UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended: December 31, 2004

OR

[    ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file no. 1-8598

BELO CORP.

(Exact name of registrant as specified in its charter)

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

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act: Series B Common Stock, $1.67 par value

(Title of class)                                                                

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. [ X ]

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, 2004, 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 $3,085,500,131.*

Shares of Common Stock outstanding at February 28, 2005: 114,228,563 shares. (Consisting of 98,360,791 shares of Series A Common Stock and 15,867,772 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:

Portions of the registrant’s Proxy Statement, prepared pursuant to Regulation 14A, relating to the Annual Meeting of Shareholders to be held May 10, 2005, are incorporated by reference into Part III (Items 10, 11, 12, 13 and 14) of this report.

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FORM 10-K

TABLE OF CONTENTS

2         Belo Corp.

PART I

Item 1. Business

Belo Corp. (“Belo” or the “Company”), a Delaware corporation, began as a Texas newspaper company in 1842. Belo today 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 $1.5 billion in 2004 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 U.S. markets) that reach 13.9 percent of U.S. television households, and manages one television station through a local marketing agreement (“LMA”). Belo’s daily newspapers are The Dallas Morning News, The Providence Journal, The Press-Enterprise (Riverside, CA) and the Denton Record-Chronicle (Denton, TX). In addition, Belo owns three cable news channels and holds ownership interests in four others. Belo operates 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 for over 162 years. These principles have built durable relationships with viewers, readers, advertisers and online users and have guided Belo’s success.

Note 16 to the Consolidated Financial Statements contains information about the Company’s segments for the years ended December 31, 2004, 2003 and 2002.

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 through an LMA. In the 15 U.S. markets in which the Television Group operates, eleven of Belo’s stations are ranked number one and two are ranked number two (including stations tied with one or more other stations in the market) in “sign-on/sign-off” audience rating, based on the November 2004 Nielsen Media Research report. Belo has six stations in the top 15 markets and fourteen stations in the top 50 markets.

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:

The Company has a balanced portfolio of broadcast 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. As such, Belo’s Television Group revenue streams are not significantly affected by which broadcast network leads primetime. Belo also owns two independent (“IND”) stations, two WB affiliates, one FOX affiliate and one United Paramount Network (“UPN”) affiliate, and operates one additional UPN affiliate through an LMA.

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 17 Alfred I. duPont-Columbia Awards, 15 George Foster Peabody Awards and 26 Edward R. Murrow Awards – the industry’s most prestigious honors.

The Company’s television broadcasting operations began in 1950 with the acquisition of WFAA-TV shortly after the station began operations. In 1984, the Company expanded its television operations with the purchase of KHOU-TV 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-TV 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 through an LMA in 1999. In 1999, Belo acquired KVUE-TV in Austin and KTVK-TV in Phoenix. In 2000, Belo acquired KONG-TV in Seattle/ Tacoma and KASW-TV in Phoenix, which stations were previously managed by Belo through LMAs. In 2001 and 2002, Belo purchased KSKN-TV in Spokane and KTTU-TV in Tucson, respectively. Belo operated KSKN-TV and KTTU-TV through LMAs prior to the purchases. On December 20, 2004, Belo entered into joint marketing and shared services agreements with HIC Broadcasting, Inc., the owner and operator of KFWD-TV, Channel 52, licensed to Fort Worth, Texas. These agreements expire December 31, 2009, but are subject to extension. Under these agreements, Belo will provide

Belo Corp.          3

advertising sales assistance, certain technical services and facilities to support the operations of KFWD-TV, as well as limited programming.

The following table sets forth information for each of the Company’s television stations (including the station which it operates through an LMA) and their markets as of December 31, 2004:

The principal source of revenue for Belo’s television stations is the sale of airtime to local and national advertisers. In 2004, approximately 94.2 percent of total television revenues was derived from spot revenues. Network compensation was approximately 2.9 percent of total television revenues in 2004.

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. 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

4         Belo Corp.

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 with ABC, CBS, NBC, FOX, WB and UPN. The station Belo operates through an LMA is affiliated with UPN.

Definitive network affiliation agreements between ABC and four of the Company’s television stations (WFAA-TV, WHAS-TV, WVEC-TV and KVUE-TV) 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 under a short-term extension, and the Company expects to enter into a definitive renewal agreement or agreements with ABC.

Newspaper Group

Belo’s Newspaper Group includes four daily newspapers. The Dallas Morning News is recognized as one of the leading newspapers in America and has earned seven Pulitzer Prizes since 1986 for its news reporting and photography. 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 publications, The Dallas Morning News Collin County Edition, al dia and Quick. The Dallas Morning News Collin County Edition, introduced in March 2003, serves residents in fast-growing Collin County, Texas. The Dallas Morning News launched al dia, a Spanish-language newspaper, in September 2003 to support the growing Hispanic market in North Texas. Quick was introduced in November 2003 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 fast-growing Coachella Valley.

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:

The Dallas Morning News, The Providence Journal and The Press-Enterprise provide extensive 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 Bernardino counties.

