UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Form 10-Q

OR

Commission File No. 1-8598

Belo Corp.

Registrant’s telephone number, including area code: (214) 977-6606

Former name, former address and former fiscal year, if changed since last report.
None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

* Consisting of 98,892,511 shares of Series A Common Stock and 16,070,068 shares of Series B Common Stock.

BELO CORP.
FORM 10-Q
TABLE OF CONTENTS

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PART I.

Item 1. Financial Statements

CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
Belo Corp. and Subsidiaries

See accompanying Notes to Consolidated Condensed Financial Statements.

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CONSOLIDATED CONDENSED BALANCE SHEETS
Belo Corp. and Subsidiaries

See accompanying Notes to Consolidated Condensed Financial Statements.

2

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
Belo Corp. and Subsidiaries

See accompanying Notes to Consolidated Condensed Financial Statements.

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NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
Belo Corp. and Subsidiaries
in thousands, except per share amounts (unaudited)

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Net operating revenues and segment EBITDA by industry segment, along with a reconciliation of total segment EBITDA to net earnings, for the three and nine months ended September 30, 2004 and 2003 are shown below.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Dollars in thousands, except per share amounts

The following information should be read in conjunction with the Company’s Consolidated Condensed Financial Statements and related notes filed as part of this report.

Overview

Belo Corp. (“Belo” or the “Company”) is one of the nation’s largest media companies with a diversified group of market-leading television broadcasting, newspaper publishing, cable news and interactive media operations. A Fortune 1000 company, Belo owns 19 television stations reaching 13.8 percent of U.S. television households and manages one television station through a local marketing agreement (“LMA”); publishes four daily newspapers; owns two regional cable news channels reaching over 3.5 million households; and has more than 30 Web sites, including some of the most popular local and regional news sites in the U.S.

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The Company operates its business in four segments: the Television Group, the Newspaper Group, Interactive Media and Other. The following table sets forth the Company’s major media assets by segment as of September 30, 2004:

Television Group

Newspaper Group

Interactive Media

Other

The Company depends on advertising as its principal source of revenues, including the sale of air time on its television stations and advertising space in published issues of its newspapers and on the Company’s Web sites. As a result, the Company’s operations are sensitive to changes in the economy, particularly in the Dallas/Fort Worth metropolitan area, where its two largest properties are located. The Company also derives revenues, to a much lesser extent, from the sale

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of daily newspapers, from compensation paid by networks to its television stations for broadcasting network programming, from subscription and data retrieval fees and from amounts charged to customers for commercial printing.

Total net revenues in the three and nine months ended September 30, 2004 were higher than in the same periods of 2003 as a result of revenue increases in all of the Company’s segments related to improvements in the demand for advertising. In 2004, the demand for advertising has been favorably affected by the improving U.S. economy and, in the Television Group, by the volume of advertising time purchased by campaigns for elective offices and for political issues. The demand for political advertising is generally higher in even-numbered years, when congressional and presidential elections occur, than in odd-numbered years. Additionally, total net revenues in the third quarter and first nine months of 2004 included approximately $9,700 of advertising revenues generated by the Company’s NBC affiliates from their broadcast of the Summer Olympics.

Total operating costs and expenses for the third quarter and first nine months of 2004 include $24,000 for advertiser payments and other expenses related to the circulation overstatement at DMN and $5,818 for severance costs and other expenses related to Company-wide staff reductions. See “Other Matters” below for further discussion of the circulation overstatement. In addition to these charges, total operating costs and expenses increased in the third quarter and first nine months of 2004 when compared to the prior year periods due primarily to increases in salaries expense primarily due to annual merit increases and an increase in the number of employees prior to the Company-wide staff reductions in 2004; newsprint expense due to newsprint price increases throughout 2003 and the first nine months of 2004; and medical insurance expenses due to an increase in the number of employees and higher insurance rates. Total operating costs and expenses also were higher in the third quarter and first nine months of 2004 due to incremental costs associated with new products launched by the Newspaper Group in the second half of 2003 (principally Quick and al dia at DMN in Dallas and the d at PE in Riverside).

The Company intends for the discussion of its financial condition and results of operations that follows to provide information that will assist in understanding the Company’s financial statements, the changes in certain key items in those statements from period to period and the primary factors that accounted for those changes, as well as how certain accounting principles, policies and estimates affect the Company’s financial statements. The discussion of results of operations at the consolidated level is followed by a more detailed discussion of results of operations by segment.

