Belo Corp Q4 2007 Earnings Call Transcript

| About: Belo Corp. (BLC)

Belo Corp (NYSE:BLC)

Q4 2007 Earnings Call

February 13, 2008 2:00 pm ET

Executives

Paul Fry - Vice President of Investor Relations and Corporate Communications

Dunia Shive - President and Chief Operating Officer

Dennis Williamson - Chief Financial Officer and Executive Vice President

Robert Decherd - Chairman, President and Chief Executive Officer

Jim Moroney - Executive Vice President of A.H. Belo

Analysts

Ed Adreno

Peter Evert

Victor Miller

Lee Westerfield

Ken Silver

Operator

Ladies and gentleman thank you for standing by. Welcome to the 2007 Fourth Quarter Conference Call. At this time, all participants are in a listen only mode. Later we will conduct a question-and-answer session. Instructions will be given at that time. (Operator Instructions). As a reminder, todays call is being recorded. I would now like to turn the conference over to Vice President Investor Relations and Corporate Communications, Paul Fry. Please go ahead sir.

Paul Fry – Vice President of Investor Relation and Corporate Communication

Thank you. Good Afternoon, welcome to Belo's fourth quarter year end conference call. We issued a press release today announcing the company's fourth quarter and year end 2007 earnings. Press releases have been posted to our website at belo.com and the new A.H. Belo corporation website ahbelo.com.

Today's call will include comments from Dunia Shive, President and Chief Executive Officer of Belo Corp, Robert W. Decherd, Chairman, President and Chief Executive Officer of A. H. Belo, and Dennis Williamson, Executive Vice President and Chief Financial Officer of Belo Corp. Also with us today is Jim Moroney, Executive Vice President of A.H. Belo.

Before Dunia make her opening remarks, let me note that our discussion will include forward-looking statements. Forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results to differ materially from those statements. Additional information about these factors are detailed in the Company's press release and public filings with the SEC, including the Annual Report on Form 10-K. Also, reconciliations of non-GAAP financial measures discussed during this conference call to the most directly comparable financial measure presented in accordance with GAAP, including the reasons we believe the non-GAAP financial measures provide useful supplemental information for investors are posted on Belo's website at Belo.com, under Investor Relations. Now, I am pleased to turn the call over to Dunia.

Dunia Shive - President and Chief Operating Officer

Thank you, Paul. First I would like to announce the spin-off of our newspaper business related assets was completed last Friday, February 08, to a tax free stock free dividend to shareholder. Belo Corp stock continues to trade on New York stock exchange under the ticker symbol BLC, while A.H. Belo began regular trading on Monday February 11th, under the ticker symbol AHC. The Belo and A.H. Belo are well positioned to compete effectively in their respective industry. We are excited about the potential of these two companies going forward and Robert will provide further context about the transactions later in the call.

Belo has got many successes in 2007. The television groups reported record revenue up a cheerleading 0.8% versus the prior year. As you know, our number of year revenue growth is rare following the typically heavy political spending of an even number of year. The newspaper group continued to make significant progress in transforming it's business to compete in the increasingly intra-centric environment, even as the newspaper industry continue to experience very tough advertising condition especially in Southern California, where Belo operates the press enterprise. The newspaper group launched several new product initiatives and implemented cost reduction measures.

The Dallas Morning News reported year-over-year EBITDA growth of 5.9 percent, partly due to such product initiatives and cost controls. Belo's consolidated online advertising revenue grew at a rapid pace once again, increasing 24% in the fourth quarter and 26% for the full year.

The television group experienced strong ratings in November 2007. Belo television station have the #1 or #2 rating position in 12 or 15 market. Rating highlights included Belo's ABC affiliate and Dallas/Fort Worth, WFAA television, speaking the new 5, 6, and 10 p.m. newscast, KING-TV, our NBC affiliate in Seattle-Tacoma, completing its 12th consecutive year as the regions news leader. KGW-TV in Portland, winning the sign-on to sign-off ratings for the 32nd consecutive rating and KVUE-TV in Austin placing number one in every major newscast Monday through Friday. Last month, the Belo television station WFAA-TV in Dallas/Forth Worth, KHOU-TV in Houston and KMOV-TV in St. Louis received 2008 Alfred I duPoint Silver Baton award. These Belo's stations retrieve only five U.S. local television stations to receive this award in 2008. Belo was also awarded four national Edward R. Murrow award in June 2007.