Belo’s Newspaper Group derives its revenue from advertising, circulation and commercial printing. For the year ended December 31, 2004, advertising revenue accounted for 86.4 percent of total newspaper revenue while circulation revenue accounted for 12.3 percent and commercial printing accounted for most of the remainder.

Belo Corp.          5

The following table sets forth information concerning the prices of the Company’s primary daily newspapers as of December 31, 2004:

The basic material used in publishing Belo’s newspapers is newsprint. Currently, most of Belo’s newsprint is obtained through a purchasing consortium of which Belo is a member. The Providence Journal purchases approximately 85.5 percent of its newsprint from other suppliers under long-term contracts; these contracts provide for certain minimum purchases per year. Management believes the Company’s sources of newsprint, along with available alternate sources, are adequate for the Company’s current needs.

During 2004, Belo’s publishing operations consumed approximately 211,950 metric tons of newsprint at an average cost of $509 per metric ton. Consumption of newsprint in the previous year was approximately 219,000 metric tons at an average cost per metric ton of $463. Newsprint prices increased approximately 12.2 percent in 2004. The average price of newsprint is expected to be higher in 2005 than in 2004, although the amount and timing of any increase cannot be predicted with certainty.

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 The Dallas Morning News, 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 The Dallas Morning News resulted from the aggressive pursuit of circulation goals by former senior circulation managers using incentive contests, bonuses and low newspaper wholesale rates to stimulate circulation growth, 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 Dallas Morning News 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, al dia, Quick and the Denton Record-Chronicle. Based on this review, the investigators concluded that the circulation distribution processes at these other publications were significantly different from those used at The Dallas Morning News.

On August 16, 2004, the Company announced a voluntary advertiser plan developed by management in response to the circulation overstatement. As a result, the Company recorded a charge of $23.5 million in 2004 related to the advertiser plan, of which approximately $19.6 million, consisting of cash payments to advertisers, was classified as a reduction of revenues and approximately $3.9 million, consisting of related costs, was included in other operating costs. Approximately 18,600 checks, net of undeliverable checks, were mailed or delivered to advertisers as part of the plan. As of February  25, 2005, 89.5 percent of the checks have cleared, representing 92.3 percent of the dollars. The Dallas Morning News’ payments to affected advertisers under the plan were made without the condition that such advertisers release The Dallas Morning News from liability for the circulation overstatement. The plan also included future advertising credits. To use the credits, advertisers generally must place advertising in addition to the terms of each advertiser’s current contract. Credits earned may be used by the end of an advertiser’s contract period or February 28, 2005, whichever is later. The Company currently expects advertisers to use approximately $13.8 million of the credits, of which approximately $8.0 million had been used as of December 31, 2004. The Company believes that the advertising credits were a modest deterrent to advertising revenue growth at The Dallas Morning News in the fourth quarter of 2004 and expects a similar impact in the first quarter of 2005.

On February 3, 2005, The Dallas Morning News filed its Publisher’s Statement with the Audit Bureau of Circulations (the “Audit Bureau”) for the six-month period ended September 30, 2004. The reported circulation figures represent a decrease of 5.4 percent daily and 11.7 percent Sunday compared to the prior year period. The Audit Bureau advised The Dallas

6         Belo Corp.

Morning News on January 21, 2005, that the Audit Bureau will not be issuing an audit report of the newspaper’s circulation for the twelve months ended March 31, 2004 or the six months ended September 30, 2004, as it had originally planned.

The Audit Bureau concluded not to issue 2004 audit reports for The Dallas Morning News due primarily to the absence of reliable records of independent contractors to support revised circulation figures for city single copy sales. The Audit Bureau advised The Dallas Morning News that sufficient records and data do exist to confirm the accuracy of circulation figures for the six-month period ended September 30, 2004 for all areas other than city single copy sales, and that these figures appear to be materially accurate. That Audit Bureau conclusion is consistent with the conclusion reached by the independent investigation conducted for the Audit Committee of Belo’s Board of Directors, which was completed in September 2004. The Audit Bureau’s bylaws require that the Audit Bureau’s Board of Directors approve the release of any Publisher’s Statement not subject to subsequent audit, and The Dallas Morning News requested such approval for the September 2004 Publisher’s Statement. The contents of the Publisher’s Statement were reviewed and discussed with the Audit Bureau prior to filing, including the methodologies used to estimate circulation in city single copy sales where reliable records do not exist for the entire period. On March 7, 2005, The Dallas Morning News was advised that the Audit Bureau’s Board of Directors declined this request.

The Audit Bureau is presently auditing The Dallas Morning News circulation for the six months ending March 31, 2005, and has advised The Dallas Morning News that it expects to release that audit report during the second quarter of 2005. For that six month reporting period, The Dallas Morning News’ circulation is expected to be approximately 481,000 daily and 661,000 Sunday, decreases of approximately 47,000 newspapers daily versus March 2004, or 8.9 percent, and 95,000 newspapers Sunday, or 12.6 percent.

