Belo earnings crash 24% with sharp decline in political ad revenue

Michelle Clancy ©RapidTVNews | 08-02-2012

US local TV station owner Belo reported a 24% plummet in Q411, earnings, a direct result of less political advertising for its local stations--even as the Republican primary race cranked up.

Belo owns and operates 20 television stations and saw a whopping 83% drop in political advertising revenue year over year for the quarter, while total traditional spot advertising revenue declined 15%.
Despite the gloomy news, analysts at J.P. Morgan said that local TV affiliates like Belo will see political ads come back as a money-maker as the election cycle reaches its peak over the summer and fall. Belo, because of its presence in Texas, expects political advertising in the Lone Star State to be a particularly positive source of income. Also, J.P. Morgan expects auto advertising to increase in coming months, helping to shore up an on-going weakness in affiliate ad revenue across the segment.
Belo did see double-digit growth in combined retransmission fee income and Internet revenue. Barter and trade advertising also improved in the quarter. And thanks to Oprah retiring and some cost control measures, corporate operating costs declined 6%. Overall, Belo's share price is up about 27% for the year.
Belo is still profitable, only a quarter less so. It reported a profit of $30.4 million, or 29 cents a share, down from $39.9 million, or 38 cents a share, YOY. That's because revenue decreased 13% to $180.3 million, while operating margin fell to 33.9% from 38.4%.
For the current quarter, the company's forecast calls for revenue growth of 3% to 5%.