Revenue performance of the newspaper group reflected the challenging advertising condition faced by news paper companies throughout the country, yet there were several highlights during 2007. The Dallas Morning News continues to see strengthened (inaudible) revenues increasing 4.3% for the year on the strength of its zoned Metro edition in Neighbor that have format publication reporting on neighborhood needs. Newsprint expense decrease to 24% in 2007, benefiting partly from strategic decision from our third party circulation and reduce the distribution parameter of the Dallas Morning news.

Distribution expense was down 8% versus the prior year, due primarily to reducing the previously mentioned distribution parameter to focus on the most highly valued circulation for advertisers. Compensation and benefits with the newspaper group were down 9% for the year, due to organizational realignment in reduction and force implemented in 2006 and 2007. Belo's online businesses continue to grow important over the past year. Online ad revenue associated with Belo's website grew to 79 million in 2007, a 26% increase over the prior year. Online advertising revenue at Belo's website increased to 24% in the fourth quarter of 2007. Television Group online adverting revenue increased 41% over the prior year and represented a profit 3% of total television revenue for the l year.

Newspaper group online advertising revenue increased almost 20% over the prior year, and represents approximately 9% of newspaper advertising revenue and 7%of newspaper total revenue.

Belo's volumes continued to grow with the number of unit users increasing 22% in the fourth quarter and page views increasing 13% for the same period.

For the full year unit users increased 30% and page views increased to 19%. The time users spend on our website grew as well increasing 23% in the fourth quarter and 43% for the full year. New video content on Belos website increased significantly in 2007. Online users consumed 11.6 million video streams in the fourth quarter of 2007, a 40% increase over the fourth quarter of 2006 and 46.8 million video streams for the full year, a 56% increase over the prior year a result of website redesign that were launched a little more than a year ago.

In January 2008, Google and Yahoo announced an agreement whereby 13 of Belos television stations will be the exclusive provider of local news video to Yahoo News in their respective markets.

All Belo markets expect the Dallas (Inaudible) are included in the agreement. Yahoo will host dozens of local news video clips each day provided by Belo television stations. These clips will run within the local news pages of Yahoo News.

Belo and Yahoo will share the advertising revenue from the video clips. This agreement provides Belo with yet another way to distribute high quality content. This announcement is an expansion of existing relationship between Belo and Yahoo which began in 2005 with an agreement between Belo's newspapers and Yahoo Hotjob. That agreement helped provide momentum for the Yahoo newspaper consortium which recently celebrated its first year and now comprises over 500 newspapers.

So with the intention of Yahoo newspaper consortium relationship, the number of unique visitors to the Hotjob platform has surpassed that of Monster.com, which we believe validates the strength of the partnership that was created.

Just as important, we're seeing this increased traffic in our markets as well. Future Yahoo initiatives include graphical ad serving and premium content listings and both are planned to be installed by the end of the year.

Belo also recently launched highschoolgametime.com, a website focused on providing high school sports information in its local markets. Highschoolgametime.com combines the editorial content and resources of Belo's local sports department with user generated content such as text, video and photograph for students, athletics, parents, coaches and fans.

Since the injunction highschoolgametime.com page dues have reached 23 million, almost 17,000 users have created profiles on this site and nearly 155,000 photographs and over 2000 videos.

For the 2007-2008 full year $1.6 million of revenue has been booked on highschoolgametime.com. Hghschoolgametime.com recently received a 2008 award from the Newspaper Association of America for media innovation in the niche product category.

Summing up, we're pleased with the Television Groups 2007 performance. The significant progress made in our online and new media efforts and how Belos newspapers addressed very real industry challenges during the year.

Now I'll turn it over to Dennis to provide further details about our fourth quarter and full year results. Dennis.