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 Dallas Morning News’ circulation overstatement. The Company has briefed the SEC on The Dallas Morning News circulation situation and related matters. The information voluntarily provided to the SEC relates to The Dallas Morning News, 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.

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 products and 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 serve the needs of its audience.

The majority of the Company’s Web sites are associated with the Company’s television stations and newspapers and primarily provide news and information. According to Nielsen/NetRatings, the Company has seven of the top 50 and nine 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 markets. The Company is currently integrating the sales, advertising and content of the Company’s Web sites into their related operating companies to maximize revenue growth. Revenues for Interactive Media in 2004 were principally derived from advertising on Belo’s various Web sites and, to a much lesser extent, fees generated from Internet service provider subscriptions and data retrieval services.

Other

Belo’s other operations consists primarily of its regional cable news operations. These regional cable news operations include Texas Cable News (“TXCN”), NorthWest Cable News (“NWCN”) and 24/7 NewsChannel (“24/7”) in Boise, Idaho, 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. 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 use the news resources of the television stations owned by the Company in those markets. Revenues from Belo’s cable news operations in 2004 were principally derived from advertising and subscriber-based fees.

On July 23, 2004, the Company and Time Warner Cable (“Time Warner”) announced the discontinuation of their joint ventures that operated the local cable news channels in Charlotte, North Carolina and Houston and San Antonio, Texas. The operations of the Houston and San Antonio, Texas news channels ceased on July 23, 2004. The Charlotte, North

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Carolina cable news channel continues to be operated solely by Time Warner after the discontinuation of the joint venture on July 23, 2004.

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, cable television systems, the Internet, direct broadcast satellite (“DBS”), radio stations, outdoor advertising, 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 Company’s 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 national telephone companies and other multichannel video programming distributors into the local 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 (1) determine stations’ operating frequencies, location and power; (2) issue, renew, revoke and modify station licenses; (3) regulate equipment used by stations; (4) impose penalties for violation of the Communications Act or FCC regulations; and (5) 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 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 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. The FCC grants television station licenses for terms of up to eight years. The Communications Act requires renewal of a television license if the FCC finds that (1) the station has served the public interest, convenience and necessity; (2) there have been no serious violations by the licensee of either the Communications Act or the FCC’s rules and regulations; and (3) there have been no other violations by the licensee of either the Communications Act or the FCC’s

8         Belo Corp.

rules and regulations which, taken together, constitute a pattern of abuse. The current license expiration dates for each of Belo’s television broadcast stations are as follows:

The current license expiration date for both KBEJ-TV and KFWD-TV, the television stations to which the Company provides programming, is August 1, 2006.

Programming and Operations. FCC rules and policies, and rules and policies of other federal agencies, regulate certain programming practices and other areas affecting the business and operations of broadcast stations.

The Children’s Television Act of 1990 limits the amount of commercial matter in children’s television programs and requires each station to present educational and informational children’s programming. Pursuant to the FCC’s implementing rules, broadcasters are required to provide a minimum of three hours of children’s educational programming per week. In addition, in September 2004, the FCC issued “public interest” mandates relating to the implementation of digital television service (“DTV”) (which is discussed in detail below). Among other things, the FCC determined that the amount of children’s educational programming a DTV broadcaster must air will increase proportionally with the number of free video programming streams broadcast simultaneously (or “multicast”) by the broadcaster. The FCC also established restraints designed to address “commercialization” of children’s fare on both analog and digital programming.

In July 2004, the FCC released a wide-ranging Notice of Inquiry into broadcasters’ localism practices. The notice evaluates whether additional regulation is necessary to ensure that licensees satisfy the programming needs and interests of local audiences. The proceeding remains pending, and Belo cannot predict its outcome.

In October 2002, the FCC adopted Equal Employment Opportunity (“EEO”) rules, which went into effect on March 10, 2003. These rules impose job information dissemination, recruitment and reporting requirements. Licenses must retain documentation of each of the required recruitment activities and file periodic reports relating to the EEO requirements. Broadcasters are subject to random audits to ensure compliance with the EEO rules and could be sanctioned for noncompliance.

The FCC recently has stepped up its enforcement with respect to broadcast indecency. In doing so, it has stated its willingness to find licensees liable for repeated violations during a single program (which can lead to significantly increased fines) and issued warnings about possible license revocation proceedings for serious violations. In addition, Congress has passed legislation to increase penalties for broadcasting indecent material.

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, governing the relationship between broadcasters and cable operators. Among other matters, these regulations require cable systems to

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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 “must carry rights” or a right to restrict or prevent cable systems from carrying the station’s signal without the station’s permission (“retransmission consent”).

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 direct broadcast satellite (“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 the rulemakings required under SHVIA, 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.

Congress recently passed the Satellite Home Viewer Extension and Reauthorization Act of 2004 (“SHVERA”), which extends the compulsory copyright license for carriage of distant signals through December 31, 2009 and addresses a variety of other issues related to the carriage of broadcast television signals on DBS systems. Specifically, SHVERA requires satellite carriers to phase out the carriage of distant signals in markets where they offer local broadcast service. The new statute also permits satellite carriers to deliver the distant signal of a network station to consumers in unserved digital households (also referred to as “digital white areas”), but only if the local station affiliated with that network misses the FCC’s deadlines for increasing the station’s digital signal power.