Results of Operations

Consolidated Results of Operations

Three Months Ended September 30, 2004 and 2003

Total net operating revenue increased $18,439, or 5.2 percent, from $356,268 in the third quarter of 2003 to $374,707 in the third quarter of 2004, due to revenue increases of $10,625 in the Television Group, $6,132 in the Newspaper Group, $1,561 in Interactive Media and $121 in Other.

Salaries, wages and employee benefits expense increased $12,375, or 9.6 percent, in the third quarter of 2004 as compared to the prior year period, primarily due to increases of $5,176 in other direct compensation, $4,180 in salaries expense and $1,354 in medical insurance expense. Other direct compensation increased due to severance costs for Company-wide staff reductions, while an increase in salaries expense is primarily due to annual merit increases and an increase in the number of employees before staff reductions. Medical insurance expense increased primarily due to an increase in the number of employees and higher insurance rates.

Other production, distribution and operating costs increased $28,451, or 30.2 percent, in the third quarter of 2004 as compared to the third quarter of 2003, primarily due to the $24,000 charge related to the circulation overstatement at DMN and a $2,314 increase in distribution expense. See “Other Matters” below for further discussion of the circulation overstatement. Distribution expense increased primarily due to costs associated with new products launched in the second half of 2003.

Newsprint, ink and other supplies increased $1,429, or 4.4 percent, in the third quarter of 2004 as compared to the prior year period. The average cost per metric ton of newsprint increased 9.9 percent in the third quarter of 2004 when compared to the third quarter of 2003. Newsprint consumption decreased 4.1 percent between the third quarter periods.

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Depreciation expense decreased $1,471, or 6.5 percent, in the third quarter of 2004 as compared to the third quarter of 2003.

Amortization expense remained constant at $2,119 for the third quarter periods of 2003 and 2004.

Interest expense for the third quarter of 2004 was $22,552, or 2.9 percent lower than the third quarter of 2003 expense of $23,225, due to lower average debt levels.

Other income (expense), net for the third quarter increased from expense of $2,074 in 2003 to expense of $11,812 in 2004 primarily due to a charge of $11,528 related to the discontinuation of the Company’s joint ventures with Time Warner Cable (“Time Warner”) that operated local cable news channels in Charlotte, North Carolina and Houston and San Antonio, Texas.

The effective tax rate for the third quarter of 2004 was 41.2 percent compared with 38.3 percent for the third quarter of 2003. The effective tax rate in the third quarter of 2004 was higher, primarily due to lower earnings before taxes in the third quarter of 2004 resulting from charges taken for the circulation overstatement at DMN, the discontinuation of the Time Warner joint ventures and the reduction in workforce.

As a result of the factors discussed above, net earnings for the third quarter of 2004 were $11,171 (10 cents per share) compared to $31,111 (27 cents per share) for the third quarter of 2003.

The Company defines EBITDA as net earnings before interest expense, income taxes, depreciation and amortization. EBITDA is not a measure of financial performance under accounting principles generally accepted in the United States (“GAAP”). Accordingly, it should not be considered in isolation or as a substitute for net earnings, operating income, cash flow provided by operating activities or other income or cash flow data prepared in accordance with GAAP. EBITDA is a common alternative measure of performance used by investors, financial analysts and rating agencies to evaluate financial performance. Because EBITDA is not a measurement determined in accordance with GAAP and is thus susceptible to varying calculations, EBITDA as presented may not be comparable to other similarly titled measures of other companies. The following table presents a reconciliation of EBITDA to net earnings for the third quarters of 2004 and 2003:

EBITDA decreased $33,554 in the third quarter of 2004 compared to the third quarter of 2003, primarily due to decreases in segment EBITDA of $25,747 in the Newspaper Group and $5,638 in Corporate; and an increase in expense in other income (expense), net, of $9,738; partially offset by increases in segment EBITDA of $6,298 in the Television Group, $1,177 in Interactive Media and $94 in Other.

Nine Months Ended September 30, 2004 and 2003

Total net operating revenue increased $68,978, or 6.6 percent, from $1,048,163 for the nine months ended September 30, 2003 to $1,117,141 for the nine months ended September 30, 2004, due to revenue increases of $36,537 in the Television Group, $27,493 in the Newspaper Group, $4,248 in Interactive Media and $700 in Other.

Salaries, wages and employee benefits expense increased $34,805, or 9.1 percent, for the nine months ended September 30, 2004 as compared to the prior year period, primarily due to increases of $13,178 in salaries expense, $6,287 in accruals for performance-based bonuses, $5,621 in other direct compensation, $4,009 in medical insurance expense and $1,896 in sales commissions expense. Salaries expense increased primarily due to an increase in the number of employees before staff reductions and annual merit increases. Performance-based bonuses and sales commissions

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expense increased due to higher revenue and improved operating performance excluding one-time charges. Other direct compensation increased due to severance costs for Company-wide staff reductions. Medical insurance expense increased primarily due to an increase in the number of employees and higher insurance rates.

