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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

For the fiscal year ended: December 31, 2003

OR

Commission file no. 1-8598

Belo Corp.

	Registrant’s telephone number, including area code: (214) 977-6606 Securities registered pursuant to Section 12(b) of the Act:

     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. Yes [X]  No [  ]

     Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ]

     Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes [X]  No [  ]

     The aggregate market value of the registrant’s voting stock held by nonaffiliates on June 30, 2003, based on the closing price for the registrant’s Series A Common Stock on such date as reported on the New York Stock Exchange, was approximately $2,538,468,550. *

Shares of Common Stock outstanding at February 29, 2004: 115,712,264 shares. (Consisting of 99,325,252 shares of Series A Common Stock and 16,387,012 shares of Series B Common Stock.)

*

For purposes of this calculation, the market value of a share of Series B Common Stock was assumed to be the same as the share of Series A Common Stock into which it is convertible.

Documents incorporated by reference:

Table of Contents

BELO CORP.
FORM 10-K
TABLE OF CONTENTS

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PART I

Item 1. Business

     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 with $1.4 billion in 2003 revenues, Belo operates news and information franchises in some of America’s most dynamic markets and regions. The Company owns 19 television stations (six in the top 15 markets) that reach 13.8 percent of U.S. television households, and manages one television station through a local marketing agreement (“LMA”). Belo also publishes four daily newspapers with a combined daily circulation of approximately 900,000 copies and a combined Sunday circulation of more than 1.2 million copies. In addition, Belo owns three cable news channels and holds ownership interests in seven others. Belo’s Internet subsidiary, Belo Interactive, Inc. (“Belo Interactive”), includes more than 30 Web sites, several interactive alliances and a broad range of Internet-based products.

     The Company believes the success of its media franchises is built upon providing local and regional news and information and community service of the highest caliber. These principles have built durable relationships with viewers, readers, online users and advertisers for 161 years, and have guided Belo’s success.

     Note 15 to the Consolidated Financial Statements contains information about the Company’s industry segments for the years ended December 31, 2003, 2002 and 2001.

Television Group

     Belo’s Television Group is the nation’s sixth largest non-network owned station group based on audience share. The Company owns 19 television stations and manages one station under an LMA. In the 15 markets in which the Company operates, ten of Belo’s stations are ranked number one and three are ranked number two in “sign-on/sign-off” audience rating, based on November 2003 Nielsen estimates. Belo has six stations in the top 15 markets and 14 stations in the top 50 markets. Belo’s stations collectively reach 13.8 percent of U.S. television households.

     Belo’s stations are primarily concentrated in three high-growth regions: Texas, the Northwest and the Southwest. Six of the Company’s stations are located in four of the fastest-growing major metropolitan areas in the United States:

	•		ABC affiliate WFAA-TV in Dallas/Fort Worth;
	•		CBS affiliate KHOU-TV in Houston;
	•		NBC affiliate KING-TV and independent KONG-TV in Seattle/Tacoma; and
	•		Independent KTVK-TV and WB affiliate KASW-TV in Phoenix.

     The Company has a balanced portfolio of network-affiliated stations with four ABC affiliates, four NBC affiliates and five CBS affiliates, and at least one large-market station associated with each network. In addition, Belo owns two independent (“IND”) stations, two Warner Brothers Network (“WB”) affiliates, one FOX affiliate and one United Paramount Network (“UPN”) affiliate, and operates one additional UPN affiliate under an LMA. This balance provides stability to Belo’s revenue stream regardless of which network leads prime time.

     Belo’s television stations have been recognized with numerous local, state and national awards for outstanding news coverage. Since 1957, Belo’s television stations have garnered 16 Alfred I. duPont-Columbia Awards, 13 George Foster Peabody Awards and 25 Edward R. Murrow Awards – the industry’s most prestigious honors.

      The Company’s television broadcasting operations began in 1950 with the acquisition of WFAA shortly after the station began operations. In 1984, the Company expanded its television operations with the purchase of KHOU in Houston and WVEC-TV in Hampton/Norfolk. The Company acquired WWL-TV in New Orleans in 1994. The Providence Journal Company acquisition in February 1997 added KING in Seattle/Tacoma; KGW-TV in Portland; WCNC-TV in Charlotte; WHAS-TV in Louisville; KMSB-TV in Tucson; KREM-TV in Spokane; and KTVB-TV in Boise. In separate 1997 transactions, Belo acquired KENS-TV in San Antonio and KMOV-TV in St. Louis. Belo entered into an agreement to operate KBEJ-TV under an LMA in 1999. In 1999, Belo acquired KVUE-TV in Austin and KTVK in Phoenix. In 2000, Belo acquired KONG in Seattle/Tacoma and KASW in Phoenix, which were previously operated by Belo under LMAs. In 2001 and 2002, Belo purchased KSKN-TV in Spokane and KTTU-TV in Tucson, respectively. Belo operated KSKN and KTTU under LMAs prior to the acquisitions.

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     The following table sets forth information for each of the Company’s television stations (including the station which it operates under an LMA) and their markets as of December 31, 2003:

(1)		Market rank is based on the relative size of the television market Designated Market Area (“DMA”), among the 210 generally recognized DMAs in the United States, based on November 2003 Nielsen estimates.
(2)		Substantially all revenue of the Company’s television stations is derived from advertising. Approximately 3.5 percent of Television Group revenue is provided by compensation paid by networks to the television stations for broadcasting network programming.
(3)		Represents the number of television stations (both VHF and UHF) broadcasting in the market, excluding public stations, low power broadcast stations and national cable channels.
(4)		Station rank is derived from the station’s rating, which is based on November 2003 Nielsen estimates of the number of television households tuned to the Company’s station for the Sunday-Saturday 7:00 a.m. to 1:00 a.m. period (“sign-on/sign-off”) as a percentage of the number of television households in the market.
(5)		Station audience share is based on November 2003 Nielsen estimates of the number of television households tuned to the station as a percentage of the number of television households with sets in use in the market for the sign-on/sign-off period.
(6)		Operated under an LMA.
(7)		The Company also owns KTFT-LP (NBC), a low power television station in Twin Falls, Idaho.