Digital Television Service. In 1997, the FCC adopted rules for implementing DTV service, 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. All broadcasters holding a license or construction permit for a full-power television station have been temporarily assigned a second channel in order to provide either separate DTV programming or a simulcast of their analog programming. 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. Currently, all Belo stations are on the air broadcasting digitally.

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 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. Last year, the FCC Media Bureau proposed a plan that would allow the 85 percent threshold to be met nationwide on January 1, 2009. In addition, legislative proposals have been introduced that are designed to speed the end of the transition. Belo cannot predict the outcome of either the Commission’s or the legislative proposals.

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 September 2004, the FCC issued a decision in its second periodic review of the DTV transition. Among other things, the decision set deadlines 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. In addition, the decision established a multi-step process by which broadcasters may select their post-transition DTV channel within the core DTV spectrum (Channels 2-51). This process began in November 2004, with a goal of having all channel assignments finalized by the end of 2006.

In January 2001, the FCC issued a preliminary decision regarding the carriage (“must carry”) rights of digital broadcasters on local cable and certain DBS systems in which the FCC determined that (1) digital-only stations may immediately assert carriage rights on local cable systems; (2) stations that return their analog spectrum and convert to digital operations are entitled to must carry rights; and (3) a digital-only station asserting must carry rights is entitled to carriage only of a single programming stream and other “program-related” content, regardless of the number of programs multicast on its digital spectrum. In February 2005, the Commission released a decision on reconsideration in which it (1) affirmed its prior tentative conclusion not to impose a dual carriage requirement on cable operators (which would have required them to carry broadcasters’ analog and digital signals simultaneously); and (2) affirmed its prior determination that cable operators are not required to carry more than a single digital programming stream from any particular broadcaster. Further FCC action or legislation on these issues is possible.

The FCC decided in August 2003 to require, by 2007, all new television sets with screens 13 inches and larger and all TV interface devices (VCRs, etc.) to include the capability of tuning and decoding over-the-air digital signals. In addition, on

10         Belo Corp.

September 10, 2003, the FCC adopted “plug-and-play” rules for cable adaptability. 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; the cable and electronics industries are negotiating 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.

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 consumer’s ability to make limited digital copies. Digital television equipment must comply with the FCC’s broadcast flag requirements by July 1, 2005.

Broadcasters are permitted either to provide a single HDTV signal or to multicast several program streams in lower resolution DTV formats. Broadcasters also may use some of their digital spectrum to provide non-broadcast “ancillary” services– such as subscription video, data transfer or audio signals– provided such services do not interfere with the mandatory free digital broadcasts. Stations using DTV spectrum for subscription services must pay the government a fee of 5 percent of gross revenues received from such use of the digital spectrum. Network-affiliated DTV broadcasters in the top 30 television markets must broadcast a DTV signal at any time they broadcast an analog signal. All other stations currently must air a DTV signal for 75 percent of the time they provide an analog signal, increasing to 100 percent on April 1, 2005. The DTV signal must always be in operation during prime time hours.

Also under consideration at the FCC are issues such as whether a licensee’s public interest obligations attach to DTV service as a whole or to each program stream offered by the licensee; whether the Commission should establish more specific public interest requirements for digital broadcasters; and the improvement of candidate access to television. Belo cannot predict the outcomes of these proceedings.

Ownership Rules. The FCC’s ownership rules affect the number, type and location of broadcast and newspaper properties that Belo may hold or acquire in the future. The rules now in effect limit the aggregate national audience that a broadcaster may reach through television stations that it owns, operates, or controls, or in which it has an “attributable” interest (as described below). FCC rules also place certain limits on the common ownership, operation, or control of, as well as the acquisition or retention of attributable interests in:

The FCC completed a review of its ownership rules in 2003, relaxing restrictions on the common ownership of television stations, radio stations and daily newspapers within the same local market. On June 24, 2004, however, the United States Court of Appeals for the Third Circuit released a decision rejecting much of the Commission’s 2003 decision. While affirming the FCC in certain respects, the Third Circuit found fault with the proposed new limits on media combinations, remanded them to the agency for further proceedings and extended a stay on the implementation of the new rules that it had imposed in September 2003. As a result, the restrictions that were in place prior to the FCC’s 2003 decision generally continue to govern media transactions, pending completion of the agency proceedings on remand, possible legislative intervention, and/or further judicial review. In January 2005, several parties, including Belo, filed petitions for Supreme Court review of the Third Circuit’s decision. Belo cannot predict whether the Supreme Court will determine to review the ownership decision or what the outcome of any such further review proceedings might be. The discussion below reviews the changes contemplated in the FCC’s 2003 decision and the Third Circuit’s response to the revised ownership regulations that the Commission adopted.

