News Release


February 10, 2005

Belo reports results for the fourth quarter and full-year 2004

Dallas, TX -- Belo Corp. (NYSE: BLC) today reported net earnings per share for the fourth quarter and full-year 2004 of $0.46 and $1.13, respectively, compared with $0.36 and $1.11, respectively, for the fourth quarter and full-year 2003. Fourth quarter 2004 earnings include a pre-tax severance charge of $2.1 million, most of which is related to the reorganization of Texas Cable News ("TXCN") and the integration of Belo's Web sites into their legacy operating units. The charge equates to $1.3 million on an after-tax basis or $0.01 per share.

Full-year 2004 results include special items totaling $0.21 per share. The special items include a favorable settlement of a property tax matter in Providence of $0.01 per share; a charge related to the circulation overstatement at The Dallas Morning News of $0.12 per share; a charge related to discontinuing the Belo/Time Warner cable news joint ventures of $0.06 per share; and, third and fourth quarter severance charges totaling $0.04 per share. Reported earnings for the fourth quarter and full-year 2003 included a gain of $0.01 per share on the sale of Belo's radio station in San Antonio, KENS-AM.

Full-year 2004 results also include a reclassification of the approximately $20 million of cash payments made under The Dallas Morning News' voluntary advertiser plan from a charge to other operating costs and expenses to a reduction of revenue. In the third quarter of 2004, when the advertiser plan was approved and its amounts estimatable, the Company recorded this item as an expense. The reclassification from our prior presentation (including the prior presentation in our Form 10-Q for the quarter ended September 30, 2004) has no effect on reported earnings per share for the year ended December 31, 2004 or for either the third or fourth quarter of that year.

Had Belo expensed stock options under the current accounting standard in the fourth quarter, pro forma net earnings per share would have been $0.45 compared to the $0.46 reported today. Pro forma net earnings per share in the fourth quarter of 2003 would have been $0.34 compared to reported net earnings per share of $0.36 for the same period. The pro forma effect of expensing stock options would have been $0.07 per share for the full-year 2004 and $0.09 per share for full-year 2003. The Company plans to begin expensing stock options in accordance with the new accounting rules in the third quarter of 2005.

2004 in Review
Robert W. Decherd, Belo's chairman, president, and chief executive officer, said, "Belo experienced strong financial performance in 2004 overall. The Company experienced substantial growth in revenue, EBITDA and net earnings, before special items. Fifteen of Belo's 25 operating companies achieved record revenue levels in 2004 and five others came very close to achieving the same.

"In the Television Group, political revenue far exceeded our initial expectations, totaling $52.8 million for the year, and we had solid Olympics revenue of almost $10 million at our NBC affiliates. In the Newspaper Group, The Press-Enterprise in Riverside grew advertising revenue at a remarkable, industry-leading rate of 16.5 percent. The Newspaper Group's new products, principally Quick and al dia at The Dallas Morning News and the d at The Press-Enterprise, had an impressive first full year of operations, growing revenues and improving their quarterly impact on segment EBITDA significantly in each successive quarter. Belo Interactive increased revenue by 26.3 percent in 2004 versus the prior year and reached its stated goal of segment EBITDA breakeven, before a severance charge related to the integration of Belo's Web sites into our operating companies. Building on these enterprise-wide successes, we are positioning Belo for long-term financial growth and success."

Consolidated
Belo's consolidated revenue was $413 million for the fourth quarter of 2004 and $1.5 billion for the full year, increases of 6.4 percent and 5.2 percent, respectively, as compared to the fourth quarter and full-year 2003. Full-year 2004 revenue includes the $20 million reduction in revenue associated with The Dallas Morning News' advertiser plan previously noted, which equates to 1.4 percentage points. Operating costs and expenses increased 2.9 percent in the fourth quarter, including the severance charge, with newsprint expense up only 0.3 percent and programming expense down 3.6 percent. Full-year operating costs and expenses increased 5.5 percent, with 0.8 percentage points, or $9.4 million, of the increase attributable to the special items discussed above.

Television Group
Television Group revenue increased 13.5 percent in the fourth quarter with a 14.6 percent increase in spot revenues. Political revenues were $28.4 million in the fourth quarter of 2004, representing about 14.5 percent of Belo's Television Group revenue. Excluding political, local revenues increased 0.9 percent while national revenues decreased 1.7 percent. For full-year 2004, Television Group revenues increased 9.2 percent with an increase of almost 10 percent in spot revenue. Full-year political revenues were $52.8 million. Excluding political revenues, local revenues were up 4.8 percent for full-year 2004 while national revenues were down 0.6 percent.

Segment EBITDA for the Television Group increased 24.6 percent in the fourth quarter. The Television Group's operating costs and expenses increased 3.7 percent versus the fourth quarter of last year while earnings from operations increased 29.7 percent. For full-year 2004, the Television Group's segment EBITDA increased 15.7 percent with a 4.0 percent increase in operating costs and expenses and a 19.0 percent increase in earnings from operations.