Other production, distribution and operating costs increased $32,681, or 11.8 percent, in the nine months ended September 30, 2004 as compared to the same period of 2003, primarily due to a $24,000 charge related to the circulation overstatement at DMN and a $4,960 increase in distribution expense. See “Other Matters” below for further discussion of the circulation overstatement. The increase in distribution expense is due mostly to costs associated with new products launched in the second half of 2003.

Newsprint, ink and other supplies increased $6,767, or 7.1 percent, in the nine months ended September 30, 2004 as compared to the nine months ended September 30, 2003. The average cost per metric ton of newsprint increased 10.1 percent in the first nine months of 2004 when compared to the prior year period. Newsprint consumption was 1.4 percent lower in the first nine months of 2004 as compared to the same period of 2003.

Depreciation expense decreased $863, from $68,518 in the first nine months of 2003 to $67,655 in the first nine months ended September 30, 2004.

Amortization expense increased from $6,325 for the nine months ended September 30, 2003 to $6,357 in the nine months ended September 30, 2004.

Interest expense for the first nine months of 2004 was $67,764, or 4 percent lower than the first nine months of 2003 expense of $70,608, due to lower average debt levels.

Other income (expense), net increased from expense of $7,004 in the first nine months of 2003 to expense of $16,630 in the first nine months of 2004 due primarily to an $11,528 charge from the discontinuation of the joint ventures between Belo and Time Warner that operated the local cable news channels in Charlotte, North Carolina and Houston and San Antonio, Texas.

The effective tax rate for the nine months ended September 30, 2004 was 38.7 percent compared with 38.6 percent for the nine months ended September 30, 2003.

As a result of the factors discussed above, net earnings for the nine months ended September 30, 2004 were $79,002 (67 cents per share) compared to $86,094 (75 cents per share) for the nine months ended September 30, 2003.

The Company defines EBITDA as net earnings before interest expense, income taxes, depreciation and amortization. EBITDA is not a measure of financial performance under GAAP. Accordingly, it should not be considered in isolation or as a substitute for net earnings, operating income, cash flow provided by operating activities or other income or cash flow data prepared in accordance with GAAP. EBITDA is a common alternative measure of performance used by investors, financial analysts and rating agencies to evaluate financial performance. Because EBITDA is not a measurement determined in accordance with GAAP and is thus susceptible to varying calculations, EBITDA as presented may not be comparable to other similarly titled measures of other companies. The following table presents a reconciliation of EBITDA to net earnings for the nine-month periods ended September 30, 2004 and 2003:

EBITDA decreased $14,901 in the first nine months of 2004 compared to the same period of 2003, primarily due to decreases in segment EBITDA of $24,237 in the Newspaper Group and $8,963 in Corporate; and an increase in expense in other income (expense), net of $9,626; partially offset by increases of $23,631 in the Television Group, $3,675 in Interactive Media and $619 in Other.

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Segment Results of Operations

Three Months Ended September 30, 2004 and 2003

Television Group

Television Group revenues for the third quarter of 2004 were $171,326, an increase of $10,625, or 6.6 percent, from revenues of $160,701 in the third quarter of 2003. Total spot revenues including political advertising revenues increased 6.8 percent for the third quarter of 2004 as compared to the prior year period. Total spot revenues excluding political advertising increased 0.9 percent when compared to the prior year period, with the most significant increases reported in the insurance, healthcare and financial services categories, partially offset by decreases in the department stores and food products categories. Local spot revenues increased 3.4 percent in the third quarter of 2004 as compared to the prior year period. Local spot revenue increases in the Seattle/Tacoma, Charlotte and Portland markets were partially offset by a decrease in the Phoenix market. National spot revenues decreased 3.6 percent in the third quarter of 2004 when compared to the third quarter of 2003, primarily due to decreases in the Houston and Dallas/Fort Worth markets. Political advertising revenues increased $8,835, from $3,636 in the third quarter of 2003 to $12,471 in the third quarter of 2004, primarily due to Presidential and election issues spending in the Seattle/Tacoma, St. Louis and Portland markets. Television Group revenues for the third quarter of 2004 included approximately $9,700 of advertising revenues generated by the Company’s NBC affiliates from their broadcast of the Summer Olympics.