*

Tied with one or more other stations in the market.

     The principal source of revenue for Belo’s television stations is the sale of air time to local and national advertisers. In 2003, approximately 93.7 percent of total television revenues was derived from spot revenues. Network compensation was approximately 3.5 percent of total television revenues in 2003.

     Commercial television stations generally fall into one of three categories. The first category comprises stations affiliated with one of the four major national networks (ABC, CBS, NBC and FOX). The second category comprises stations affiliated with newer national networks, such as UPN, WB and Paxson Communications Corporation. The third category includes independent stations that are not affiliated with any network and rely principally on local and syndicated programming. Affiliation with a television network can have a significant influence on the revenues of a television station because the audience ratings generated by a network’s programming

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can affect the rates at which a station can sell advertising time. Generally, rates for national and local spot advertising sold by the Company are determined by each station, which receives all of the revenues, net of agency commissions, for that advertising. Rates are influenced by the demand for advertising time, the popularity of the station’s programming and market size.

     The Company’s network affiliation agreements generally provide the station with the exclusive right to broadcast in its local service area all programs transmitted by the network with which the station is affiliated. In return, the network has the right to sell most of the advertising time during such broadcasts. Stations generally receive a specified amount of network compensation for broadcasting network programming. To the extent that a station’s preemptions of network programming exceed a designated amount, compensation may be reduced. Network compensation is also subject to reduction by the network during the term of an affiliation agreement under other circumstances, with provisions for advance notice. The Company has network affiliation agreements in place with ABC, CBS, NBC, FOX, WB and UPN. The station Belo operates under an LMA is affiliated with UPN.

Newspaper Group

     Belo’s Newspaper Group includes four daily newspapers with a combined daily circulation of approximately 900,000 copies and a combined Sunday circulation of more than 1.2 million copies. The group is led by The Dallas Morning News, which has the sixth-largest Sunday circulation and eleventh-largest daily circulation in the United States. Recognized as one of the elite newspapers in America, The Dallas Morning News has earned six Pulitzer Prizes since 1986 for its news reporting and photography initiatives. The Providence Journal, the Company’s second-largest publication based on total circulation, has won four Pulitzer Prizes and Belo’s third-largest publication, The Press-Enterprise, has won one Pulitzer Prize. Belo also owns the Denton Record-Chronicle in Denton, Texas and operates certain commercial printing businesses. In 2003, The Dallas Morning News launched three new products, The Dallas Morning News Collin County Edition, Al Dia and Quick. The Dallas Morning News Collin County Edition was introduced in March to serve the needs of residents in fast-growing Collin County, Texas. Al Dia, a Spanish-language newspaper, was launched in September to support the growing Hispanic market in North Texas. Quick was introduced in November to deliver news to readers on the run in a new “quick-read” format. In October 2003, The Press-Enterprise launched the d to reach California’s booming Coachella Valley.

     The Company’s principal newspaper, The Dallas Morning News, was established in 1885 and is one of the leading newspaper franchises in America. Its success is founded upon the highest standards of journalistic excellence, with an emphasis on comprehensive news and information, and community service. The Company acquired The Providence Journal in February 1997. The Providence Journal has a long history of journalistic excellence and service to its community and is America’s oldest major daily newspaper of general circulation and continuous publication. Belo acquired The Press-Enterprise in July 1997 and the Denton Record-Chronicle in June 1999.

     The following table sets forth information concerning the Company’s primary daily newspaper operations:

(1)

Average paid circulation is for the six months ended September 30, 2003 and 2002, respectively, according to the Audit Bureau of Circulations’ FAS-FAX report, except for the Denton Record-Chronicle, for which 2003 and 2002 circulation data is taken from the Certified Audit of Circulations Report for the twelve-month periods ended December 31, 2002 and 2001, respectively.

     The Company’s three largest newspapers, The Dallas Morning News, The Providence Journal and The Press-Enterprise, provide coverage of local, state, national and international news. The Dallas Morning News is distributed throughout the Southwest, though its circulation is concentrated primarily in Dallas County and the 11 surrounding counties. The Providence Journal is the leading newspaper in Rhode Island and southeastern Massachusetts. The Press-Enterprise is distributed throughout the Inland Empire area of southern California, which includes Riverside and San Bernadino counties.

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     Belo’s Newspaper Group derives its revenue from advertising, circulation and commercial printing. For the year ended December 31, 2003, advertising revenue accounted for 84.6 percent of total newspaper revenue while circulation revenue accounted for 12 percent and commercial printing accounted for most of the remaining amount.

     The following table sets forth information concerning the prices of the Company’s primary daily newspapers as of December 31, 2003:

(1)		Single Copy represents the list or newsstand price per copy as of December 31, 2003
(2)		Home Delivery represents the range of prices based on the various subscription plans offered as of December 31, 2003.

Note: The price per copy presented above represents the gross revenue based on the newspaper’s specific pricing plans, which does not include any applicable wholesale allowances. Net wholesale price refers to the price per copy after any applicable allowances and discounts provided to distributors and contractors who deliver or sell the paper to the various outlets. Circulation revenue is recorded at the net wholesale price for newspapers delivered or sold by independent contractors and at the retail price for newspapers delivered or sold by employees.

     The basic material used in publishing Belo’s newspapers is newsprint. Currently, most of Belo’s newsprint is purchased from two suppliers. In addition, The Providence Journal purchases approximately 50 percent of its newsprint from other suppliers under long-term contracts. These contracts provide for certain minimum purchases per year. Management believes its sources of newsprint, along with available alternate sources, are adequate for the Company’s current needs.

     During 2003, Belo’s publishing operations consumed approximately 218,000 metric tons of newsprint at an average cost of $463 per metric ton. Consumption of newsprint in the previous year was approximately 217,000 metric tons at an average cost per metric ton of $440. Newsprint prices declined in the second half of 2001 and through most of 2002 due to lower demand resulting from the slowdown in the U.S. economy. Newsprint prices increased approximately 5.4 percent in 2003. The average price of newsprint is expected to be higher in 2004 than in 2003, although the amount and timing of any increase cannot be predicted with certainty.

