Fitch Rates Belo's $275MM Senior Notes Due 2016 'BB'; Outlook Negative

NEW YORK--(Business Wire)--
Fitch Ratings has assigned a 'BB' rating to the Belo Corporation's (Belo) $275
million senior notes due 2016. Additionally, Fitch has affirmed all other
ratings of Belo as follows:

--Issuer Default Rating (IDR) at 'BB-';

--Guaranteed bank facility at 'BB+';

--Senior non-guaranteed unsecured notes/bonds at 'B+'.

The Rating Outlook remains Negative.

The 'BB-' IDR and Negative Outlook reflect the continued weak macro-economic
environment impacting Belo's local media properties. Fitch expects Belo's
Arizona markets (less than 15% of total revenue) to potentially remain pressured
over the long-term due to the affiliation profile of the stations and
micro-economic environment of the region. Fitch expects Belo's remaining markets
to remain weak relative to historical years, however, should be able to maintain
strong margins and generate sufficient free cash flow to de-lever the balance
sheet at approximately 5% - 10% of debt per year after taking into account
pension contributions. The concurrent 18-month extension of the bank facility
should give the company sufficient time to completely pay it down by its new
maturity of December 2012. The 'BB-' IDR takes into account that the company
will depend on the external capital markets to re-finance at least a portion of
its $175 million 2013 senior unsecured notes. Fitch expects the company to
generate in excess of $50 million of incremental free cash flow (i.e., beyond
that used to pay down the bank facility) that could be used for this maturity
and that its leverage profile should be under 3 times (x) on a guaranteed basis
by the time this maturity is due.

The ratings continue to be supported by Belo's strong local presence in the
top-50 U.S. markets and top network affiliations. Fitch continues to believe
that there is an overcapacity of premium-priced media outlets in most
mid-to-major markets. In Fitch's view the lower rated stations that are unable
to sufficiently aggregate the local market audiences will bear a
disproportionate share of pressure. Excluding Arizona, Belo maintains strong
network affiliations and has a track record of making investments in its news
infrastructure, which has positioned it to have either the No.1 or No.2 station
in most of its markets. As such, Fitch would expect Belo to compete effectively
with the Internet, radio and outdoor by taking market share from print products
over the intermediate term. Newspapers in some of Belo's television markets
(Seattle, Tucson) have already announced closings and Fitch expects this trend
to continue.

Long-term secular risks continue to be present related to time-shifting,
however, it is Fitch's expectations that local broadcasters will continue to
remain relevant and capture material audiences that local, regional and national
spot advertisers will demand. The 'BB-' IDR takes into account Fitch
expectations that the broadcast networks could seek reverse compensation.

The company's liquidity is comprised of $3 million of cash and approximately
$300 million revolver availability (taking into account this note offering). The
'BB' rating on the 2016 notes reflect the subordinate guarantees it will receive
from all material subsidiaries. The guarantees will be subordinate to the
guarantees the bank facility receives. Fitch expects the company to successfully
complete amendments to its bank facility in order to generate adequate room
under its leverage covenant. Without an amendment, Fitch would expect the
company to be in breach of its existing leverage covenant by year-end.

Additional information is available at www.fitchratings.com.

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Fitch Ratings, New York
Jamie Rizzo, CFA, +1-212-908-0548
Rolando Larrondo, +1-212-908-9189
or
Cindy Stoller, +1-212-908-0526 (Media Relations)
cindy.stoller@fitchratings.com

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