Television Group operating costs and expenses were 3.6 percent higher in the third quarter of 2004 than in the third quarter of 2003, primarily due to increases in salaries expense, accruals for performance-based bonuses, medical insurance and outside services expenses.

Television Group earnings from operations increased 12.3 percent in the third quarter of 2004 compared to the prior year period. Segment EBITDA for the Television Group increased 9.5 percent, from $66,626 in the third quarter of

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2003 to $72,924 in the third quarter of 2004, primarily due to the $10,625 increase in revenues, partially offset by the $3,742 increase in operating costs and expenses discussed above.

Newspaper Group

Newspaper Group total revenues increased 3.3 percent and advertising revenues increased 3 percent in the third quarter of 2004 compared to the same period of 2003. Classified revenues increased 7.3 percent and retail and general revenues decreased 3.2 percent and 2.4 percent, respectively, in the third quarter of 2004 as compared to the prior year period. All other advertising revenues were 5.4 percent higher in the third quarter of 2004 compared to the year earlier period, primarily due to increased revenues from preprints and Total Market Coverage (“TMC”). Total Newspaper Group revenues in the third quarter of 2004 included approximately $2,945 of revenues from new products launched in the second half of 2003 compared with $42 of revenues from new products in the third quarter of 2003.

At DMN, total revenues were flat for the third quarter of 2004 as compared to the third quarter of 2003. Retail, general and classified advertising revenues declined 4.9 percent, 4 percent and 3.1 percent, respectively, in the third quarter of 2004 as compared to the prior year period. The decline in retail advertising is primarily due to lower rates and higher volumes in automotive and furniture categories. The decrease in general advertising is primarily due to lower rates and higher volume in the automotive category. Classified advertising revenues declined primarily due to lower volumes and lower rates in the automotive category, partially offset by higher rates in the employment category. These decreases were offset by increases in other revenue (primarily revenue from commercial printing), preprints and TMC revenue, other advertising revenue and circulation revenue.

Total revenues at PJ increased 3.4 percent for the third quarter of 2004 when compared to the prior year period, primarily due to increases in classified and general advertising revenues.

Total revenues at PE increased 16.1 percent for the third quarter of 2004 when compared to the prior year period, primarily due to increases in classified advertising revenues.

Newspaper Group operating costs and expenses increased 20.6 percent in the third quarter of 2004 when compared to the same period of 2003, primarily due to a charge of $21,023 for voluntary advertiser compensation and other expenses related to the circulation overstatement at DMN and a charge of $3,167 in severance, payroll taxes and benefits expenses related to the Company-wide staff reductions. Operating costs and expenses in the third quarter of 2004 included approximately $4,344 in expenses associated with the new products introduced by the Newspaper Group in 2003, while the third quarter of 2003 included approximately $758 of such expenses.

Newspaper Group earnings from operations decreased 71.9 percent in the third quarter of 2004 compared to the prior year period. Segment EBITDA for the Newspaper Group decreased 55.6 percent, from $46,175 in the third quarter of 2003 to $20,428 in the third quarter of 2004, primarily due to the $30,817 increase in operating costs and expenses, partially offset by the $6,132 increase in total revenues discussed above.

Interactive Media and Other Segments

Interactive Media revenues, which are derived primarily from advertising, increased 24.7 percent, from $6,313 in the third quarter of 2003 to $7,874 in the third quarter of 2004. Interactive Media operating costs and expenses increased 6.9 percent for the third quarter 2004 compared to the prior year period, while the loss from operations for Interactive Media improved from $1,941 in the third quarter of 2003 to $947 in the third quarter of 2004. The Interactive Media segment EBITDA improved from a loss of $1,133 in the third quarter of 2003 to earnings of $44 in the third quarter of 2004.

Other revenues consist primarily of Belo’s regional cable news operations, NWCN and TXCN. Revenues from Belo’s regional cable news operations are derived from a combination of advertising and subscriber-based fees. Other revenues increased 2.4 percent, from $5,133 in the third quarter of 2003 to $5,254 in the third quarter of 2004, while operating costs and expenses were flat in the third quarter of 2004 when compared to the prior year period. The loss from operations for the Other segment improved 26.9 percent for the third quarter periods, from $432 in 2003 to $316 in 2004. Segment EBITDA for the Other segment improved from $220 in the third quarter of 2003 to $314 in the third quarter of 2004.