Interactive Media

     The Internet is a powerful resource through which the Company continuously explores ways to expand the scope of its core businesses while creating innovative services for its viewers, readers, online users and advertisers. Interactive editions of Belo’s newspapers along with the Web sites of each of the Company’s television stations provide consumers with accurate and timely news and information as well as a variety of other products and services. Belo obtains immediate feedback through online communication with its audience, which allows the Company to tailor the way in which it delivers news and information to better serve the needs of its audience.

     The majority of Belo Interactive’s Web sites are associated with the Company’s television stations and newspapers and primarily provide news and information. According to Nielsen/NetRatings, Belo Interactive has seven of the top 50 and ten of the top 60 local television-affiliated Web sites in the U.S., and the Company’s newspaper-affiliated Web sites in Dallas and Providence are the leading local media sites in those market areas.

     Revenues for Belo Interactive in 2003 were principally derived from advertising on its various Web sites and, to a much lesser extent, fees generated from Internet service provider subscriptions and data retrieval services. After implementing full-site registration in early 2002, Belo Interactive had 2.6 million registered users at the end of 2002 and 5.7 million registered users at the end of 2003.

     In 2001, the Company purchased a minority equity position in Classified Ventures, LLC and joined the affiliated network of cars.com, Classified Ventures’ leading automotive site. On August 1, 2002 the Company contracted with CareerSite, a product of Employment Specialists, LLC, to provide the software and hosting of the Company’s online recruitment products.

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Other

     Belo’s other segment consists primarily of its regional cable news operations and, beginning in 2003, its consumer expositions business. Belo’s regional cable news operations include Texas Cable News (“TXCN”) and NorthWest Cable News (“NWCN”), which provide news coverage in a comprehensive 24-hour a day format, using the news resources of the Company’s television stations and newspapers in Texas and television stations in the Northwest, respectively. The Company also operates four cable news channels in partnership with Cox Communications and others, which provide local market coverage in New Orleans, Louisiana (NewsWatch on Channel 15), Phoenix, Arizona (Arizona NewsChannel and ¡Más! Arizona) and Hampton/Norfolk, Virginia (Local News on Cable). These cable news channels also use the news resources of the television stations owned by the Company in those markets. Revenues from Belo’s cable news operations in 2003 were principally derived from advertising and subscriber-based fees.

     During 2000 and 2001, Belo announced the formation of cable news partnerships with Time Warner Cable that called for the creation of 24-hour local cable news channels in Charlotte, North Carolina and in Houston and San Antonio, Texas. The on-air dates of the news channels in Charlotte, Houston and San Antonio were June 14, 2002, December 12, 2002 and April 7, 2003, respectively.

     In 2003, the Company announced the creation of Belo Expositions (“Expo”), a business unit that produces, manages and promotes consumer-oriented events in Belo’s key markets and regions, including Texas, the Southwest and the Northwest. Expo’s revenues are generated primarily from sponsorship and booth revenues from expositions.

Competition

     Competition for advertising revenues at Belo’s television stations, as well as its daily newspapers, Web sites and cable news operations, includes other television stations and newspapers (including those owned and operated by Belo), direct broadcast satellite (“DBS”), radio stations, cable television systems, outdoor advertising, the Internet, magazines and direct mail advertising. The success of the Company’s operations depends on a number of factors, including the general strength of the economy, the ability to provide attractive programming, audience ratings, relative cost efficiency for advertisers in reaching audiences as compared to other advertising media, technical capabilities and governmental regulations and policies.

     The four major national television networks are represented in each television market in which Belo has a television station. Competition for advertising sales and local viewers within each market is intense, particularly among the network-affiliated television stations.

     The entry of local telephone companies and other multichannel video programming distributors into the market for video programming services has also had an impact on competition in the television industry. Belo is unable to predict the effect that these or other technological and related regulatory changes will have on the television industry or on the future results of Belo’s operations.

     The Dallas Morning News’ primary newspaper competitor in certain areas of the Dallas/Fort Worth market is the Fort Worth Star-Telegram. The Providence Journal competes with five daily newspapers in the Rhode Island market. The Press-Enterprise competes with seven daily newspapers in the Inland Empire area of southern California.

FCC Regulation

     General. Belo’s television broadcast operations are subject to the jurisdiction of the Federal Communications Commission (“FCC” or the “Commission”) under the Communications Act of 1934, as amended (the “Communications Act”). Among other things, the Communications Act empowers the FCC to:

	•		determine stations’ operating frequencies, location and power;
	•		issue, renew, revoke and modify station licenses;
	•		regulate equipment used by stations;

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	•		impose penalties for violation of the Communications Act or of FCC regulations;
	•		impose fees for processing applications and other administrative functions; and
	•		adopt regulations to carry out the Communications Act.

     The Communications Act also prohibits the assignment of a broadcast license or the transfer of control of a broadcast licensee without prior FCC approval. Under the Communications Act, the FCC also regulates certain aspects of the operation of cable television systems and other electronic media that compete with television stations. Further, the Communications Act prohibits direct or indirect record ownership of a broadcast licensee or the power to vote more than one-fourth of a licensee’s stock from being held by aliens, foreign governments or their representatives, or corporations formed under the laws of foreign countries.

     Station Licenses. Under the Communications Act, as amended by the Telecommunications Act of 1996 (the “1996 Act”), the FCC grants television station licenses for terms of up to eight years. The 1996 Act requires renewal of a television license if the FCC finds that:

	•		the station has served the public interest, convenience and necessity;
	•		there have been no serious violations by the licensee of either the Communications Act or the FCC’s rules and regulations; and
	•		there have been no other violations by the licensee of either the Communications Act or the FCC’s rules and regulations which, taken together, constitute a pattern of abuse.

