Dallas Newspaper Publisher Battered by Earnings, Update, Shares Rise 5%

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Toward the end of trading, shares are up 5% to $6.25

A.H. Belo Corp. (NYSE: AHC) only owns one large daily, the Dallas Morning News, unlike large chains Gannett Co. Inc. (NYSE: GCI) and Tronc Inc. (NASDAQ: TRNC), the stocks of which were recently punished for poor earnings and a busted M&A deal. Belo, nevertheless, was not immune from worry about the overall industry, and it offered disappointing earnings. Its shares are off by nearly 20% in the past month to $5.75 (the stock was down only slightly Wednesday after the Belo earnings announcement).

Belo revenue fell 3.2% in the third quarter to $64.8 million. The publisher lost $500,000 ($0.02 per share) in the period, better than a $4 million ($0.18) loss a year ago. On a non-GAAP basis, the numbers were not as good: income was $2.3 million, down 19.8% from the same period a year ago.

The Belo earnings were similar to those of other newspapers, although it owns a small operation, called DMV, that helped results. It is a “marketing solutions” company that offers direct mail, digital distribution, research and mobile services.

The math of the DMV contribution:

Revenue from advertising and marketing services, including print and digital revenues, was $38.3 million in the third quarter of 2016, a decrease of $0.9 million, or 2.2 percent, when compared to the $39.2 million reported in the third quarter of 2015. Within advertising and marketing services, total digital and marketing services revenue increased 18.7 percent to $14.0 million primarily due to organic growth associated with Speakeasy and DMV. DMV revenue increased $2.5 million, or 106.5 percent, compared to the prior year period

The other large line of revenue, circulation, dropped 3.2% to $19.6 million.

One reason A.H. Belo shares were higher earlier this year was likely a rumor that the company was a buyout candidate for Gannett. The rumor, in September, helped drive shares close to $8.

Unlike Tronc and Gannett, which trade near 52-week lows, Belo has traded closer to the middle of its range. Part of This probably is partly due to DMV, which has packed a large punch for earnings.

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