BeloWatch

A document the A.H. Belo Corp. recently filed with the U.S. Securities and Exchange Commission flatly contradicts a key Dallas Morning News executive's published explanation for the demise of the paper's Sunday magazine.

On November 15, 1994, The Dallas Morning News published a story on page 10D of the business section announcing the death of Dallas Life, the weekly Sunday magazine the News had published for 24 years. Staffers at the daily called the decision, foreshadowed by a glitzy but insipid redesign of the magazine five months earlier, an abandonment of the paper's primary forum for literate, stylish writing.

BeloWatch agreed.
News President and General Manager Jeremy L. Halbreich insisted that the paper--despite overall record profits--had to pull the plug because Dallas Life was unprofitable.

Halbreich's explanation began in the second paragraph of the story by News media writer Laura Castaneda, headlined "Publication of Dallas Life to end on Christmas Day."

The explanation in the News went this way: "'The economics of the magazine were very difficult for us,' said Jeremy L. Halbreich, president and general manager of The News. 'We have been losing significant amounts of money for a number of years. We have been reducing that number over the last three or four years, but we finally ran into a wall.'"

Added the story, "Although he would not say how much the magazine was losing, Mr. Halbreich confirmed that it was in the 'seven figures.'"

Flash forward to February 28, 1996, when the News' parent, A.H. Belo, filed a registration statement with the SEC for a new stock offering intended to raise $174 million in fresh capital, possibly for acquisitions. Knowingly making a false statement in a registration statement--which by law must disclose extensive detail about the company's operations to prospective investors--is a violation of federal securities law.

Deep into that document, as required, came "Management's discussion and analysis of financial condition and results of operations." There, on page 15, Belo discussed how it had worked to minimize the impact of rising newsprint costs on The Dallas Morning News.

A reduction in the number of tons of newsprint used during 1995 "helped offset the effect of these price increases to some extent," the statement explained. "Reductions in newsprint usage came as a result of better waste control, fewer news columns, lower ad linage and promotional space, and the elimination of a marginally profitable Sunday magazine."

"Marginally profitable?"
That certainly doesn't square with Halbreich's statement that Dallas Life was "losing significant amounts of money for a number of years"--running a loss in the "seven figures."

All of which presents an unsettling choice.
Was Halbreich lying to Dallas Morning News readers to justify the company's decision to kill Dallas Life?

Or are the members of Belo's board of directors--each of whom signed the registration statement--now violating securities laws by saying something that isn't true?

BeloWatch phoned Halbreich's office to try to resolve this apparent contradiction. Halbreich did not return BeloWatch phone calls.

BeloWatch phoned the office of Belo CEO Robert Decherd and explained the question. Decherd did not return BeloWatch phone calls.

Will they explain themselves to Morning News readers and staffers, who have reason to believe they were misled?

Or will they explain themselves to the enforcement division of the SEC?
Belo filed its registration statement electronically with the SEC in Washington, and it's available through a search engine on the Internet at http://www.edgar.stern. nyu.edu/formco_array.html. Officials at Belo worldwide headquarters in Dallas say paper copies of the registration statement are not yet available.

BeloWatch's review of the public filing, however, turned up other interesting details The Dallas Morning News has somehow neglected to report about its parent company.

The first was the size of the stock offering, which Belo says it expects will raise $174 million. The company declared its intention to use the proceeds to reduce its outstanding debt--$551 million--and for general corporate purposes, "including possible future acquisitions."

The second was the hefty price of the two small newspapers the News purchased around year's end: Kentucky's Owensboro Messenger-Inquirer and the Bryan-College Station Eagle.

Extensive Morning News coverage of the two purchases--the first for Belo's new and acquisitive publishing division--consistently quoted company officials declining to reveal the price tag for either of the small dailies.

The stock offering statement doesn't say how much each paper cost either. But it does disclose that Belo bought the two dailies for "an aggregate cost of approximately $89 million."

Once again, the paper has told Wall Street more than it has told its own readers.

Two weeks after the public filing, the figure has yet to appear in the pages of The Dallas Morning News.

 
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