     In making its determination, the FCC cannot consider whether the public interest would be better served by a party other than the renewal applicant. Under the 1996 Act, competing applications for the same frequency may be accepted only after the FCC has denied an incumbent’s application for renewal of a license.

     The current license expiration dates for each of Belo’s television broadcast stations are as follows:

     The current license expiration date for KBEJ, the television station with which the Company has an LMA, is August 1, 2006.

     Programming and Operations. FCC rules and policies, and rules and policies of other federal agencies, regulate matters such as network/affiliate relations, cable and DBS systems’ carriage of television programming, political advertising practices, obscene and indecent programming, accessibility of television

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programming to audience members who are visually or hearing disabled, programming and advertising directed toward children, employment practices, and other areas affecting the business or operations of broadcast stations.

     The Children’s Television Act of 1990 limits the permissible amount of commercial matter in children’s television programs and requires each television station to present educational and informational children’s programming. The FCC’s children’s programming requirements include a requirement that television broadcasters provide a minimum of three hours of children’s educational programming per week. Broadcasters also are required to place “issues/programs lists” in their public inspection files to provide their communities with information on their “public interest” programming.

     In August 2003, FCC Chairman Michael Powell announced that the agency would open an inquiry proceeding to seek comment on a wide range of measures aimed at promoting localism in broadcasting. While the Commission has not released a Notice of Inquiry, the “Localism in Broadcasting” initiative has resulted in the creation of a Localism Task Force to conduct studies to measure localism, organize a series of public hearings around the country on localism, and offer recommendations to both the agency and Congress on how to promote localism in television and radio. It is expected that the Commission will evaluate whether certain elements of its regulation of broadcasting—including the license renewal process, the network/affiliate rules, political broadcasting mandates, and public interest obligations—should be strengthened or otherwise supplemented to advance localism on the airwaves.

     In October 2002, the FCC adopted EEO rules, which went into effect on March 10, 2003. These rules impose job information dissemination, recruitment and reporting requirements. Specifically, broadcasters must (1) widely disseminate information concerning each full-time job vacancy; (2) provide notice of each full-time job vacancy to recruitment organizations requesting notice; and (3) complete additional recruitment initiatives, such as participation in job fairs, scholarship programs and EEO training. To allow the FCC to verify compliance with these requirements, licensees must retain documentation of each of the required recruitment activities and file periodic reports relating to the EEO requirements. Broadcasters may be subject to random audits to ensure compliance with the new EEO rules and could be sanctioned for noncompliance. In its order announcing the new rules, the FCC also reaffirmed its rule prohibiting broadcasters from discriminating against individuals on the basis of race, religion, color, national origin or gender.

     Cable and Satellite Transmission of Local Television Signals. The FCC has adopted various regulations to implement provisions of the Cable Television Consumer Protection and Competition Act of 1992, as amended by the 1996 Act, governing the relationship between broadcasters and cable operators. Among other matters, these regulations require cable systems to devote a specified portion of their channel capacity to the carriage of the signals of local television stations and permit TV stations to elect between having a right to mandatory carriage on local cable systems, referred to as “must carry rights,” or a right to restrict or prevent cable systems from carrying the station’s signal without the station’s permission, referred to as “retransmission consent.” The Communications Act and FCC regulations also contain measures to facilitate competition among cable systems, telephone companies and other systems in the distribution of TV signals, video programming and other services.

     In November 1999, Congress enacted the Satellite Home Viewer Improvement Act of 1999 (“SHVIA”), which established a copyright licensing system for limited distribution of television programming to DBS viewers and directed the FCC to initiate rulemaking proceedings to implement the new system. SHVIA also extended the current system of satellite distribution of distant network signals to unserved households (i.e., those that do not receive a Grade B signal from a local network affiliate).

     As part of those rulemakings, the FCC established a market-specific requirement for mandatory carriage of local television stations, similar to that applicable to cable systems, for those markets in which a satellite carrier chooses to provide any local signal, beginning January 1, 2002. Stations in affected markets were required to select either must carry or retransmission consent rights by July 1, 2001. Further, until 2006, those broadcasters selecting retransmission consent (as opposed to must carry rights) are required to meet certain “good faith” requirements in negotiating for carriage rights. The July 1, 2001 election is effective from January 1, 2002 to December 31, 2005.

     In December 2001, a panel of the U.S. Court of Appeals for the Fourth Circuit upheld the federal law that requires DBS carriers to carry the signals of all local television stations in markets where they elect to carry any local signals. The court also upheld an FCC rule that permits DBS operators to offer all local television stations on a single tier or on an a la carte basis.

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     Digital Television Service. In April 1997, the FCC adopted rules for implementing digital television (“DTV”) service in the United States, which will improve the technical quality of television signals received by viewers and give television broadcasters the ability to provide new services, including high-definition television.

     On April 3, 1997, a second channel on which to initially provide separate DTV programming or simulcast analog programming was assigned to all broadcasters holding a license or construction permit for a full-power television station. These second channels are assigned for an eight-year transition period scheduled to end in 2006. Stations were required to construct their DTV facilities and be on the air with a digital signal according to a schedule set by the FCC based on the type of station and the size of the market in which it is located. Several stations in large markets voluntarily committed in writing to the FCC to build DTV facilities by November 1, 1998, six months before the FCC’s May 1, 1999 deadline. The Company’s network-affiliated stations in Dallas/Fort Worth, Houston and Seattle/Tacoma met the accelerated schedule. Affiliates of the four major networks in the top 30 markets were required to begin transmitting digital signals by November 1999. Belo’s stations in St. Louis, Portland and Charlotte each met this schedule. Except as noted below, all other commercial broadcasters were required to follow suit by May 1, 2002. Currently, all Belo stations are on the air broadcasting digitally except for KSKN (Spokane), which has been granted an extension.