1. Local Television Ownership

In 2003, the FCC relaxed the local television ownership regulation by eliminating its “eight voices” test, which barred co-ownership of two TV stations in a local market unless at least eight independently owned, full-power television stations, or “voices,” remained. The modified rule would have permitted a company to own two commercial television facilities in any market with at least five such stations. In the largest markets– those with at least 18 television stations– a company would, for the first time, be permitted to own three TV stations. Under the new rules, both duopolies and triopolies would be subject to the Commission’s “top four” limitation, meaning that no more than one of the co-owned stations may be ranked among the top four in audience ratings. The Third Circuit upheld the top-four rule, but remanded for further consideration the other numerical limits applicable to same-market TV station combinations. The “eight voices” requirement of the pre-2003 rules therefore remains in effect.

Belo Corp.          11

2. Cross-Media Limits

The newspaper/ broadcast cross-ownership rule generally prohibits one entity from owning both a commercial broadcast station and a daily newspaper in the same community.⁽¹⁾ The radio/television cross-ownership rule allows a party to own one or two TV stations and a varying number of radio stations within a single market, depending on the number of independently owned media voices that remain. The cross-media limits adopted by the FCC in 2003 would supplant both rules with three different categories of restrictions based on the number of commercial and noncommercial full-power television stations in the market. First, in markets with three or fewer TV stations, the FCC would not permit any cross-ownership among TV stations, radio stations, and daily newspapers. Second, in markets with between four and eight TV stations, the agency would permit limited cross-ownership. Finally, in local markets with nine or more TV stations, the Commission would allow any newspaper and broadcast cross-media combinations, so long as they comply with the local TV ownership rule and local radio ownership rule. The Third Circuit remanded the new cross-media limits to the Commission for further consideration, and the newspaper/ broadcast cross-ownership rule was left in place in the meantime.

3. National Television Station Ownership Cap

In 2003, the FCC modified the national TV ownership cap on the percentage of U.S. households that a single owner can reach through commonly owned television stations from 35 percent to 45 percent. On January 22, 2004, President Bush signed into law the Consolidated Appropriations Act of 2004, which re-set the national TV ownership cap at 39 percent.

Attribution Rules. Pursuant to FCC rules, the following positions and interests generally are considered “attributable” for purposes of the agency’s broadcast ownership restrictions:

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

Employees

As of December 31, 2004, the Company had approximately 6,400 full-time and 1,200 part-time employees, including approximately 1,200 employees 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.

12         Belo Corp.

Item 2. Properties

At December 31, 2004, Belo owned broadcast operating facilities in the following U.S. cities: Dallas, Texas (WFAA-TV); Houston, Texas (KHOU-TV); Seattle, Washington (KING-TV and KONG-TV); Phoenix, Arizona (KTVK-TV and KASW-TV); Portland, Oregon (KGW-TV); Charlotte, North Carolina (WCNC-TV); San Antonio, Texas (KENS-TV); New Orleans, Louisiana (WWL-TV); Norfolk, Virginia (WVEC-TV); Louisville, Kentucky (WHAS-TV); Austin, Texas (KVUE-TV); Tucson, Arizona (KMSB-TV and KTTU-TV); Spokane, Washington (KREM-TV and KSKN-TV); and Boise, Idaho (KTVB-TV). The Company also leases broadcast facilities for the operations of KMOV-TV 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-TV, KGW-TV, KENS-TV and KVUE-TV). The Company leases broadcast towers for the digital transmission of KMSB-TV and for both the digital and analog transmission of KTTU-TV. 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 broadcast and production studios 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, the Denton Record-Chronicle, Quick, and al dia. 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.

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-TV facility in Seattle, Washington.

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

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

The Company has additional leasehold and other interests that are used in its activities, which interests are not material. 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

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 executive of The Dallas Morning News. The complaints arise out of the circulation overstatement at The Dallas Morning News, 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 the consolidation of all cases arising out of the same facts and presenting the same claims, and on February 7, 2005, plaintiffs filed an amended, consolidated complaint adding as defendants John L. Sander, Dunia A. Shive, and Dennis A. Williamson, executive officers of Belo, and James M. Moroney III, an executive officer of The Dallas Morning News. 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.

Belo Corp.          13

A number of other legal proceedings are pending against the Company, including several actions for alleged libel and/or defamation. 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 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 Annual Report on Form 10-K.

PART II

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.

On February 24, 2005, the closing price for the Company’s Series A Common Stock as reported on the New York Stock Exchange was $24.01. 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 28,836 and 56, respectively.

14         Belo Corp.

Issuer Purchases of Equity Securities

The following table provides information about the Company’s Series A Common Stock repurchases during the quarter ended December 31, 2004. The Company did not repurchase any shares of Series B Common Stock during the quarter ended December 31, 2004.

Belo Corp.          15

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, 2004. 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.

16         Belo Corp.

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.

All references to earnings per share represent diluted earnings per share.

Overview

In 2004, the Company operated 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, 2004:

Belo Corp.          17

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. The Company also derives revenues, to a much lesser extent, from the sale of daily newspapers, from compensation paid by networks to its television stations for broadcasting network programming, and from subscription and data retrieval fees and amounts charged to customers for commercial printing.

