Belo (NYSE:BLC) joined its media cohorts in turning in first-quarter earnings that were lower on a year-over-year basis. The bad news is that the situation in the coming quarters probably isn't going to get any better. Nevertheless, there is some reason for hope, particularly if the firm can manage to keep its top-line performance going as it works on the expenses side.
The Dallas-based company said that revenue for the quarter rose 6.5% to $371.2 million. Unfortunately, growth in operating expenses, at 11%, outpaced revenue growth, causing net earnings to decline 27% to $17.3 million, for EPS of $0.16. The television group turned in a solid performance on a revenue and earnings basis, but, as with companies like New York Times (NYSE:NYT) and Tribune (NYSE:TRB), Belo's newspaper group struggled.
Expenses there ballooned 14% in the quarter thanks to increased spending on distribution at The Dallas Morning News and higher newsprint expenses. Still, the story at Belo's newspaper business is not totally gloomy. While first-quarter revenue at Tribune's publishing side declined 1% and New York Times' media group unit eked out a 1% increase in the top line, revenue at Belo's newspaper group rose a comparatively robust 4.8%.
If Belo can keep this growth going, it should allow the firm to shine as cost-cutting measures deepen. Belo already is reducing expenses with some concrete steps, including consolidating technology and services, and outsourcing. Unfortunately, these projects will add to expenses in the near term, so investors will have to wait several months before the results show up in the bottom line.
Belo's decent revenue growth stands out. In the near term, the stock will remain stuck in neutral as restructuring expenses weigh on earnings. But this story may be worth following if the top-line growth continues.
For related content:
It pays to read the Fool's financial newsletters. Find the service that's right for you, and then try it free for 30 days.
Fool contributor Brian Gorman is a freelance writer in Chicago. He does not own shares of any companies mentioned in this article.