     At the end of the DTV transition period, analog television transmissions will cease and DTV channels will be reassigned to a smaller segment of the broadcasting spectrum comprising channels 2-51. Although the FCC has targeted December 31, 2006 as the date by which all television broadcasters must return their analog licenses, the Balanced Budget Act of 1997 allows broadcasters to maintain both their analog and digital licenses in a market until at least 85 percent of the television households in that market can receive a digital signal. During the transition, broadcasters are being required to “simulcast” the traditional free, analog, over-the-air broadcast service on their digital channels as follows: currently, broadcasters must simulcast 50 percent of the traditional broadcast service on their digital spectrum; as of April 2004, they must simulcast 75 percent of the traditional broadcast service; as of April 2005, they must simulcast 100 percent of the traditional broadcast service.

     When the FCC adopted service rules for the digital television transition, it stated that it would periodically review the transition’s progress. In its first review, completed in 2001, the Commission decided to permit broadcasters to construct initial minimal DTV facilities (i.e., facilities that cover only their cities of license) while retaining interference protection for their allotted and maximized facilities. Eleven Belo stations are operating at reduced power pursuant to such authority.

     In January 2003, the FCC opened its second periodic review of the DTV transition. In this ongoing review, the Commission is revisiting several of the issues addressed in 2001 and considering a number of new matters. These include:

	•		Setting a date by which broadcasters operating with minimal (e.g., reduced power) DTV facilities must either provide DTV service to their full authorized coverage areas or else lose interference protection to the unserved areas;
	•		Deciding when commercial broadcasters with both analog and digital channel assignments within the DTV core spectrum (channels 2-51) must choose their permanent post-transition DTV channel;
	•		Determining whether the FCC’s simulcasting requirement should be retained, revised, or removed; and
	•		Establishing the criteria and methodology for determining when a broadcaster must return its analog spectrum (i.e., selecting measurement standards to determine when 85% of TV households in a station’s service area can receive the broadcaster’s digital signal).

This review remains pending and Belo cannot predict its outcome. The FCC will continue to review the progress of DTV periodically and make adjustments to the 2006 target date, if necessary.

     In addition, in April 2002, FCC Chairman Michael Powell challenged the broadcast, cable, satellite and consumer electronics industries to take certain voluntary actions designed to speed the DTV transition. The consumer electronics industry was reluctant to embrace Chairman Powell’s proposals. Accordingly, the FCC found it necessary to formally mandate a phased-in DTV tuner requirement. Under the new requirements, all new television sets with screens 13 inches and larger and all TV interface devices (VCRs, etc.) must include the capability of tuning and decoding over-the-air digital signals by 2007.

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     In January 2001, the FCC issued a preliminary decision regarding the carriage (“must carry”) rights of digital television broadcasters on local cable and certain DBS systems. Although the FCC deferred making a decision as to whether broadcasters are entitled to simultaneous carriage of both their digital and analog signals during the transition to DTV, the FCC did determine the following:

	•		Digital-only television stations may immediately assert carriage rights on local cable systems;
	•		Television stations that return their analog spectrum and convert to digital operations are entitled to must carry rights; and
	•		A digital-only station asserting must carry rights is entitled only to carriage of a single programming stream and other “program-related” content, regardless of the number of programs it broadcasts simultaneously on its digital spectrum.

     Several parties filed petitions for reconsideration of various parts of the FCC’s DTV must carry decision. Those petitions remain pending before the Commission and Belo cannot predict what changes, if any, the FCC will make to its DTV must carry rules on reconsideration.

     In addition to digital must carry rights, another major concern for the DTV transition involves the technical standards needed to ensure that digital television sets can connect to cable systems. In December 2002, the cable and consumer electronics industries filed a Memorandum of Understanding (“MOU”) with the FCC detailing an agreement on a cable compatibility standard for an integrated, one-way digital cable television receiver, as well as other unidirectional digital cable products. On September 10, 2003, the FCC adopted “plug-and-play” rules for cable adaptability that are substantially similar to those proposed in the MOU. Under these rules, consumers will be able to plug their cable directly into their digital televisions, without the need for a set-top box. These rules cover one-way programming only and the cable and electronics industries continue to work towards an agreement on two-way “plug-and-play” standards that would eliminate the need for set-top boxes for advanced services such as video on demand, impulse pay-per-view and cable operator-enhanced electronic programming guides. Belo cannot predict the outcome of those negotiations.

     More recently, the FCC issued a decision regarding how over-the-air digital broadcasts may be protected from unauthorized copying and distribution. Specifically, on November 4, 2003 the Commission adopted anti-piracy protection for digital television in the form of a “broadcast flag.” A broadcast flag is a digital code that can be embedded into a digital broadcasting stream. This will allow a broadcaster, at its discretion, to prevent mass distribution of its digital signal over the Internet, without affecting consumers’ ability to make digital copies. The Commission also adopted a Further Notice of Proposed Rulemaking seeking comment on a permanent objective process for the approval of digital recording and output content protection technologies that will foster innovation and marketplace competition. This proceeding remains pending and Belo cannot predict its outcome.

     Additionally, the FCC adopted a Notice of Proposed Rulemaking to consider a wide range of legal, technical and policy issues concerning the digital operation of Low Power Television (“LPTV”) stations, TV translator stations and TV booster stations. The Commission has tentatively decided that an LPTV or TV translator station may convert to digital on its existing channel or may apply for a second channel. Belo owns and operates 24 television translators and LPTV stations. This proceeding remains pending and Belo cannot predict its outcome.

     In December 1999, the FCC commenced a proceeding seeking comment on the public interest obligations of television broadcast licensees in the DTV era. Specifically, the FCC requested information in four general areas:

	•		The new flexibility and capabilities of digital television, such as multiple channel transmission;
	•		Service to local communities, including information on public interest activities and disaster relief;
	•		Enhancing access to the media by persons with disabilities and using DTV to encourage diversity in the digital era; and
	•		Enhancing the quality of political discourse.

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In commencing the proceeding, the FCC did not propose specific new rules or policies, but stated that it was seeking to create a forum for public debate on how broadcasters can best serve the public interest during and after the transition to DTV. In early 2003, the Commission called for further comments to update the record on the public interest issues, particularly with regard to multicasting obligations. This proceeding remains pending and Belo cannot predict its outcome.