Total net revenues in 2004 were higher than 2003 as a result of revenue increases in all of the Company’s segments related to increases in advertising demand. In 2004, the demand for advertising was 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 for 2004 included approximately $9.7 million of advertising revenues generated by the Company’s NBC affiliates from their broadcast of the Summer Olympics.

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.

Forward-Looking Statements

Statements in Items 7 and 7A and elsewhere in this Annual Report on Form 10-K concerning Belo’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, interest rates and newsprint prices; The Dallas Morning News circulation matters, including current and future audits of that newspaper’s circulation by the Audit Bureau of Circulations; technological changes, including the transition to digital television and the development of new systems to distribute television and other audio-visual content; 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; general economic conditions; and significant armed conflict, as well as other risks detailed in Belo’s other public disclosures, filings with the Securities and Exchange Commission and elsewhere in this Annual Report on Form 10-K.

GAAP and Non-GAAP Financial Measures

In this report, financial measures are presented in accordance with accounting principles generally accepted in the United States (“GAAP”) and also on a non-GAAP basis. The Company defines Consolidated EBITDA as net earnings before interest expense, income taxes, depreciation and amortization. Consolidated EBITDA is not a measure of financial performance under GAAP. Management uses Consolidated EBITDA in internal analyses as a supplemental measure of the financial performance of the Company to assist it with determining consolidated performance targets and performance comparisons against its peer group of companies, as well as capital spending and other investing decisions. Consolidated EBITDA is also a

18         Belo Corp.

common alternative measure of performance used by investors, financial analysts, and rating agencies to evaluate financial performance.

Critical Accounting Policies and Estimates

Belo’s financial statements are based on the selection and application of accounting policies, which require management to make significant estimates and assumptions. The Company believes that the following are some of the more critical accounting policies currently affecting Belo’s financial position and results of operations.

Revenue Recognition Broadcast revenue is recorded, net of agency commissions, when commercials are aired. Newspaper advertising revenue is recorded, net of agency commissions, when the advertisements are published in the newspaper. Advertising revenues for Internet Web sites are recorded, net of agency fees, ratably over the period of time the advertisement is placed on Web sites. Proceeds from subscriptions are deferred and are included in revenue on a pro-rata basis over the term of the subscriptions. Commercial printing revenue is recorded when the product is shipped.

Bad Debts Belo maintains allowances for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. If the financial condition of Belo’s customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required.

Impairment of Property, Plant and Equipment, Goodwill and Intangible Assets In assessing the recoverability of the Company’s property, plant and equipment, goodwill and intangible assets, the Company must make assumptions regarding estimated future cash flows and other factors to determine the fair value of the respective assets. If these estimates or their related assumptions change in the future, the Company may be required to record impairment charges not previously recorded for these assets. At December 31, 2004, Belo had investments of $536 million in net property, plant and equipment, $1.2 billion in goodwill and $1.4 billion in intangible assets, primarily FCC licenses. During the years ended December 31, 2004 and 2003, the Company did not record any impairment losses related to property, plant, and equipment, goodwill or intangible assets.

Prior to January 1, 2002, all of the acquired intangible assets were classified together as “goodwill and intangible assets” in the Company’s consolidated financial statements and were amortized over a composite life of 40 years. Effective January 1, 2002, the Company reclassified the FCC licenses apart from goodwill as separate indefinite lived intangible assets and ceased amortization of both goodwill and the FCC licenses. The Company was not able to reclassify any amounts related to the network affiliation agreements apart from goodwill, as the accounting records that would allow for segregation of these assets were not available. Substantially all of the network affiliation agreements acquired in these business acquisitions were acquired prior to December 31, 1999, and many of these agreements have been modified or replaced by new agreements. In addition, the Company believes that network affiliation agreements currently do not have a material value that is separable from the related FCC licenses, because without an FCC license, a broadcast company cannot obtain a network affiliation agreement. Accordingly, the Company believes that the remaining value of its acquired network affiliated agreements was not significant as of January 1, 2002.

If the Company had assigned separate values for its acquired network affiliation agreements and, therefore, less value to its broadcast licenses, it would have had a significant impact on the Company’s historical operating results. The following chart reflects the impact of a hypothetical reassignment of value from broadcast licenses to network affiliation agreements and the resulting increase in amortization expense assuming a 15-year amortization period. However, had the Company amortized the values over the lives of the respective contracts, there would have been no material impact on the Company’s results of operations for the year ended December 31, 2004, as substantially all of these agreements have been modified or replaced since acquisition.

Belo Corp.          19

Contingencies Belo is involved in certain claims and litigation related to its operations. In the opinion of management, liabilities, if any, arising from these claims and litigation would not have a material adverse effect on Belo’s consolidated financial position, liquidity or results of operations. The Company is required to assess the likelihood of any adverse judgments or outcomes to these matters as well as potential ranges of probable losses. A determination of the amount of reserves required, if any, for these contingencies is made after careful analysis of each individual matter. The required reserves may change in the future due to new developments in each matter or changes in approach such as a change in settlement strategy in dealing with these matters.