Dennis Williamson - Chief Financial Officer and Executive Vice President

Thank you, Dunia. Belo reported a GAAP net loss per share in the fourth quarter of 2007 of $3.26 yielding a full year 2007 loss per share of $2.57. The fourth quarter of 2007 loss includes a non-cash impairment charge to goodwill of 365 million or $3.58 per share. Excluding the impairment charge fourth quarter net earnings and fourth quarter earnings per share were 33.1 million and $0.32 per share respectively. And full year net earnings and full year earnings per share were 103.7 million and $1.01 per share respectively. The non-cash impairment charge of 367 million related to t reductions to goodwill of 243 million at the providence journal, a 102 million at the press enterprise in Riverside California and 22 million at WHAS-TV in Louisville.

These charges were determined through Belo's annual impairment testing of goodwill and other intangible assets using the methodology prescribed by Statement of Financial Accounting Standards No. 142. The $367 million impairment is a non-cash charge to earnings and, as such, will not affect Belo's liquidity, cash flows from operating activities or debt covenants, or have any impact future operations.

Consolidated revenue was 1.52 billion for the full year 2007, down 4.6% versus full year 2006. Political revenue was 14.6 million in 2007 versus 47 million in 2006. Total operating cost and expenses, excluding the 367 million impairment charge decreased 2.4% for full year 2007, and consolidated EBITDA was down 8.9%.

For the fourth quarter, consolidated revenue was 407 million, a decrease of 6.8% versus the prior year. The fourth quarter of 2006 included 31.6 million in political revenue versus 8.4 million in the fourth quarter of 2007. Fourth quarter total operation costs and expenses excluding the impairment charge decreased 1.1% and consolidated EBITDA decreased 19%.

Television Group total revenue decreased 2.4% in the fourth quarter, but was up eight-tenth of a percent for the full year. Television spot advertising revenue decreased 5% in the fourth quarter and was down 1.1% to prior year on a full year basis. Excluding political revenue, spot advertising revenue increased 7.6% in the fourth quarter and 3.8% for the full year.

The categories showing the most strength in the fourth quarter were department stores, retail, telecom, grocery, and healthcare. Automotive, the Television Group's largest revenue category increased 1.7% in the fourth quarter of 2007 and was down 3.1% for full year 2007.

Online advertising revenue associated with our television stations website increased 43% in the fourth quarter, making this the third consecutive quarter with gains over 40%. Television Group's segment cost and expenses increased 3.7% in the fourth quarter and 3.8% for the full year. The increase is due primarily to greater outside services expense related to outsourced technology cost. Full year EBITDA declined 3.2% with an EBITDA margin of 41%.

Turning to the Newspaper Group, Total Revenue declined 11% in the fourth quarter and 10% for the full year. Newspaper advertising revenue declined 14% in the fourth quarter and 11% for the full year as the newspaper advertising environment continued to be a challenge, especially in Southern California where it is to be noted Belo operates the The Press-Enterprise in Riverside.

The fourth quarter of 2006 had one more Sunday than the fourth quarter of 2007, adjusting for the difference in Sundays, Newspaper Group advertising revenue was down 12%.

On a reported basis, retail, general, and classified revenues decreased 9%, 30%, and 23% respectively in the fourth quarter. On a full-year basis, retail, general, and classified revenues decreased 9%, 25%, and 17% respectively. Online revenue for Belo's Newspaper Group increased 15% and 20% for the fourth quarter and full year respectively.

At The Dallas Morning News, total revenue decreased 11% in the fourth quarter and 8.1% for the full year. Advertising revenue was down 14% and 10% for the fourth quarter and full year respectively. Adjusting for one less Sunday in the fourth quarter of 2007, total revenue and advertising revenue declined about 9% and 12% respectively. Online advertising revenue fur The Dallas Morning News increased 11% in the fourth quarter and 15% in the full year.

Total revenue of The Providence Journal declined 7.7% in the fourth quarter and 6.8% for the full year. Advertising revenue decreased 8.3% for the fourth quarter and 6.9% for the full year. On a Sunday-adjusted basis, total revenue and advertising revenue were both down 6% in the fourth quarter.

Classified revenue at The Journal decreased 10% in the fourth quarter and was down 11% for the full year. Internet advertising revenue at The Journal increased 31% and 36% for the fourth quarter and full year respectively.