Newspaper Group
The Newspaper Group's financial results in the fourth quarter reflect the impact of the circulation overstatement at The Dallas Morning News. From October through December 2004, advertisers used approximately $6.9 million in advertising credits available to them through The Morning News' advertiser plan, bringing the full-year impact to $8 million. While these advertising credits negatively impacted revenue growth in the fourth quarter of 2004, projected revenue growth in the fourth quarter of 2005 should be favorably impacted by a like amount. Also, preprint revenues at The Dallas Morning News were lower in the fourth quarter due to lower circulation levels.

Newspaper Group total revenue decreased 0.4 percent in the fourth quarter of 2004, with a decrease of 4.7 percent at The Dallas Morning News, an increase of 1.3 percent at The Providence Journal and an increase of 13.3 percent at The Press-Enterprise in Riverside. Advertising revenues for the Newspaper Group decreased 1.7 percent compared with the fourth quarter of 2003. If Belo's print and online publishing revenues were combined for the fourth quarter, Belo's Newspaper Group total revenue would have increased 0.4 percent versus the fourth quarter of 2003, with a 0.7 percent decrease in advertising revenues. For the full-year and on a reported basis, Newspaper Group total revenues increased almost one percent with a 3.0 percent increase in advertising revenue. Including online revenues, Newspaper Group total revenues and advertising revenues increased 1.5 percent and 3.7 percent, respectively, for the full year. The $20 million in cash payments related to The Dallas Morning News' advertiser plan, which were charged against revenue, affected total revenue by 2.6 percentage points.

Newspaper Group operating costs and expenses increased only 2.0 percent in the fourth quarter, with flat newsprint expense. A ten percent increase in the net cost per ton of newsprint was offset by a similar decrease in consumption due mostly to lower circulation at The Dallas Morning News. Segment EBITDA for the Newspaper Group decreased 8.3 percent in the fourth quarter and earnings from operations decreased 9.1 percent. For full-year 2004, operating costs and expenses at the Newspaper Group increased 5.6 percent. Segment EBITDA for the Newspaper Group decreased 15 percent for full-year 2004, with earnings from operations down 18.4 percent.

Interactive Media
Belo Interactive generated revenue of $9.3 million during the fourth quarter of 2004, compared to $7.1 million in the fourth quarter of 2003, an increase of 31.3 percent. BI's segment EBITDA improved to $437,000 in the fourth quarter of 2004 from a segment EBITDA deficit of $670,000 in the fourth quarter of 2003, despite a $1.0 million severance charge related to the integration of Belo's Web sites into their legacy companies. BI reached its goal of segment EBITDA breakeven for full-year 2004 before the previously noted severance charge. BI's loss from operations was $625,000 in the fourth quarter compared with a loss of $1.7 million in the fourth quarter of 2003.

Other
Revenues in Belo's Other segment, consisting primarily of NorthWest Cable News and Texas Cable News, increased 7.1 percent in the fourth quarter of 2004 to $5.0 million. Operating costs and expenses increased 1.5 percent in the fourth quarter. The loss from operations was $734,000 in the fourth quarter of 2004 compared with a loss of $982,000 in the fourth quarter of last year. For the full year, operating costs and expenses increased 1.4 percent and the loss from operations was $2.4 million.

Corporate
Corporate's operating costs and expenses in the fourth quarter were 0.6 percent higher than the prior year.

Non-GAAP Financial Measures
A reconciliation of EBITDA to net earnings, and reconciliations of other non-GAAP financial measures noted in this release to the most directly comparable financial measure presented in accordance with GAAP, are set forth in exhibits to this release.

First Quarter 2005 Outlook
Decherd said, "We are beginning 2005 with a clear focus on our strategic priorities after last year's comprehensive review of the Company's operations. Along with putting additional support behind the highest-potential media properties in our Television and Newspaper Groups, we are refining how we manage our Interactive sites and cable operations to increase their value for customers and improve their financial returns. Providing superior, trustworthy news and advertising outlets remains our highest priority in every market we serve."

As a result of strategic decisions made last year, Belo's statement of earnings will look somewhat different in 2005, including the following changes:

  • Belo Interactive will no longer be reported as a separate entity, so the Interactive Media segment will be eliminated. Revenues will be included in the operating unit associated with each respective Web site. A large percentage of Belo Interactive's expenses will be similarly allocated to the Web sites, while just less than an estimated $11 million in expense will be held at Corporate in 2005, related primarily to product development and the management of the common technology platform of our Web sites.
  • The re-tooled programming approach at TXCN will result in lower revenues and lower expenses in 2005, with its expected impact on segment EBITDA improving from a loss of $1.6 million in 2004 to a slightly positive contribution in 2005.
  • Discontinuing the news channel joint ventures with Time Warner will eliminate approximately $10 million in annual losses in Other Income/Expense. These funds will be re-allocated to cash marketing and promotion at our key operating units to drive even greater financial results, resulting in a $10 million increment to Belo's operating expenses.
  • The recommendations of the Circulation Review Team at The Dallas Morning News will affect the P&L in several ways in 2005, with the projected net effect being an increase in revenue of approximately $5-8 million and an increase in operating expenses of approximately $7-8 million. As The Morning News transitions through the recommended changes, there will be impact on expense before revenue benefits are realized. When the total effect of all the Circulation Review Team's recommendations are fully realized in 2006, the result will be an expected annual increase in Newspaper Group segment EBITDA of about $5 million.