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Nine Months Ended September 30, 2004 and 2003

Television Group

Television Group revenues for the nine months ended September 30, 2004 increased $36,537, or 7.7 percent, from $474,144 in 2003 to $510,681 in 2004. Total spot revenues including political advertising increased 8.1 percent for the first nine months of 2004 as compared to the prior year period. Total spot revenues excluding political advertising increased 3.9 percent for the nine months ended September 30, 2004 when compared to the prior year period. Excluding political advertising, the largest spot revenue increases for the nine-month period comparisons were reported in the automotive, insurance, financial services, telecom and home improvement categories. Local spot revenues increased 6.2 percent for the nine-month period ended September 30, 2004, as compared to the prior year periods, primarily due to increases in the Seattle/Tacoma, Houston, Norfolk and Austin markets. National spot revenues were flat for the nine-month period of 2004 compared to the prior year period. Political advertising revenues increased $18,936, from $5,514 in the nine months ended September 30, 2003 to $24,450 in the nine months ended September 30, 2004, with the largest increases reported in the St. Louis, Seattle/Tacoma and Portland markets. Television Group revenues for the first nine months of 2004 included approximately $9,700 of advertising revenues generated by the Company’s NBC affiliates from their broadcast of the Summer Olympics.

Television Group operating costs and expenses increased 4.1 percent in the first nine months of 2004 compared to the same period of 2003, primarily due to increases in salaries, accruals for performance-based bonuses, outside services and medical insurance expense.

Television Group earnings from operations increased 14.7 percent for the first nine months of 2004 compared to the year earlier period. Segment EBITDA for the Television Group increased $23,631, or 12.3 percent, for the nine-month period ended September 30, 2004 as compared to the prior year period, primarily due to the $36,537 increase in revenues, partially offset by the $12,926 increase in operating costs and expenses discussed above.

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Newspaper Group

Newspaper Group total revenues and total advertising revenues increased 5.1 percent and 4.8 percent, respectively, in the nine-month period of 2004 when compared to the same period of 2003. General, classified and retail advertising revenues increased 8.1 percent, 5.6 percent and 1.6 percent, respectively, in the nine-month period of 2004 as compared to the prior year period. All other advertising revenues increased 5.9 percent in the nine-month period, primarily due to increases in revenues from preprints and TMC. Total Newspaper Group revenues in the first nine months of 2004 included approximately $7,454 of revenues from new products launched in the second half of 2003 compared with $42 of revenues from new products in the first nine months of 2003.

DMN reported an increase in total revenue of 2.6 percent for the first nine months of 2004 compared to the prior year period. General advertising revenues increased 7.2 percent in the nine-month period of 2004 compared to the year earlier period, primarily due to higher volumes in the automotive and financial categories and higher rates in the automotive category. Other advertising revenues increased 4.4 percent while retail advertising revenues were flat in the nine-month period of 2004 as compared to prior year period. Classified advertising revenues declined 2.9 percent in the first nine months of 2004 as compared to the year earlier period, primarily due to decreases in classified automotive and real estate volumes, partially offset by increases in real estate and employment rates.

At PJ, total revenues increased 5 percent for first nine months of 2004 when compared to the year earlier period, primarily due to increases in classified advertising, preprints and TMC and general advertising revenues.

Total revenues at PE increased 14.2 percent for the nine-month period ended September 30, 2004 when compared to the prior year period, primarily due to increases in classified advertising and preprints and TMC revenues.

Newspaper Group operating costs and expenses increased 11.3 percent in the first nine months of 2004 when compared to the same period of 2003, primarily due to a charge of $21,023 for voluntary advertiser compensation and other expenses related to the circulation overstatement at DMN and increases in salaries, newsprint and distribution expenses, partially offset by a decrease in tax expense. Tax expense decreased primarily due to a $2,450 favorable property tax settlement between PJ and the city of Providence, Rhode Island. Operating costs and expenses in the first nine months of 2004 included approximately $13,559 in expenses associated with the new products introduced by the Newspaper Group in the second half of 2003, while the first nine months of 2003 included approximately $1,175 of such expenses.

Newspaper Group earnings from operations decreased 22.4 percent for the nine-month period in 2004 compared to the prior year period. Segment EBITDA for the Newspaper Group decreased 17.8 percent, from $136,161 in the nine months ended September 30, 2003 to $111,924 in the nine months ended September 30, 2004, primarily due to the $50,024 increase in operating costs and expenses, partially offset by the $27,493 increase in total revenues discussed above.