Total revenue at The Press-Enterprise decreased 19% for the fourth quarter and 18% for the full year. Total advertising revenue decreased 20% for the fourth quarter and 19% for the full year. On a Sunday adjusted basis total revenue was down 18% and advertising revenue was down 19% in the fourth quarter.

Internet advertising revenue at The Press Enterprise was up 23% in the fourth quarter and 26% for the full year.

Newspaper Group segment cost and expenses decreased 7% in the fourth quarter and 8.5% for the full year. The decrease in expenses was driven by significantly less pension expense and lower Newsprint and distribution expense. Newsprint expense decreased 24% for the full year with a 7.1% net cost per ton decrease and 18% decrease in consumption. Newsprint expense decreased 24% in the fourth quarter with an 11% net cost per ton decrease and a 14% decrease in consumption.

EBITDA for the Newspaper Group declined 26% in the fourth quarter, and 14% for the full year. Corporate costs and expenses increased 4.5% to 32.3 million in the fourth quarter of 2007, as compared to 30.9 million in the fourth quarter of 2006. The fourth quarter included spin-off related costs of approximately 6.5 million, and share-based compensation expense of 6.4 million as compared to 3.4 million in the fourth quarter of 2006.

Full year 2007 corporate costs and expenses were 102.6 million, as compared to 100.1 million for full year 2006, an increase of 2.5%. Full year 2007 corporate costs included approximately 9.3 million in costs related to the spin-off and share based compensation expense of 13.4 million versus 10.7 million in 2006.

Turning to the Balance Sheet, our debt-to-cash flow ratio was 3.1 times at December 31. The company did not repurchase any shares in the fourth quarter, but did repurchase 827,000 shares during the year, for a total of 17.1 million. The company invested 31 million 72 million in capital expenditures for the fourth quarter and full year respectively.

Looking ahead to 2008, total television revenues are current pacing down low single digits when compared with first quarter 2007. In the first quarter of 2008, we aired the Super Bowl on our single Fox affiliate versus our five CBS affiliates in 2007.

In addition, we are experiencing a soft advertising environment in our Seattle operations. Finally, we had strong performance relative to our peers in the first quarter of last year. And as for political revenue, we don't expect meaningful political revenue until the back half of this year.

As for full year 2008 guidance, we expect total television revenues to be up in the mid-to-high single digits, depending on the strength of political in our markets and the stability of the economy. Internet revenue growth is expected to be less than the rate experienced in 2007 but is still expected to be up strong double digits. Corporate expense will be approximately 40 million excluding spin-off related costs and corporate costs attributable to AH Belo Corporation from January 1st to the spin-off date of February 8th, 2008.

Capital expenditures for 2008 will be approximately 30 million. Belo will also incur one-time tax charge and payment of 18 million in 2008 related to moving certain intangible assets from Belo Crop. to AH Belo Corporation. We expect the tax rate to be around 39% excluding the $18 million payment I just mentioned.

Belo's pro forma leverage ratio was about 4.4 times at the time of the spin-off, and we expect the leverage ratio to be below four times at year end 2008.

Now I'll turn it over to Robert to discuss the 2008 outlook for AH Belo and to provide some closing comments.

Robert Decherd - Chairman, President and Chief Executive Officer

Dennis, thank you. Good afternoon everyone. On the AH Belo side, we are only in a position to provide some general guidance on 2008 at this time, which of course depends on economic conditions during the year and related advertiser responses to consumers' spending patterns.

As I stated at Belo's investor conference on January 30th, newspaper advertising revenues will be down in 2008, but not at the levels of decline experienced in 2007. Declines in Providence and Riverside especially will be more substantial than in Dallas Fort Worth.

Operating expenses will be flat or slightly lower than 2007, as long as newsprint prices do not exceed our assumptions. At our investor conference we said those price assumptions are generally inline with the current analyst projections.

AH Belo corporate expenses for 2008 will be around $50 million and capital expenditures will be approximately $25 million. As for the spin-off, we are very excited about what this means for both companies going forward.

Belo Corp and AH Belo Corporation will continue their commitment to delivering the highest quality local news and information to our durable audiences and our wide range of advertisers. Both companies have outstanding assets and highly attractive markets with balance sheets appropriate with their businesses and the capacity to support future growth and innovation.