     In addition, the FCC has commenced, but not completed, a proceeding specifically addressing the children’s programming obligations of DTV broadcast licensees and how the current children’s programming rules should apply to DTV. In this proceeding, the FCC is considering a number of measures that might increase licensees’ current obligation to air at least three hours of educational programming per week.

     Ownership Rules. The FCC’s broadcast ownership rules limit the ownership, operation or control of, as well the “attributable” interests or voting power in: (1) television stations serving the same area; (2) television stations and daily newspapers serving the same area; and (3) television stations and radio stations serving the same area. The rules also limit the aggregate national audience reach of television stations that may be under common ownership, operation and control, or in which a single person or entity may hold office or have more than a specified interest or percentage of voting power. Pursuant to the 1996 Act and recent appropriations legislations, the FCC must review all of its broadcast ownership rules every four years to determine if they remain necessary in the public interest.

     On June 2, 2003, the FCC modified several of its rules governing the ownership of television stations and other media outlets in national and local markets. The modified rules are currently subject to further FCC and judicial review as well as possible congressional action. Specifically, multiple petitions for review of the Commission’s June 2 decision have been consolidated in an appellate proceeding before the U.S. Court of Appeals for the Third Circuit. In September 2003, the Third Circuit issued a stay order preventing the FCC from putting the new media ownership rules into effect pending the outcome of the appeal proceeding. As a result, the former media ownership rules will remain in effect at least until the Court issues a decision, which is anticipated to occur in mid-2004. Further, there are several legislative efforts currently in process that ultimately may alter or roll back the new media ownership rules.

     The FCC’s ownership rules, both those adopted in the June 2 decision and the pre-existing rules that currently remain in effect pursuant to the Court’s stay order, affect the number, type and location of newspaper and broadcast properties that Belo is able to acquire. For example, under the pre-existing FCC rules, Belo generally may not acquire any daily newspaper property in a market where it now owns or has an interest in a television station deemed attributable under FCC rules. (Belo’s ownership of both The Dallas Morning News and WFAA in the Dallas/Fort Worth market predates the adoption of the FCC’s rules regarding newspaper/broadcast cross-ownership and was “grandfathered” by the FCC.) The Company cannot predict how ownership rule modifications including relaxation or elimination of the pre-existing restrictions will affect the broadcasting industry generally or Belo specifically.

     The following describes the FCC’s broadcast ownership rules directly affecting Belo prior to the FCC’s June 2, 2003 decision and currently in effect, and the changes that will occur if the new rules become effective:

     Local TV Ownership Rule:

	•		Existing Rule: Permits common ownership of two commercial television stations with overlapping Grade B contours within a single DMA if (1) eight or more independently owned, full-power, and operational commercial and noncommercial TV stations will remain in the market after the merger and (2) at least one of the commonly-owned stations is not ranked among the top four in the market based on audience share (“top four” standard). Waivers are permitted in the case of failed, failing and unbuilt stations.
	•		New Rule: Would permit a company to own two TV stations in any DMA with at least five television stations, but retains the top four standard. In the largest markets (18 or more TV stations), the new rule allows a company to own three TV stations so long as no more than one is among the market’s top four. In addition to retaining the failed, failing and unbuilt station waiver standard, the new rule also allows parties to seek waivers of the “top four” restriction in markets with 11 or fewer stations.

     Cross-Media Limits:

•

Existing Newspaper/Broadcast Cross-Ownership Rule: Prohibits one entity from owning either a TV or radio broadcast station and a daily newspaper in the same local community.

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•

New Cross-Media Limits: The new cross-media limits would replace both the former newspaper/broadcast cross-ownership restriction and the FCC’s former radio/television cross-ownership limits:

	(1)		In DMAs with three or fewer TV stations, the FCC will not permit cross-ownership between TV stations, radio stations and daily newspapers.
	(2)		In DMAs with four to eight TV stations, the FCC will permit parties to have one of the three following combinations: (a) one or more daily newspaper(s), one TV station, and up to 50 percent of the radio stations that would be permissible under the local radio ownership limits (which allow common ownership of a maximum of between five and eight commercial radio stations, depending on market size); or (b) one or more daily newspaper(s) and as many radio stations as can be owned pursuant to the local radio ownership limits; or (c) two TV stations (so long as ownership would be permissible under the local TV ownership rule) and as many radio stations as the local radio ownership limits permit (but no daily newspapers).
	(3)		In DMAs with nine or more TV stations, the FCC will permit any newspaper and broadcast cross-media combinations so long as it complies with the local TV ownership rule and local radio ownership limits.

     National Television Station Ownership Rule:

	•		Existing Rule: Prohibits any entity from controlling TV stations with a combined potential audience reach that exceeds 35 percent of the TV households in the U.S. An owner of a UHF station is attributed with only 50 percent of the TV households in the station’s market (“UHF discount”).
	•		New Rule: Would prohibit any entity from controlling TV stations with a combined potential audience reach that exceeds 45 percent of the TV households in the U.S.; retains the UHF discount.
	•		As noted above, Congress has used the appropriations process to prevent implementation of the revised national cap. The recent Consolidated Appropriations Act of 2004 includes a compromise provision directing the FCC to set the cap at 39 percent. There may be further legislative efforts to restore the former 35 percent cap.

Attribution Rules

     Pursuant to FCC rules adopted in August 1999, as modified slightly on January 2001, the following positions and interests generally are considered “attributable” for purposes of the agency’s broadcast ownership restrictions:

	•		All officers and directors of a licensee and its direct or indirect parent(s);
	•		Voting stock interests of at least five percent;
	•		Stock interests of at least 20 percent, if the holder is a passive institutional investor (investment companies, banks and insurance companies);
	•		Any equity interest in a limited partnership or limited liability company, unless properly “insulated” from management activities; and
	•		Equity and/or debt interests which in the aggregate exceed 33 percent of a licensee’s total assets, if the interest holder supplies more than 15 percent of the station’s total weekly programming, or is a same-market broadcast company, cable operator or newspaper.