Interactive Media and Other Segments

For the first nine months of 2004, Interactive Media revenues increased 24.3 percent over the prior year period, from $17,482 in 2003 to $21,730 in 2004. Interactive Media operating costs and expenses increased 3.8 percent for the nine-month period ended September 30, 2004 compared to the prior year period. The Interactive Media loss from operations improved from $7,416 in the first nine months of 2003 to $4,124 in first nine months of 2004. The Interactive Media segment EBITDA loss improved from $4,871 in the first nine months of 2003 to $1,196 in the first nine months of 2004.

Other revenues consist primarily of Belo’s regional cable news operations, NWCN and TXCN. Revenues from Belo’s regional cable news operations are derived from a combination of advertising and subscriber-based fees. For the nine-month period, Other revenues increased 5 percent, from $14,095 in 2003 to $14,795 in 2004 with revenue increases reported at both NWCN and TXCN. Operating costs and expenses increased 1.3 percent in the first nine months of 2004 when compared to the year earlier period. Loss from operations for the Other segment improved from $2,107 in the first nine months of 2003 to $1,621 in first nine months of 2004. Segment EBITDA for the Other segment improved from a loss of $202 in the nine-month period ended September 30, 2003 to earnings of $417 in the same period of 2004.

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Liquidity and Capital Resources

Net cash provided by operations, bank borrowings and term debt are the Company’s primary sources of liquidity. In the first nine months of 2004, net cash provided by operations was $181,485 compared with $180,559 for the same period in 2003. During the first nine months of 2004, the Company used net cash provided by operations and proceeds from stock option exercises to purchase treasury shares, fund capital expenditures and dividend payments and pay down debt. Total debt decreased $ 76,225 from December 31, 2003 to September 30, 2004.

At September 30, 2004, Belo had $1,100,000 in fixed-rate debt securities as follows: $300,000 of 7-1/8 percent Senior Notes due 2007; $350,000 of 8 percent Senior Notes due 2008; $200,000 of 7-3/4 percent Senior Debentures due 2027; and $250,000 of 7-1/4 percent Senior Debentures due 2027. The weighted average effective interest rate for the fixed-rate debt instruments is 7.5 percent. The Company also has $150,000 of additional debt securities available for future issuance under a shelf registration statement filed in April 1997. On February 2, 2004, the Company retired $6,400 of Industrial Revenue Bonds due 2020 using borrowings under its revolving credit facility.

At September 30, 2004, the Company had a $720,000 variable-rate revolving credit facility under which borrowings were $73,000. Borrowings under the credit facility mature upon expiration of the agreement on November 29, 2006. In addition, the Company had $21,675 of short-term unsecured notes outstanding at September 30, 2004. These borrowings may be converted at the Company’s option to revolving debt. Accordingly, such borrowings are classified as long-term in the Company’s financial statements.

Belo’s revolving credit agreement requires the Company to maintain certain financial ratios as of the end of each quarter. As of September 30, 2004, the Company was in compliance with all debt covenant requirements.

The Company paid dividends of $32,887, or 28.5 cents per share, on Series A and Series B common stock outstanding, compared with $27,739, or 24.5 cents per share, in the first nine months of 2003.

In the first nine months of 2004, capital expenditures of $40,063 were primarily for Television Group and Newspaper Group equipment purchases. Capital spending for fiscal 2004 is expected to be approximately $90,000, primarily for capital expenditures in the normal course of business. The Company expects to fund such capital expenditures with cash generated from operating activities and, when necessary, borrowings under its revolving credit facility.

On July 23, 2004, the Company and Time Warner discontinued their joint ventures that operated the local cable news channels in Charlotte, North Carolina and Houston and San Antonio, Texas. Investments totaling $38,495 ($4,518 of which was invested in the first nine months of 2004) had been made related to the Time Warner joint ventures before operations ceased. A charge of $11,528 related to the discontinuation of the joint ventures was recorded in the third quarter of 2004.

In the first nine months of 2004, the Company purchased 1,957,500 shares of its Series A Common Stock at an aggregate cost of $54,627 under the stock repurchase plan authorized by Belo’s Board of Directors in July 2000. These shares were retired during the nine-month period ended September 30, 2004. The Company’s policy during the first nine months of 2004 was to purchase shares of Belo Common Stock approximately equal to the number of employee options exercised during the period. Depending on market conditions, the Company plans to purchase shares exceeding the number of options exercised in the remainder of 2004 under its existing stock repurchase authorizations. As of September 30, 2004, the Company could purchase 15,475,419 shares under the authorization passed by its Board of Directors in July 2000. In addition, Belo has in place a stock repurchase program authorizing the purchase of up to $2,500 of common stock annually.