We are very pleased with the positive response we have received from the investment community for undertaking this spin-off and look forward to providing further details about operations and strategy as these two companies move ahead.

It has been a genuine privilege for me to lead Belo Corp as its Chairman and CEO this past 21 years, and I know Dunia and her management team will do a superb job managing Belo's Television business. I look forward to heading AH Belo Corporation and have confidence that with that talented management team we put in place, great progress can be made during 2008 and beyond.

I look forward to speaking with all of you in the spring, when AHC hosts its first quarterly earnings call. And with that Dunia, Dennis Jim and I are glad to take your questions. Operator go ahead.

Question-and-Answer Session

Operator

(Operator Instructions). And our first question will come from the line of Ed Adreno. Please go ahead.

Ed Adreno

Good morning. You never give the first call.

Company Representative

You are alone Ed.

Ed Adreno

Anyway, I have two questions. You talked about 8 categories in the fourth quarter, could you give us sort of the snapshot of the 8 categories up and down in the first quarter? And second, could you talk about the already experienced to the extent you can given the potential impact of the writers strike that in the process of ending?

Dunia Shive

Ed are you asking for television categories or news paper?

Ed Adreno

Television.

Dunia Shive

Okay, Dennis.

Dennis Williamson

Ed we are seeing a couple of categories that are up. I would tell you retail and the financial, legal services and travel are up, probably more significantly auto is facing down relative to first quarter of last year as our restaurants maybe slightly down, home remodeling, which you would expect is down and telecom is down. And otherwise we are seeing you know, roughly flat in some of our other categories.

Ed Adreno

Coming back to the writers strike?

Dunia Shive

Ed as we said before we had said that those writers strike to date have not had a significant impact, currently there was a will that they impacting the larger markets where you do well in prime with respect to rate. But obviously, it’s a positive that has been resolved. But having said that there wasn’t a significant impact to us while on recurring, I can't say there will be a significant impact going forward other than, if it has not been resolved I think it would have had an impact on all of us going forward.

Ed Adreno

There is no change from couple of weeks ago.

Dunia Shive

Right.

Ed Adreno

Okay.

Operator

We will go to the line of Peter Evert. Please go ahead sir.

Peter Evert

Thank you. Robert any color on January headlines trends and category trends in the newspaper operations?

Robert Decherd

Peter let Jim tackle that. We are going to be general as you would expect, but we just made about this yesterday in Indiana.

Jim Moroney

Peter the January start looks pretty much like the fourth quarter. There is a little bit of improvement we have seen on average basis across our newspaper and general advertising. Retail is about the same plus five and profit same. So I would say we talked about at Investor Day and so forth in the fourth quarter, it seems to be the experience for January.

Peter Evert

And then likewise, the individual markets are more or less tracking those they were?

Jim Moroney

Yeah that’s right. I wouldn’t say there is any significant change in the markets.

Peter Evert

Right.

Robert Decherd

One thing to keep in mind as you model AHC for this year, there is plenty of risk in Southern California. I mean we said that in New York and certainly what Jim reported yesterday reinforces that. It just seems to be no bottom for newspapers in that part of California.

Peter Evert

Right. Robert are you giving any thought to possibly excluding monthly ad liners reports now that you're a pure play newspaper company?

Robert Decherd

Peter we're not. There is just so much volatility in the adverting markets. Generally that, we're certainly going do in the quarterly basis and we're thinking about what are information we're going to provide on a quarterly basis.

What I can tell you is we're committed to coming up with a set of metrics that are meaningful for our investors and the analyst who call the stock. But the monthly roller coaster, I can't get there

Peter Evert

Okay. And just two other items. Dennis, how many write downs, so all of the amortization expenses that goes away was non items that you weren't running through the income so it was non-amortizable expense correct?

Dunia Shive

Right, the goodwill is non-amortizable

Dennis Williamson

That’s right. Since I think 2002.

Peter Evert

Got it. Okay, and then do have what the Super Bowl revenues in '07 were?

Dunia Shive

Peter, I think they were about $2.5 million (multiple speakers) I don't have with me but I think that’s close.

Peter Evert

Okay. And then this you're giving me the one station it would be just the de-minimus number.