     The foregoing does not purport to be a complete summary of the Communications Act, other applicable statutes or the FCC’s regulations and policies. Proposals for additional or revised regulations and requirements are pending before and are considered by Congress and federal regulatory agencies from time to time. Belo cannot predict the effect of existing and proposed federal legislation, regulations and policies on its business. Also, several of the

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foregoing matters are now, or may become, the subject of court litigation and Belo cannot predict the outcome of any such litigation or the affect on its business.

Employees

     As of December 31, 2003, the Company had approximately 6,700 full-time and 1,200 part-time employees, including approximately 1,200 employees who are represented by various employee unions. Approximately one-half of these union employees are located in Providence, Rhode Island, with the remaining union employees working at various television stations and other properties. Belo believes its relations with its employees are satisfactory.

Available Information

     Belo maintains its corporate Web site at www.belo.com. Belo makes available free of charge on www.belo.com this Annual Report on Form 10-K, its quarterly reports on Form 10-Q, its current reports on Form 8-K and amendments to all those reports, all as filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as soon as reasonably practicable after the reports are electronically filed with or furnished to the Securities and Exchange Commission.

Item 2. Properties

     At December 31, 2003, Belo owned broadcast operating facilities in the following U.S. cities: Dallas, Texas (WFAA); Houston, Texas (KHOU); Seattle, Washington (KING and KONG); Phoenix, Arizona (KTVK and KASW); Portland, Oregon (KGW); Charlotte, North Carolina (WCNC); San Antonio, Texas (KENS); New Orleans, Louisiana (WWL); Norfolk, Virginia (WVEC); Louisville, Kentucky (WHAS); Austin, Texas (KVUE); Tucson, Arizona (KMSB); Spokane, Washington (KREM and KSKN); and Boise, Idaho (KTVB). The Company also leases broadcast facilities for the operations of KMOV in St. Louis, Missouri. Four of the Company’s broadcast facilities use primary broadcast towers that are jointly owned with another television station in the same market (WFAA, KGW, KENS and KVUE). The Company leases broadcast towers for the digital transmission of KMSB and for both the digital and analog transmission of KTTU. The primary broadcast towers associated with the Company’s other television stations are wholly-owned by the Company.

     The Company leases a facility in Washington, D.C. that is used by its television and newspaper operations for the gathering and distribution of news from the nation’s capital. This facility includes a broadcast studio as well as general office space.

     The Company owns and operates a newspaper printing facility and distribution center in Plano, Texas where eight high-speed offset presses are housed to print The Dallas Morning News and the Denton Record-Chronicle. Other operations of The Dallas Morning News are housed in a Company-owned, four-story building in downtown Dallas. The non-production operations of the Denton Record-Chronicle are housed in a Company-owned, two-story building in Denton, Texas.

     The Company also owns and operates a newspaper printing facility in Providence, Rhode Island where three high-speed flexographic presses are housed to print The Providence Journal. The remainder of The Providence Journal’s operations is housed in a Company-owned, five-story building in downtown Providence.

     The Company owns and operates a newspaper publishing facility and a commercial printing facility in Riverside, California. The newspaper publishing facility is located in downtown Riverside, California and is equipped with three high-speed offset presses to print The Press-Enterprise. The non-production operations of The Press-Enterprise are also housed in this facility.

     Each of Belo’s three large market newspapers’ facilities is equipped with computerized input and photocomposition equipment and other equipment that is used in the production of both news and advertising copy.

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     TXCN’s operations are conducted from a fully-equipped digital television facility located in downtown Dallas and owned by the Company. NWCN conducts its regional cable news operations from the KING facility in Seattle, Washington.

     The Company’s corporate operations, several departments of The Dallas Morning News and certain broadcast administrative functions have offices located in downtown Dallas in a seventeen-story office building owned by the Company. The Company also leases space for its secondary data center in Irving, Texas.

     The operations of Belo Interactive are located at each of Belo’s individual operating units and in leased office space in downtown Dallas.

     All of the foregoing operations have additional leasehold and other interests that are used in their respective activities and are not materially important physical properties. The Company believes its properties are in satisfactory condition and are well maintained and that such properties are adequate for present operations.

Item 3. Legal Proceedings

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

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

     No matter was submitted to a vote of shareholders, through the solicitation of proxies or otherwise, during the fourth quarter of the fiscal year covered by this Form 10-K.

PART II

Item 5. Market for Registrant’s Common Equity and Related Stockholder Matters

     The Company’s authorized common equity consists of 450,000,000 shares of Common Stock, par value $1.67 per share. The Company has two series of Common Stock outstanding, Series A and Series B. Shares of the two series are identical in all respects except as noted herein. Series B shares are entitled to 10 votes per share on all matters submitted to a vote of shareholders, while the Series A shares are entitled to one vote per share. Transferability of the Series B shares is limited to family members and affiliated entities of the holder and Series B shares are convertible at any time on a one-for-one basis into Series A shares, and upon a transfer other than as described above Series B shares automatically convert into Series A shares. Shares of the Company’s Series A Common Stock are traded on the New York Stock Exchange (NYSE symbol: BLC). There is no established public trading market for shares of Series B Common Stock. See Note 10 of the Notes to Consolidated Financial Statements.

     The following table lists the high and low trading prices and the closing prices for Series A Common Stock as reported on the New York Stock Exchange for each of the quarterly periods in the last two years, and cash dividends attributable to each quarter for both the Series A and Series B Common Stock.

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     On February 10, 2004, the closing price for the Company’s Series A Common Stock as reported on the New York Stock Exchange was
$27.82. The approximate number of shareholders of record of the Series A and Series B Common Stock at the close of business on such date was 23,662 and 458, respectively.

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Item 6. Selected Financial Data

The following table presents selected financial data of the Company for each of the five years in the period ended December 31, 2003. Certain amounts for the prior years have been reclassified to conform to the current year presentation. For a more complete understanding of this selected financial data, see Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Item 8. “Financial Statements and Supplementary Data,” including the Notes thereto.