Employee Benefits Belo is effectively self-insured for employee-related health care benefits. A third-party administrator is used to process all claims. Belo’s employee health insurance liability is based on the Company’s historical claims experience and is developed from actuarial valuations. Belo’s reserves associated with the exposure to the self-insured liabilities are monitored by management for adequacy. However, actual amounts could vary significantly from such estimates.

Pension Benefits Belo’s pension costs and obligations are calculated using various actuarial assumptions and methodologies prescribed under SFAS No. 87, “Employers’ Accounting for Pensions.” The Company uses assumptions including, but not limited to, the selection of the discount rate, long-term rate of return on plan assets, projected salary increases and mortality rates. The discount rate assumption is based on a review of high quality corporate bond rates and the change in these rates during the year. The assumptions regarding the long-term rate of return on plan assets and projected salary increases are based on an evaluation of the Company’s historical trends and experience taking into account current and expected market conditions. The actuarial assumptions used in the Company’s pension reporting are reviewed periodically and compared with external benchmarks for reasonableness. Although the Company believes that the assumptions used are appropriate, differences between assumed and actual experience may affect the Company’s operating results. See Note 7 to the Consolidated Financial Statements for additional information regarding the Company’s pension plan.

Recent Accounting Pronouncements

In December 2004, the FASB issued SFAS No. 123R, “Share-Based Payment”. SFAS No. 123R is a revision of SFAS No. 123, “Accounting for Stock Based Compensation”, and supersedes APB 25. Among other items, SFAS 123R eliminates the use of APB 25 and the intrinsic value method of accounting, and requires companies to recognize the cost of employee services received in exchange for awards of equity instruments, based on the grant date fair value of those awards, in the financial statements. The effective date of SFAS 123R is the first reporting period beginning after June 15, 2005, which is third quarter 2005 for calendar year companies. The Company currently expects to adopt SFAS 123R effective July 1, 2005 using the “modified prospective” method. Under the “modified prospective” method, compensation cost is recognized in the financial statements beginning with the effective date, based on the requirements of SFAS 123R for all share-based payments granted after that date, and based on the requirements of SFAS 123 for all unvested awards granted prior to the effective date of SFAS 123R. Financial information for periods prior to the date of adoption of SFAS 123R would not be restated.

The Company currently utilizes a standard option pricing model (i.e., Black-Scholes) to measure the fair value of stock options granted to employees. While SFAS 123R permits entities to continue to use such a model, the standard also permits

20         Belo Corp.

the use of a “lattice” model. The Company has not yet determined which model it will use to measure the fair value of awards of equity instruments to employees upon the adoption of SFAS 123R.

The adoption of SFAS 123R will have significant effect on the Company’s future results of operations. However, it will not have an impact on the Company’s consolidated financial position. The impact of SFAS 123R on the Company’s results of operations cannot be predicted at this time, because it will depend on the number of equity awards granted in the future, as well as the model used to value the awards.

SFAS 123R also requires that the benefits associated with the tax deductions in excess of recognized compensation cost be reported as a financing cash flow, rather than as an operating cash flow as required under current literature. This requirement will reduce net operating cash flows and increase net financing cash flows in periods after the effective date. These future amounts cannot be estimated, because they depend on, among other things, when employees exercise stock options. However, the amount of operating cash flows recognized for such excess tax deductions for the years ended December 31, 2004, 2003, and 2002 was not material.

Results of Operations

(Dollars in thousands, except per share amounts)

2004 Compared with 2003

Consolidated Results of Operations Total net operating revenue increased $74,223, or 5.2 percent, from $1,436,011 for the year ended December 31, 2003 to $1,510,234 for the year ended December 31, 2004, due to revenue increases of $59,744 in the Television Group, $6,969 in the Newspaper Group, $6,474 in Interactive Media and $1,036 in Other. Full-year 2004 revenue also includes a reduction of $19,600 for cash payments made under The Dallas Morning News voluntary advertiser plan. See “Other Matters” below.

Salaries, wages and employee benefits expense increased $39,634, or 7.7 percent, from $516,742 in 2003 to $556,376 in 2004, primarily due to increases of $13,629 in salaries, $9,336 in performance-based bonuses, $6,661 in other direct compensation, $4,865 in medical insurance and $2,875 in pension expense. Salaries increased primarily due to annual merit increases and to an increase in the number of employees prior to a Company-wide reduction in force. Performance-based bonuses increased due to higher revenue and improved operating performance excluding one-time charges. Other direct compensation increased due to the Company’s reduction in force of approximately 250 employees. In 2004, the Company recorded a charge totaling $7,897 for severance costs and other expenses related to the reduction in force. As of December 31, 2004, the Company had a remaining liability related to these severance costs and other expenses of approximately $4,200, which is expected to be paid during 2005. The increase in medical insurance is primarily due to the increase in the number of employees prior to the Company’s reduction in force, and higher insurance rates. Pension expense increased primarily due to a decrease in the discount rate used.