Regarding Belo's outlook for the first quarter of 2005, Decherd said, "In January 2005, Television Group spot revenues increased about three percent versus the prior year. The Television Group's spot revenues are pacing down in the low-single digits in February, due primarily to less Super Bowl revenue than the prior year. In February 2004, Belo's five CBS affiliates, including our CBS affiliate in the Super Bowl host city of Houston, generated about $3.0 million more Super Bowl-related revenue than Belo's one FOX affiliate in February 2005. For the first quarter overall, we currently expect Television Group spot revenue to be flat to down slightly. In addition, we expect the revenues associated with the Television Group's Web sites to increase from $1.8 million in the first quarter of 2004 to approximately $2.4 million in the first quarter of 2005.

"Newspaper Group revenues in the first quarter of 2005 will continue to reflect the impact of the circulation matter at The Dallas Morning News. We expect preprint revenue at The Dallas Morning News to be about $2 million lower due to lower circulation levels. We currently estimate that approximately $6 million in advertising credits will be used in the first quarter. Like 2004, most of these credits will displace advertising that otherwise would be recorded as revenue by The Morning News and, similar to the fourth quarter of 2005, revenue growth in the first quarter of 2006 should then be favorably impacted by a like amount.

"Overall Newspaper Group advertising revenues increased about three percent in January 2005, which had one more Sunday than January 2004. We currently expect advertising revenues to decrease in the low-double digits in February, which has one less Sunday than February 2004. For the first quarter overall, Newspaper Group advertising revenue should be down in the low-to-mid single digits with a high-single to low-double digit decrease at The Dallas Morning News, a low-to-mid single digit increase at The Providence Journal and a low-to-mid double digit increase at The Press-Enterprise. In addition, we expect the revenues associated with the Newspaper Group's Web sites to increase from $4.5 million in the first quarter of 2004 to approximately $5.8 million in the first quarter of 2005.

"The majority of the advertiser credits at The Dallas Morning News expire at the end of February; therefore, we do not expect advertiser credits to significantly impact the remaining quarters of 2005. Preprint revenues will continue to be approximately $2 million lower in each quarter of 2005.

"Currently, we expect first quarter operating costs and expenses for the Company as a whole to increase about two to three percent. The previously announced commitment to advertising and promotion, along with increased newsprint expense, are expected to account for approximately half of the first quarter cost variance."

Belo's total depreciation and amortization expense is expected to be slightly lower than the first quarter of last year. Interest expense should be similar to the first quarter of last year. The effective tax rate for the first quarter should be about 38 percent.

Belo will update expectations for revenues, operating costs and expenses and net earnings per share for both the first quarter and full-year 2005 at the Bear Stearns Conference on Monday, February 28. The Company will also continue to provide information on operating trends in its monthly statistical reports.

About Belo
Belo Corp. is one of the nation's largest media companies with a diversified group of market-leading television, newspaper, cable and interactive media assets. A Fortune 1000 company with approximately 7,600 employees and $1.5 billion in annual revenues, Belo operates media franchises in some of America's most dynamic markets and regions, including Texas, the Northwest, the Southwest, Rhode Island, and the Mid-Atlantic. Belo owns 19 television stations (six in the top 15 markets); owns or operates seven cable news channels; and manages one television station through a local marketing agreement. Belo's daily newspapers are The Dallas Morning News, The Providence Journal, The Press-Enterprise (Riverside, CA) and the Denton Record-Chronicle (Denton, TX). Belo operates more than 30 Web sites, several interactive alliances and a broad range of Internet-based products. Additional information, including earnings releases and corporate communications, is available online at www.belo.com. For more information contact Carey Hendrickson, vice president/Investor Relations & Corporate Communications, at 214-977-6626.

Statements in this communication concerning Belo's business outlook or future economic performance, anticipated profitability, revenues, expenses, capital expenditures, investments, future financings or other financial and non-financial items that are not historical facts, are "forward-looking statements" as the term is defined under applicable federal securities laws. Forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results to differ materially from those statements.

Such risks, uncertainties and other factors include, but are not limited to, changes in advertising demand, interest rates and newsprint prices; The Dallas Morning News circulation matters, including current and future audits of the newspaper's circulation by the Audit Bureau of Circulations; technological changes, including the transition to digital television and the development of new systems to distribute television and other audio-visual content; development of Internet commerce; industry cycles; changes in pricing or other actions by competitors and suppliers; regulatory changes; adoption of new accounting standards or changes in existing accounting standards by the Financial Accounting Standards Board or other accounting standard-setting bodies or authorities; the effects of Company acquisitions and dispositions; general economic conditions; and significant armed conflict, as well as other risks detailed in the Company's filings with the Securities and Exchange Commission, including the Annual Report on Form 10-K.

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