DALLAS The Belo Corp. will take a $26 million third-quarter charge as its flagship newspaper, The Dallas Morning News, begins compensating advertisers for overstated circulation.
The $26 million charge will include $3 million to cover the cost of an investigation of the false circulation figures that were corrected Aug. 5, the company said. The charge equates to $16.6 million on an after-tax basis, or $0.14 per share, according to the company. An additional newsprint cost of $4 million due to the advertising credits will be expensed in the fourth quarter of 2004 and the first quarter of 2005, the company said.
In the Aug. 5 announcement, Belo reported that daily circulation figures were 1.5 percent lower than those used to set ad rates, while Sunday figures were 5 percent lower. Combined with previously disclosed losses, the News' circulation fell 11.5 percent on Sunday and 5 percent daily.
Belo also reported that Barry Peckham, evp for operations, has resigned. The company said it "had no reason to believe at present that this executive or any current executive … acted illegally."
Under the reimbursement plan, advertisers will receive a cash payment equal to 10 percent of their total Sunday advertising expenditures from Aug. 1, 2003 through July 31 of this year. Each advertiser will receive a "credit bank" for future advertising purchases from Sept. 1 to the end of an advertiser's current contract period or Feb. 28, 2005. Preprint advertisers will receive an additional cash payment for estimated excess preprint printing costs incurred from Aug. 1, 2003 to Sept. 30, 2004. All private-party advertisers who placed classified ads from Aug. 1, 2003 to July 31 of this year will receive one five-line ad from Oct. 1 to March 31, 2005.