Dunia Shive

Yes

Dennis Williamson

And it was in Tucson.

Peter Evert

Great. Thank you

Operator

And we do have a question from the line of Victor Miller. Please go ahead.

Victor Miller

Good afternoon. I think on January 30th you had suggested that the first quarter pace of the television was flatish. Now looking down low single digit. Maybe you could talk about any changes you've seen over the last two weeks.

Secondly for the political, there's a sense that the political dollars may not have come in as forcefully as some people thought may be in first quarter. Maybe you could comment on what you saw there and whether Texas seems to be heating up given the importance of that especially on the democratic side of coming in the couple weeks.

And lastly, on free cash flow we had yet a 100 to 110 million of cash flow this year obviously as the stock settles in here. It still seems to be at a multiple below almost I think all the comps. Are you focussing just on debt reduction or do you consider at least putting a share repurchase in place whether you execute it or not. Would you consider that, thanks?

Dunia Shive

Okay. I'll go in reverse order. On the free cash flow we are primarily focussed on paying down debt for the short and intermediate term as we said in New York. I believe we have a share repurchase plan in place. But having, I don't want you to believe that repurchasing share in the short term. But right now the focus is if we continue to pay down debt.

With respect to Texas we haven't seen political or presidential dollars in Texas in the last year election cycles. So we're happy with any dollars we’re getting in Texas. And we are getting some. We're in the $400 to 500,000 range at this point. Trying to predict where that will go between here and March 4th I think is very difficult. But we're optimistic that we're seeing dollars in Texas on the democratic side and we'll see a few. But the problem is I can't really put a circle around what that number will be.

With respect to political for us generally we have said all long that most of our political comes in the back half of the year. So for a first quarter political for us it's not a big number anyway. We had not anticipated it would be a big number. So I really can't speculate as to whether it was less than we would have though otherwise.

Again we still believe that most of our political will fall in the back half of the year. On the change in the pacing we did say we expect that, we said total revenue was pacing about flat at that time. It has changed to low single digit. A lot of that has to do with what we are seeing in the Seattle marketplace and our Seattle operations. We had a little bit of softness here in Dallas but that I think was more specific to February than January and not necessarily for March. But I would attribute most of that to changes I've seen in the North West but more particularly in the Seattle marketplace

Victor Miller

And is that driven Dunia by the marketplace or some changes in the competitive landscape of your station there?

Dunia Shive

Well we are a NBC affiliate there. So we struggle a little bit with that. The market itself, we expect that market to be down. I think it’s a combination of a couple of factors. But I think those are two of the larger factors.

Victor Miller

Thank you.

Robert Decherd

Victor, just to pick up on the theme about the trading multiples. You're going hear a lot about that from the AHC side. And I think like wise the BLC side. We did the math at the close yesterday. You get 16, 17 for the combined companies and lots of headroom for each company in terms of coming up to the average or mean multiple for the respective comparative groups.

We think that's a big opportunity because these assets deserve that average or mean at least. And that’s what I think, both of us are going to be very focused on accomplishing. The key is to separated out the assets, so that we can after that target.

Victor Miller

Thank you.

Operator

And next we will go to the line of Lee Westerfield. Your line is open.

Lee Westefield

Sorry and thank you very much. Some almost critical questions on the financial in the television business going forward, if you have them available the year end, Belo TV pro forma asset, total asset would be, beside the balance sheet secondly Belo TV with the option count is, if there is a Belo TV option count available at this point, couple of quickies here, but run rate D&A for the Belo TV side. Hopefully educated guess that is about 45 million, but if you can talk through that for 2008 or if you prefer for 2007 again, excluding the newspaper business. Finally, if you could have little bit more specifically about the tax treatment in the first quarter of 80 million, one time expense, what the nature of that is again and excluding that we are looking at 39% tax is correct.

Robert Decherd

That's correct Lee.

Lee Westefield

Okay.

Robert Decherd

Let me take it backwards a little bit. The tax treatments really came from moving the masthead of the Dallas Morning News and intangible out of Belo Corp over to A.H. Belo Corporation, there was a deferred intercomany gain that Belo Corp will have to recognize of about $51 million tax effective balance about an $18 million tax expense so it was triggered by moving that intangible out of Belo Corp. For the D&A, it is about $45 million, we are looking at 08, I don't have the option count with me, but I think it is safe to say, all of the options are right now currently underwater. I don't know what that total count is.

