Fueled by political, Olympics advertising, Belo sees 16% revenue increase

Michelle Clancy | 30-10-2012

The Presidential election and the Olympics continue to be a windfall for media companies. Local TV affiliate owner Belo Corp. has reported total revenue of $176 million for the third quarter of 2012, a 16% ($24 million) year-over-year increase in revenue, buoyed by political and Olympics-related advertising.

Political revenue in the third quarter of 2012 totaled $17.7 million, a $15.6 million increase compared to the third quarter of 2011, and $13.4 million in Olympics revenue. Total spot revenue, including political, was up 18% in the third quarter of 2012 compared to the third quarter of 2011. Excluding political, revenue was up 4.6% for local ads and 5.8% for national.

Other revenue, which is comprised primarily of Internet advertising, retransmission revenue, and barter and trade advertising, was up 9% in the third quarter of 2012 compared to the third quarter of 2011 due primarily to double-digit percentage increases in both Internet and retransmission revenue. Other revenue in the third quarter of 2011 included network compensation.

Meanwhile, station EBITDA grew almost 50% compared to the third quarter of 2011.

Combined station and corporate operating costs were up 3% in the third quarter of 2012 compared to the third quarter of 2011. Corporate operating costs of $7.5 million in the third quarter of 2012 were $2.4 million higher than the third quarter of 2011 due primarily to higher share-based compensation as a result of the company's higher share price, higher accrued performance-based bonus expense, and investments in new content and digital business initiatives.

So, net earnings per share in the third quarter of 2012 came in at $0.24 compared to net earnings per share of $0.13 in the third quarter of 2011, which included a credit of $0.02 per share related to the satisfactory resolution of a tax matter.

The company also announced that its Board of Directors declared a special cash dividend of $0.25 per share for each outstanding share of Series A common stock and Series B common stock to be paid on 21 December 21 to shareholders of record on 30 November 30, funded by available cash. It also will provide for early redemption of May 2013 notes.

"Our strong cash generation has allowed for a special dividend and for the early redemption of our May 2013 notes in a net present value cash-positive transaction," said Dunia Shive, Belo's president and CEO. "Our solid financial position gives us the flexibility to pursue acquisitions and investments and consider further opportunities to increase shareholder returns."

As of 30 September, the company had $166 million in cash and temporary cash investments and had nothing drawn on its $200 million revolving credit facility, which does not expire until August 2016.

Shive added that "the November 30th redemption of the 6.75 percent Senior Notes due May 2013 will result in an after-tax charge of approximately $2.5 million in the fourth quarter of 2012, with after-tax savings in interest expense of approximately $3.1 million in the first five months of 2013. We currently expect our cash balance at November 30 to exceed the amount necessary to redeem the notes on that date."

Looking to the fourth quarter, political revenue should finish in the range of $29 million to $30 million, which would result in $58 million to $59 million of political revenue for the full year. "While crowd-out during the political period in October and the first week of November will impact our core spot revenue overall in the fourth quarter, core spot revenue is currently pacing up post the political period," said Shive.

Total spot revenue, including political, in the fourth quarter of 2012 is expected to finish up in the range of 11% to 13% compared to the fourth quarter of 2011, the company said.

"Combined station and corporate operating costs are currently expected to be up about 7% in the fourth quarter of 2012 versus the fourth quarter of 2011 due to higher national representation fees associated with higher political revenue, higher accrued performance-based bonus expense and continued investments in new business initiatives," said Shive. "The company will also cycle against a credit associated with a property tax settlement and certain other one-time credits recorded in the fourth quarter of 2011 totaling $2.4 million. Combined station and corporate operating costs for the full year are expected to be up about 2% versus the prior year."