The Company made contributions to its defined benefit pension plan totaling $30,800 in the first nine months of 2004. This contribution exceeds the Company’s required minimum contribution for ERISA funding purposes. The Company does not expect to make additional contributions to the plan in 2004.

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Other Matters

On August 5, 2004, the Company announced that an internal investigation, then ongoing, disclosed practices and procedures that led to an overstatement of previously reported circulation figures at DMN, primarily in single copy sales. The investigation was conducted by a national law firm and supervised by the Audit Committee of the Company’s Board of Directors. The investigation found that the circulation overstatement at DMN resulted from the aggressive pursuit of circulation goals by former senior circulation managers, accompanied by inadequate procedures to monitor and verify distribution and returns of newspapers. The overstatement estimates determined during the investigation also include estimates resulting from the DMN circulation department’s use of an unrepresentative survey of returns percentages in the newspaper’s state circulation. The investigation also reviewed the circulation distribution processes of other Belo publications: The Providence Journal, The Press-Enterprise in Riverside, California, al dia and Quick in Dallas, and the Denton Record-Chronicle in Denton, Texas. Based on this review, the investigators concluded that the circulation distribution processes at these other publications are significantly different from those used at DMN. The Company estimates DMN’s circulation for the six-month period ended September 30, 2004, to be approximately 5.1 percent less daily, and approximately 11.9 percent less Sunday, than circulation reported for the prior year period. Most of the declines are believed to be related to overstatements.

On August 16, 2004, the Company announced a voluntary advertiser compensation plan developed by Company management in response to the circulation overstatement. The plan includes a combination of cash payments and future advertising credits. Approximately 19,000 checks have been mailed or delivered to advertisers as part of the plan. As of October 29, 2004, 82.1 percent of the checks have cleared, representing 72.5 percent of the dollars. DMN’s payments to affected advertisers under the plan were made without the condition that such advertisers release DMN from liability for the circulation overstatement.

Belo recorded a charge of $24,000 in the third quarter of 2004 related to the circulation overstatement, of which approximately $21,000 relates to cash payments to DMN advertisers and approximately $3,000 covers costs related primarily to the investigation of the circulation overstatement. The advertising credits may be used between September 1, 2004 and the end of an advertiser’s contract period or February 28, 2005, whichever is later, and is in addition to the terms of each advertiser’s current contract. The Company expects the advertising credits to have a modest impact on advertising revenue growth at DMN through the remainder of 2004 and into the first quarter of 2005. Incremental newsprint expense associated with the credits are expected to be offset by decreases in newsprint consumption associated with lower circulation.

DMN has been working with the Audit Bureau of Circulations (the “Audit Bureau”) since the overstatement was announced. The Audit Bureau is currently auditing DMN’s circulation for the twelve-month period ended March 31, 2004. DMN expects the Audit Bureau to conclude its audit for that period sometime in early 2005. DMN has advised the Audit Bureau of DMN’s intention to revise previously reported September 2003 and March 2004 circulation figures, reported in the Company’s Form 10-K for the fiscal year ended December 31, 2003 and Form 10-Q for the quarter ended March 31, 2004, respectively. Pursuant to the Audit Bureau’s practices and procedures, because the estimated circulation adjustment is in excess of 5%, the Audit Bureau Board could impose a censure period upon DMN which would include more frequent audits in the two years following censure, and exclusion from FAS-FAX for up to one year following censure (among other penalties). No final determination as to the length of any censure has yet been made. DMN is continuing to implement process improvements within DMN’s circulation department. DMN has not as yet filed with the Audit Bureau the newspaper’s circulation figures for the six months ended September 30, 2004, but anticipates doing so after DMN and the Audit Bureau finalize their work for that reporting period.

The staff of the Securities and Exchange Commission (the “SEC”) is conducting a newspaper industry-wide inquiry into circulation practices, and has inquired specifically about the DMN overstatement. The Company has briefed the SEC on the DMN circulation situation and related matters. The information voluntarily provided to the SEC relates to DMN, as well as The Providence Journal and The Press-Enterprise. The Company will continue to respond to additional requests for information that the SEC may have.

On September 29, 2004, Belo announced its updated operating strategy, which included a Company-wide reduction in workforce of approximately 250 positions, with the majority coming from DMN. The Company recorded charges totaling $5,818 for severance costs and other expenses related to the reduction in workforce in the third quarter of 2004.

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In addition, the Company announced that it is assessing how to operate Texas Cable News (“TXCN”) given the Company’s inability to obtain analog carriage on Time Warner’s cable systems in Houston, San Antonio and Austin, or any carriage from certain other cable systems operating in Texas, notably Cox Communications. The Company’s choices regarding TXCN could mitigate or eliminate $1,700 in annual losses. The Company is also reviewing Belo Interactive’s operating structure in light of changes in audience patterns, technology and the competitive environment.