(a)		The Company acquired KVUE in June 1999 in exchange for KXTV and purchased KTVK in November 1999. Belo sold KASA-TV and KHNL-TV in October 1999 and KOTV in December 2000.
(b)		The Company purchased the Denton Record-Chronicle in June 1999. Belo sold The Gleaner, The Eagle and the Messenger-Inquirer on November 1, December 1 and December 31, 2000, respectively.
(c)		Other revenues consist primarily of the Company’s regional cable news operations, NWCN and TXCN and, beginning in 2003, revenues from Belo’s consumer expositions business.
(d)		In 2001, Television Group EBITDA includes a charge for employee reduction initiatives totaling $897.
(e)		In 2001, Newspaper Group EBITDA includes a charge for a voluntary early retirement program at The Providence Journal and other employee reduction initiatives totaling $2,261.
(f)		All references to consolidated EBITDA and to its component, segment EBITDA, are references to non-GAAP financial measures. Consolidated EBITDA, which is reconciled to net earnings (loss) above, is defined 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. Management believes that EBITDA is useful as a supplemental measure of evaluating financial performance of the Company and its business segments because of its focus on the Company’s results from operations before interest, income taxes, depreciation and amortization. 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.
(g)		In 2000, the Company recorded a gain of $104,628 on the sales of The Gleaner in Henderson, Kentucky, The Eagle in Bryan-College Station, Texas, the Messenger-Inquirer in Owensboro, Kentucky and KOTV in Tulsa, Oklahoma. In 1999, the Company recorded a non-cash gain of $50,312 on the exchange of KVUE in Austin, Texas for KXTV in Sacramento, California, a gain of $20,448 on the sales of KASA in Albuquerque, New Mexico and KHNL in Honolulu, Hawaii and a gain of $47,006 on the sale of its investment in Falcon Communications, a cable system operator.
(h)		Effective January 1, 2002, the Company adopted Statement of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets” and ceased the amortization of goodwill and certain other intangibles with indefinite lives. See Note 4 to the Consolidated Financial Statements.
(i)		Net earnings in 2003 includes an after-tax gain of $1,098 (1 cent per share) on the sale of KENS-AM, Belo’s radio station in San Antonio, Texas. Net earnings in 2002 includes an after-tax gain of $1,841 (2 cents per share) on the sale of the Company’s interest in the Dallas Mavericks and the American Airlines Center, an after-tax credit of $2,446 (2 cents per share) related to the favorable resolution of certain contingencies from properties sold in the fourth quarter of 2000 and an after-tax gain of $1,261 (1 cent per share) related to the curtailment of Belo’s post-retirement medical program. Net loss in 2001 includes an after-tax charge of $18,529 (17 cents per share) for the write-down of certain Internet investments and an after-tax charge of $5,221 (4 cents per share) related to early retirements and a Company-wide reduction in force. Net earnings in 2000 include the following after-tax items: 1) $65,367 (56 cents per share) gain on the sales of KOTV, the Messenger-Inquirer, The Eagle and The Gleaner; 2) $12,190 (10 cents per share) gain on a legal settlement; and 3) $18,331 (16 cents per share) charge for the write-down of certain Internet investments. Net earnings in 1999 include the following after-tax transactions: 1) $49,060 (41 cents per share) non-cash gain on the exchange of KXTV for KVUE; 2) $16,348 (14 cents per share) gain on the sale of KASA and KHNL; and 3) $28,489 (24 cents per share) gain on the sale of Belo’s investment in Falcon Communications.
(j)		Long-term debt decreased in 2003, 2002 and 2001 due primarily to the use of net cash provided by operations to pay down debt. Long-term debt decreased in 2000 due to cash proceeds from the sale of subsidiaries (partially offset by the repurchase of 9,642,325 shares of the Company’s stock for $171,712). Long-term debt increased in 1999 due primarily to net borrowings of $298,796 to finance various acquisitions.

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

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

     The Company operates its business in four segments, the Television Group, the Newspaper Group, Interactive Media and Other. The Company owns and operates 19 television stations and publishes four daily newspapers. The following table sets forth the Company’s major media assets by segment as of December 31, 2003:

Television Group

Newspaper Group

Interactive Media

Other

(a)		Market rank is based on the relative size of the television market, or Designated Market Area (“DMA”), among the 210 generally recognized DMAs in the United States, based on November 2003 Nielsen estimates.
(b)		Substantially all the revenue of the Company’s television stations is derived from advertising. Approximately 3.5 percent of Television Group revenue is provided by compensation paid by networks to the television stations for broadcasting network programming.
(c)		Represents the number of television stations (both VHF and UHF) broadcasting in the market, excluding public stations, low power broadcast stations and national cable channels.
(d)		Station rank is derived from the station’s rating, which is based on November 2003 Nielsen estimates of the number of television households tuned to the Company’s station for the Sunday-Saturday 7:00 a.m. to 1:00 a.m. period (“sign-on/sign-off”) as a percentage of the number of television households in the market.
(e)		Station audience share is based on November 2003 Nielsen estimates of the number of television households tuned to the station as a percentage of the number of television households with sets in use in the market for the sign-on/sign-off period.
(f)		Belo entered into an agreement to operate KBEJ under a local marketing agreement (“LMA”) in May 1999; the station’s on-air date was August 3, 2000.
(g)		Belo acquired KTTU, previously operated under an LMA, on March 12, 2002.
(h)		Belo acquired KSKN, previously operated under an LMA, on October 1, 2001.
(i)		The Company also owns KTFT-LP (NBC), a low power television station in Twin Falls, Idaho.
(j)		The first issue of The Dallas Morning News was published by Belo on October 1, 1885.
(k)		Average paid circulation is for the six months ended September 30, 2003, according to the Audit Bureau of Circulations’ FAS-FAX report, except for the Denton Record-Chronicle, for which circulation data is taken from the Certified Audit of Circulations Report for the twelve-month period ended December 31, 2002.
(l)		The majority of Belo Interactive’s Web sites are associated with the Company’s television stations and newspapers and primarily provide news and information.
*		Tied with one or more stations in the market.