant portion of total political revenues. Political revenues are generally higher in even-numbered years than in odd-numbered years due to elections for various state and national offices.

Non-political advertising revenues increased $43,559, or 11.9 percent, in the nine months ended September 30, 2010, compared to the nine months ended September 30, 2009. This increase is primarily due to a $40,860, or 12.1 percent, increase in local and national spot revenue. Spot revenue increased primarily in the automotive, retail, grocery, financial services, healthcare and telecommunications categories. Internet advertising revenues increased $3,290, or 15.7 percent. Political advertising revenues increased $15,346 in the nine months ended September 30, 2010, compared with the nine months ended September 30, 2009. Political revenues are generally higher in even-numbered years than in odd-numbered years due to elections for various state and national offices.

Station salaries, wages and employee benefits increased $6,271, or 13.3 percent, in the three months ended September 30, 2010, compared to the three months ended September 30, 2009. This increase is primarily due to a 2009 credit for vacation accruals of $1,436 due to the Companys decision to convert to a paid-time-off (PTO) vacation policy in the second quarter 2009, bonus accruals of $2,104 in the third quarter 2010 compared to virtually no bonus expense in 2009, and increases in pension and pension transition expenses of $1,228. Station programming and other operating costs increased $1,601, or 3.2 percent, in the three months ended September 30, 2010, compared to the three months ended September 30, 2009, primarily due to increases in outside services and national representation fees associated with higher national revenues. Corporate operating costs increased $995 in the third quarter 2010, primarily related to an increase of $1,065 in pension and pension transition expenses and an increase of $842 in bonus expense. These increases were partially offset by decreases in share-based compensation and lower technology costs related to the insourcing of technology operations in 2010.

Station salaries, wages and employee benefits increased $11,197, or 7.7 percent, in the nine months ended September 30, 2010, compared to the nine months ended September 30, 2009. This increase is primarily due to increases in bonus accruals of $5,443, a 2009 credit for vacation accruals of $4,414 due to the second quarter 2009 decision to convert to a PTO vacation policy, a 2009 credit of $2,110 for self-insured medical costs, and increases in pension and pension transition expenses of $3,711. These increases were partially offset by decreases in severance costs of $2,562, and 401(k) plan expense of $1,896. Station programming and other operating costs decreased $3,337 or 2.3 percent, primarily due to a non-cash expense reduction of $4,423, relating to a 2005 Federal Communications Commission (FCC) decision that allowed a major wireless provider to finance the replacement of analog newsgathering equipment with digital equipment in exchange for stations vacating the analog spectrum earlier than required. Six Belo markets converted to this digital equipment in the first nine months of 2010 and only two Belo markets converted in the first nine months of 2009. Corporate operating costs increased $4,311 in the nine months ended September 30, 2010, primarily related to increases in bonus expense of $3,305 and pension and pension transition expenses of $2,913. These increases were partially offset by a decrease in technology-related expenses of $2,700.

Belos current funding policy is to contribute annually to the Pension Plan amounts sufficient to meet minimum funding requirements as set forth in employee benefit and tax laws, but not in excess of the maximum tax-deductible contribution. A. H. Belo was required to reimburse the Company for 60 percent of each contribution the Company made to the Pension Plan for the three and nine months ended September 30, 2010; during such periods the Company made Pension Plan contributions of $500 and $14,287, respectively, and received reimbursements from A. H. Belo of $300 and $8,572, respectively. Pension contribution reimbursements received from A. H. Belo are classified as a credit to operating costs and expenses in the consolidated statements of operations.

Interest expense increased $4,383 and $14,174 in the three and nine months ended September 30, 2010, respectively, primarily due to increased interest costs associated with the issuance of $275,000 of 8% Senior Notes in November 2009, and the amortization of the discount and refinancing costs associated with the note offering and concurrent amendment to the credit facility. These borrowings were previously included in the Companys lower-rate revolving credit facility. Additionally, on August 12, 2010, the Company amended the Amended 2009 Credit Agreement to decrease the borrowing capacity under the agreement from $460,750 to $205,000, earlier than previously scheduled. In connection with the decrease in capacity, the Company recorded a charge to interest expense of $1,225 related to the write-off of debt issuance costs. Other income (expense), net increased $678 in the third quarter 2010 compared to the third quarter 2009, primarily due to a $1,273 loss on the sale of a non-operating asset in the third quarter 2009. Other income (expense), net decreased $12,778 in the nine months ended September 30, 2010, primarily due to a $14,905 gain related to the Companys first quarter 2009 purchase of debt securities. The debt securities were purchased on the open market at a discount. Additionally, in the first quarter 2009, the Company sold its interest in a Web site joint venture for a gain of $1,616.

Read the The complete Report