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Belo unveils financial strategy options

Updated:
NEW YORK - Belo Corp. outlined a financial strategy Monday that considers several possibilities, including buying back some stock, getting rid of some assets and investing in new properties.

Chairman, president and chief executive officer Robert W. Decherd told media analysts and investors that those options are not all definite or scheduled.

Mr. Decherd said he expected that a recommendation on a stock repurchase would be presented to Belo's board of directors within three to six months.

Dallas-based Belo's holdings include The Dallas Morning News and seven other daily newspapers; WFAA-TV (Channel 8) and 17 other television stations; and Texas Cable News (Channel 38) and four other cable news channels; and various interactive properties.

A principal desire is to strengthen Belo's major geographical markets, Mr. Decherd said. Those are Texas, the Northwest and Arizona, which are home to most of Belo's television stations and some other media properties, including The News.

Clusters of media properties can provide economies of scale, cross-promotional opportunities and other values.

"Clustering is the way to go," said Merrill Lynch analyst Keith Fawcett, who attended the meeting.

Mr. Decherd said Belo can grow with a tight, methodical approach to cultivating its assets, instead of taking the traditional path of major acquisitions followed by many media companies.

He did not specify what media assets might be sold, swapped or otherwise used to strengthen Belo's operations.

"It would be shortsighted to dispose of any operating asset that has the potential to grow at an above-average rate in cash flow or that delivers significant audience to Belo's overall television scale,'' Mr. Decherd said. "We will actively assess these choices going forward."

Belo remains committed to Texas, the Northwest and Arizona, Mr. Decherd said.

He also said the company was not interested in disposing of its newspapers on the East and West coasts - The Providence Journal in Rhode Island or The Press-Enterprise of Riverside, Calif. - which have shown strong financial growth.

There are "a few" assets that "may have higher impact on shareholder value if exchanged for assets that enhance the company's existing geographical clusters, or if sold outright for cash," Mr. Decherd said.

Belo also has "a few passive investments" that could be liquidated, Mr. Decherd said. Among those, he said, is the company's minority stake in the Dallas Mavericks and the basketball team's new arena.

Last summer, the company announced it would pay $24 million in cash for 12.4 percent of the team and a 6.2 percent nonvoting interest in the arena, which is under construction.

Belo's media operations will produce more than $600 million in free cash flow over the next four years, Mr. Decherd said. That amount gives the company "powerful choices in improving Belo's stock price."

Belo shares closed Monday at $16.25, down 31 cents.

Repurchasing Belo shares would be among the best uses of that free cash flow, Mr. Decherd said.

"At current trading prices, Belo stock is far and away the most compelling investment alternative available," he said. The company "can repurchase significant numbers of shares without significantly increasing debt or our debt-to-cash flow ratio."

Another appropriate direction of free cash flow would be to Belo Interactive Inc. and to related Internet opportunities, he said.

Extending Belo's core businesses would be a third opportunity, Mr. Decherd said, as long as they are "smart investments" that have "attendant growth and return characteristics."
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