Free Annual Reports
Profiting From Political Ads (BLC)
Tickers in this Article »
BLC
As we move toward the fall elections, the frequency of political ads in newspapers and TV's will increase as many races across the country are expected to be tight. One way for the public to gain from the assault to their auditory and visual senses is to invest in media companies. One in particular that has a diverse mix of newspaper and TV exposure in various markets is Belo Corporation (BLC).
BLC operates in some of the most dynamic markets in Texas, the Northwest, the Southwest, the Mid-Atlantic and Rhode Island. BLC owns 19 television stations, six of which are in the largest U.S. broadcast markets.
BLC also owns or operates seven cable news channels. BLC's daily newspapers include the Dallas Morning News, The Providence Journal and the Denton Record-Chronicle. BLC also publishes specialty publications targeting certain age groups and the fast-growing Hispanic market.
BLC has declined from its 52 week high of $23.35 to current levels of around $16.60, a fall of approximately 29%. Weaker publishing in August and September translated into a year-over-year decline in revenue of over $3 million. Classified ads also declined around 4.4%.
The television group should experience mid-high single digit revenue growth. Political revenues remain a big variable. Through the second quarter of 2006, they have come in higher than expected. Given the tightness of many races, a positive surprise is certainly attainable as the biggest political dollars will come in the third and fourth quarters.
BLC stations hold the #1 or #2 position, sign-on to sign-off, in 14 of its 15 markets. These markets dispersed across the country are 4 ABC affiliates, 4 NBC affiliates, 5 CBS affiliates, 1 independent and 1 Fox affiliate.
A rebound in the newspaper business is expected as well. Despite some declines in circulation and classified ads, BLC sees its markets strengthening. The projected 5 year annual population growth rate, the key driver of circulation, for BLC newspaper markets is 2.1%, significantly higher than the national average of 1%.
While investors wait for the ad blitz to begin, they can be comforted by the fact that BLC has allocated capital that will be beneficial to shareholders. A dividend increase of 25% was recently completed and an ongoing share repurchase plan is in place. BLC has targeted about 100 million shares within the next 2 years to be repurchased. At the end of May, 104.4 million shares were outstanding. BLC concurrently has reduced its targeted capex from $120 million to $75 million.
Currently, on a valuation basis, BLC is trading about 14 times 2006 estimated earnings of $1.16 with a cash flow yield of about 6.9%. BLC is paying a dividend yield of 3.16%. Investors should also be mindful that there is high insider ownership in the stock and Private Capital Management (an activist manager) holds a 22-25% stake in BLC. Realization of higher shareholder value will be the focus. So at the end of the day, seeing one's stock rise may make the barrage of those inevitable political ads that much easier to tolerate.
BLC operates in some of the most dynamic markets in Texas, the Northwest, the Southwest, the Mid-Atlantic and Rhode Island. BLC owns 19 television stations, six of which are in the largest U.S. broadcast markets.
BLC also owns or operates seven cable news channels. BLC's daily newspapers include the Dallas Morning News, The Providence Journal and the Denton Record-Chronicle. BLC also publishes specialty publications targeting certain age groups and the fast-growing Hispanic market.
BLC has declined from its 52 week high of $23.35 to current levels of around $16.60, a fall of approximately 29%. Weaker publishing in August and September translated into a year-over-year decline in revenue of over $3 million. Classified ads also declined around 4.4%.
BLC stations hold the #1 or #2 position, sign-on to sign-off, in 14 of its 15 markets. These markets dispersed across the country are 4 ABC affiliates, 4 NBC affiliates, 5 CBS affiliates, 1 independent and 1 Fox affiliate.
A rebound in the newspaper business is expected as well. Despite some declines in circulation and classified ads, BLC sees its markets strengthening. The projected 5 year annual population growth rate, the key driver of circulation, for BLC newspaper markets is 2.1%, significantly higher than the national average of 1%.
While investors wait for the ad blitz to begin, they can be comforted by the fact that BLC has allocated capital that will be beneficial to shareholders. A dividend increase of 25% was recently completed and an ongoing share repurchase plan is in place. BLC has targeted about 100 million shares within the next 2 years to be repurchased. At the end of May, 104.4 million shares were outstanding. BLC concurrently has reduced its targeted capex from $120 million to $75 million.
Currently, on a valuation basis, BLC is trading about 14 times 2006 estimated earnings of $1.16 with a cash flow yield of about 6.9%. BLC is paying a dividend yield of 3.16%. Investors should also be mindful that there is high insider ownership in the stock and Private Capital Management (an activist manager) holds a 22-25% stake in BLC. Realization of higher shareholder value will be the focus. So at the end of the day, seeing one's stock rise may make the barrage of those inevitable political ads that much easier to tolerate.
Free Annual Reports