Definitive network affiliation agreements between American Broadcasting Companies, Inc. (“ABC”) and four of the Company’s television stations (WFAA, WHAS, WVEC and KVUE) expired by their terms on October 31, 2004. Renewal negotiations have taken place previous to that date and continue. The four television stations continue as ABC affiliates, and the Company expects to enter into a definitive renewal agreement or agreements with ABC.

Forward-Looking Statements

Statements in this Form 10-Q concerning the Company’s business outlook or future economic performance, anticipated profitability, revenues, expenses, capital expenditures, investments, future financings or other financial and non-financial items that are not historical facts, are “forward-looking statements” as the term is defined under applicable federal securities laws. Forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results to differ materially from those statements.

Such risks, uncertainties and factors include, but are not limited to, changes in capital market conditions and prospects, and other factors such as changes in advertising demand and rates, interest rates and newsprint prices; the current audit by the Audit Bureau of Circulations of The Dallas Morning News’ circulation; technological changes; development of Internet commerce; industry cycles; changes in pricing or other actions by competitors and suppliers; regulatory changes; adoption of new accounting standards or changes in existing accounting standards by the Financial Accounting Standards Board or other accounting standard-setting bodies or authorities; the effects of Company acquisitions and dispositions; and general economic conditions and significant armed conflict as well as other risks detailed in the Company’s filings with the Securities and Exchange Commission, including the Annual Report on Form 10-K and in the Company’s periodic press releases.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Other than as disclosed, there have been no material changes in the Company’s exposure to market risk from the disclosure included in Belo’s Annual Report on Form 10-K for the fiscal year ended December 31, 2003.

Item 4. Controls and Procedures

The Company carried out an evaluation under the supervision and with the participation of the Company’s management, including the Company’s Chairman of the Board, President and Chief Executive Officer and Senior Corporate Vice President/Chief Financial Officer, of the effectiveness of the Company’s disclosure controls and procedures, as of the end of the period covered by this report. Based upon that evaluation, the Chairman of the Board, President and Chief Executive Officer and Senior Corporate Vice President/Chief Financial Officer concluded that, as of the end of the period covered by this report, the Company’s disclosure controls and procedures were effective such that information relating to the Company (including its consolidated subsidiaries) required to be disclosed in the Company’s Securities and Exchange Commission reports (i) is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms and (ii) is accumulated and communicated to the Company’s management, including the Chairman of the Board, President and Chief Executive Officer and Senior Corporate Vice President/Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

During the period covered by this report, there were no changes in the Company’s internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, Belo’s internal control over financial reporting.

During the third quarter of 2004, the Company discovered an overstatement of the circulation of DMN. Although this matter does not affect the Company’s internal controls over financial reporting, the Company has implemented steps to correct the situation.

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PART II.

Item 1. Legal Proceedings

On August 23, 2004, August 26, 2004 and October 5, 2004, respectively, three related lawsuits were filed by purported shareholders of the Company in the United States District Court for the Northern District of Texas against the Company; Robert W. Decherd, Chairman of the Board, President and Chief Executive Officer of Belo; and, Barry Peckham, a former DMN executive. The complaints arise out of the circulation overstatement at DMN, alleging that the overstatement artificially inflated Belo’s financial results and thereby injured investors. The plaintiffs seek to represent a purported class of shareholders who purchased Belo common stock between May 12, 2003 and August 6, 2004. The complaints allege violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. On October 18, 2004, the court ordered that all cases arising out of the same facts and presenting the same claims would be consolidated, and the defendants would not have to answer until a consolidated complaint is filed. No class or classes have been certified and no amount of damages has been specified. The Company believes the complaints are without merit and intends to vigorously defend against them.

A number of other legal proceedings are pending against the Company, including several actions for alleged libel. In the opinion of management, liabilities, if any, arising from these other legal proceedings would not have a material adverse effect on the results of operations, liquidity or financial position of the Company.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities

The following table provides information about the Company’s Series A Common Stock repurchases during the quarter ended September 30, 2004. The Company did not repurchase any shares of Series B Common Stock during the quarter ended September 30, 2004.

Item 3. Defaults Upon Senior Securities

None.

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Item 4. Submission of Matters to a Vote of Security Holders

None.

Item 5. Other Information

None.

Item 6. Exhibits

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SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

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INDEX TO EXHIBITS