Dunia Shive

I wouldn't say all, but I think most of it but I don't have the count with me either in terms of what the option could would be?

Dennis Williamson

I don't have the balance sheet with me. I don't have the total assets, what the number is.

Dunia Shive

Lee, if you had the 07 10-K, which I don't have in front of me. There was a segment asset back there, the only big change we had besides just normal capital expenditures and the depreciation and amortization was the $22 million write-down of the Louisville goodwill. Other than that, I would think that the assets would be fairly consistent with the television segment group. There were some corporate assets that will come on line as well.

Lee Westefield

I appreciate your help on the other number. Thank you.

Operator

Next we will go to the line of Ken Silver. Your line is open Sir

Ken Silver

Hi. Good Afternoon. Did your newspaper revenues declined during the fourth quarter? Was December worse than November and October?

Dennis Williamson

No December was actually an improvement over November and October.

Ken Silver

Have you quantified that or can you?

Dennis Williamson

No we have not.

Ken Silver

Okay. And then from listen into your conference two weeks ago and I thought I heard you say that the online team in senior management was staying or going with the newspaper company. Is that right?

Robert Decherd

Yes. Three parts of our corporate organization that have traveled with AHC. One is business development which is a very small team, BIM, which is our internet organization that manages websites for and on behalf of the operating companies and Belo technologies which is in charge of the technology platform for both companies presently and will continue to support BLC during the transition if not longer.

Ken Silver

Okay. So it is the television, BLC have plans to sort of go in different direction in terms of online or hire online sales people and management or you are just going to sort of work with A.H. Belo

Dunia Shive

With respect to sales, the television company has its own line of sales within each of our local operating companies, so the sales is not impacted. It's really more of binary technology services, running website etc. we are buying services in a transition period from AH Belo and longer term we'll determine whether we continue with that structure or go outside for those services.

Ken Silver

Okay. All right, thank you.

Robert Decherd

Ken, it's worth noting that about two years ago, we reintegrated all of the content and sales teams into our operating companies from Belo Interactive. So the function of Belo Interactive is very focused. Dunia has sales and content and marketing people in each of our television stations. We've some more personnel in each of our newspapers.

Dunia Shive

And the only sales that will happen on the AHC side which will not change in way of both the boards for national sale. But all the locals happen within the operating company.

Ken Silver

Okay, great. Thanks.

Robert Decherd

Yeah.

Operator

(Operator Instructions). And we will go to the line of (inaudible). Please go ahead, sir.

Analyst

Thank you. Just a follow-up from an earlier question and maybe this is a little picky but you mentioned the near-term focus on debt reduction. Can you give us a little more flavor on that? Does that mean, let's say when you get four times leverage is that sort of a comfortable leverage target for you or can you give us maybe a longer term leverage target that you are thinking about?

Dunia Shive

Honestly, we don't have a leverage target. We've gone from being an investment-grade company to a non-investment-grade company. Certainly below four times, we are more comfortable in how we operate our business and we think that it gives us the flexibility to do the things that we need to do either from an investment point of view should opportunities arrive. So, while I don't have a specific target, we would certainly want to get below four times before we would think about other use of the VAT free cash.

Analyst

Okay. Thank you.

Dunia Shive

You bet.

Operator

There are no additional questions at this time.

Robert Decherd

All right. Well, operator, we are of one mind here that we accomplished something very important for our shareholders and now for our two companies and speaking for Dunia and myself, we look forward to talking with all of you in separate conference calls when the first quarter is concluded and with that we are signing off. Thank you everyone.

Dunia Shive

Thank you everyone.

Operator

Thank you ladies and gentlemen. This conference will be available starting today at 3 o'clock through February 20th at midnight. You may access the replay system at any time, by dialing 800-475-6701 and entering the access code 906002. International participants may dial 320-365-3844. This does conclude our conference for today, thank you for your participation and for using AT&T Executive Teleconference Service. You may now disconnect.

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