Robert W. Decherd, Belo’s chairman, president and chief executive officer
said, As the market is well aware, economic conditions in the first quarter
were difficult. The soft advertising environment that accompanied the slowing
U.S. economy compounded the challenge Belo already faced in the first quarter
with higher newsprint costs, significantly lower political and .com
advertising dollars, investment in Belo Interactive and one less Sunday in the
2001 period. Given these factors, we are pleased with the performance of our
Television Group, cable news operations and Belo Interactive. Our newspaper
group, which is dominated by the results of The Dallas Morning News, was hurt
by the significant downturn in classified employment advertising felt by
newspapers across the country, the effect of which was greatest at large
metropolitan newspapers with significant technical employment categories like
The Morning News.
Broadcast spot revenues decreased 3.6 percent in the first quarter, while
total broadcast revenues were down 3.8 percent. Local revenues were up almost
9 percent while national advertising was down over 14 percent. Excluding
political revenue in both years, spot revenues were down 1.0 percent. Cash
expenses for the Television Group were about 1 percent less than last year due
to continued stringent cost controls. Broadcast cash flow decreased
8.7 percent for the quarter.
Our television stations maintained their strong competitive positions.
Based on February Nielsen ratings, Belo’s major-market stations in Dallas/Fort
Worth, Houston, Seattle/Tacoma and Phoenix were all ranked first in their
markets.
In the Publishing Division, total revenues decreased 7.4 percent in the
first quarter, with advertising revenues down 8.6 percent. The first quarter
of 2000 included one more Sunday than the first quarter of 2001. Adjusting
for the extra Sunday in 2000, advertising revenue was down 5.3 percent.
Excluding newsprint, publishing cash expenses were flat compared to the first
quarter of 2000. Again, tight cost controls were implemented early this year
due to prevailing economic and advertising conditions. Including an
8.9 percent increase in newsprint expense, Publishing Division cash expenses
were up 1.9 percent. As a result, operating cash flow for the Publishing
Division was down 30.4 percent in the first quarter.
Belo Interactive’s Web sites generated $2.9 million in revenue during the
first quarter, compared to $2.1 million in the first quarter of 2000. The net
investment in Belo Interactive’s operations in the first quarter was
$4.5 million compared with $3.2 million in the first quarter of 2000. Belo
Interactive recorded approximately 73 million page views per month in the
first quarter of 2001. This is up from the fourth quarter’s 68 million page
views and more than double the 36 million page views in the first quarter of
2000. The number of unique visitors per month in the first quarter was
4.4 million, an increase of almost 30 percent over the 3.4 million unique
visitors in the first quarter of last year.
As for the second quarter, visibility remains difficult. In April, we
believe the Television Group’s spot revenues will be down 7 to 8 percent. We
expect revenue trends in May and June to be similar to April. In the
Publishing Division, total revenues are expected to be down in the mid-to-high
single digits in April, with continued weakness in classified employment.
In response to continuing uncertain economic conditions, we will maintain
very tight cost controls in the second quarter. Through attrition, holding
vacancies and hiring freezes except for a limited number of critical
positions, we are aggressively addressing employment costs. We expect to hold
all other cash expenses, excluding newsprint, near flat in the second quarter.
In addition, we have reduced our capital budget for full year 2001 by
15 percent. However, because economic and, therefore, advertising trends are
not improving, we will not meet the current analysts consensus estimate of
$0.22 in the second quarter. We will provide guidance with respect to revenue
and earnings per share when we get deeper into the second quarter.
Decherd added, In this challenging advertising environment, Belo’s
combination of top-rated television stations, newspapers, cable news channels
and interactive media gives us the resources to compete successfully with
anyone. And, as we have stated previously, we believe this is the kind of
environment where Belo can build share and come out stronger than most
companies on the back-end.
