Belo Outlines Its Financial Future

The new Belo Corp. expects to ward off any revenue loss from the end of network compensation by a rise in retransmission consent dollars, the company's soon-to-be leader said Wednesday.

Dunia Shive, who will become president-CEO of the local broadcast company when it divests its newspaper assets early next month, said the approximately $15 million a year the company will lose via expiring network compensation agreements will be replaced with retrans growth.

"What we will achieve in retransmission, over time, will offset at least what we're losing in network compensation," she told investors as Belo held a meeting to discuss the strategies for its to-be separated companies.

For years, networks paid local stations to carry them, but those payments are being phased out. Belo's agreements with ABC are set to end in 2009, and with CBS by 2011. But at the same time, station groups have been able to command payments from MSOs for the rights to carry their channels. In 2007, Belo--which runs 20 stations in 15 markets, including seven of the top-25--took in $23 million.



One wild card, however, is if networks--mindful of the retrans dollars stations are commanding--make a move to garner a portion of it.

Shive agrees that's "obviously is a risk," but said by building a strong local brand that helps drive a network's ratings, Belo can "minimize" its exposure to any move for such hefty reverse compensation.

"What I can't do is tell you whether or not that means you'll pay a good amount, no amount or some amount in between," she told the investor gathering.

Belo has long-term retrans deals in place with satellite operators DirecTV and Dish Network and cable provider Cox. It is also in negotiations with Comcast. Its deal with Time Warner (Comcast and Time Warner cover about 40% of the households it reaches) expires in 2010.

Right now, both network compensation (about 2%) and retrans (some 3%) are small portions of Belo's revenue pie, dominated by the 89% that comes from spot sales. After Belo divests what will become the separate, publicly traded A.H. Belo Corp. (with the Dallas Morning News and two other papers as principal assets), the company will have annual revenues of about $775 million.

The new Belo is billed as "one of the nation's largest pure-play, publicly traded television companies." The split was conceived as a way to separate the slower-growth newspaper operations.

In 2007, the company's TV business saw revenues increase .8%, even as political ad dollars declined $32.4 from the 2006 federal election year.

Shive also said the new Belo may acquire stations that give it duopolies in select markets, although debt repayment will be an initial priority over acquisitions. (The company currently has duopolies in six, including Seattle and Phoenix.)

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