Other production, distribution and operating costs increased $17,665, or 4.7 percent, from $378,576 in 2003 to $396,241 in 2004, primarily due to an increase of $8,067 in outside services and $5,523 in distribution expense. The increase in outside services is primarily due to $3,900 in costs related to the Company’s circulation overstatement (see “Other Matters” below) and increases in consulting and other outside services. The increase in distribution expense is due mostly to costs associated with new products within the Newspaper Group launched in the second half of 2003.

Newsprint, ink and other supplies increased $7,069, or 5.4 percent, from $130,214 in 2003 to $137,283 in 2004, primarily due to an increase in the average cost per metric ton of newsprint partially offset by lower consumption of newsprint. The average cost per metric ton of newsprint was 9.9 percent higher in 2004 than in 2003. Newsprint consumption was 3.3 percent lower in 2004 when compared to the prior year primarily due to the circulation decline at The Dallas Morning News.

Depreciation expense decreased $2,110, or 2.3 percent, from $91,784 in 2003 to $89,674 in 2004, primarily due to assets that became fully depreciated in 2004.

Interest expense decreased $3,446, or 3.7 percent, from $93,610 in 2003 to $90,164 in 2004, primarily due to lower average debt levels.

Other income (expense), net increased $9,038, or 125.9 percent, from $7,181 in 2003 to $16,219 in 2004, primarily due to an $11,528 charge related to the discontinuation of the Belo and Time Warner joint ventures that operated the local cable news channels in Charlotte, North Carolina and Houston and San Antonio, Texas.

Belo Corp.          21

The effective tax rate for both 2004 and 2003 was 38.6 percent. The effective tax rate is higher than the statutory tax rate due to state income taxes.

As a result of the factors discussed above, the Company recorded net earnings of $132,496 ($1.13 per share) for 2004, compared with net earnings of $128,525 ($1.11 per share) for 2003.

The Company defines Consolidated EBITDA as net earnings before interest expense, income taxes, depreciation and amortization. Consolidated EBITDA is not a measure of financial performance under GAAP. Management uses Consolidated EBITDA in internal analyses as a supplemental measure of the financial performance of the Company to assist it with determining consolidated performance targets and performance comparisons against its peer group of companies, as well as capital spending and other investing decisions. Consolidated EBITDA is also a common alternative measure of performance used by investors, financial analysts, and rating agencies to evaluate financial performance.

The following table presents a reconciliation of Consolidated EBITDA to net earnings for 2004 and 2003:

Consolidated EBITDA increased $817 in 2004 compared to 2003, primarily due to increases in segment EBITDA of $42,146 in the Television Group, $4,782 in Interactive Media and $801 in Other, partially offset by an increase in expense in Other income (expense), net of $9,038 and decreases in segment EBITDA of $28,877 in the Newspaper Group and $8,997 in Corporate.

22         Belo Corp.

 Segment Results of Operations

Note: Certain amounts for the prior year have been reclassified to conform to the current year presentation.

Television Group Television Group revenues for 2004 were $706,410, an increase of $59,744, or 9.2 percent, from revenues of $646,666 in 2003. Total spot revenues including political advertising increased 9.9 percent in 2004 as compared to the prior year. Political advertising revenues increased $42,574 from $10,272 in 2003 to $52,846 in 2004, a national election year. Total spot revenues excluding political advertising increased 2.9 percent in 2004 when compared to 2003. Excluding political advertising, the largest spot revenue increases for 2004 were reported in the automotive, insurance, financial services, grocery, and telecom categories, while the largest decrease was in the department store category. Local spot revenues increased 4.8 percent for the year ended December 31, 2004, as compared to the prior year period, primarily due to increases in the Seattle/ Tacoma, Houston, Hampton/ Norfolk, and Austin markets. National spot revenues were flat for 2004 compared to the prior year. National spot revenue increases in the San Antonio and Spokane markets were offset by decreases in the Dallas/ Fort Worth and Seattle/ Tacoma markets.

Television Group operating costs and expenses increased $16,955, or 4.0 percent, in 2004 when compared to the prior year, primarily due to increases in salaries, performance-based bonuses, outside services, and medical insurance.

Television Group earnings from operations increased $42,789, or 19.0 percent, for the year ended December 31, 2004 compared to the prior year. Segment EBITDA for the Television Group increased $42,146, or 15.7 percent, for the year ended December 31, 2004 compared to the prior year, primarily due to the $59,744 increase in revenues, partially offset by the $16,955 increase in operating costs and expenses discussed above.

Newspaper Group Newspaper Group revenues for 2004 were $752,910, an increase of $6,969, or 0.9 percent, over 2003 revenues of $745,941. 2004 Newspaper Group revenues include a $19,600 charge related to The Dallas Morning News circulation overstatement. See “Other Matters” below. In 2004, advertising revenue accounted for 86.4 percent of total Newspaper Group revenue while circulation revenue accounted for 12.3 percent and commercial printing accounted for most of the remaining amount.

Belo Corp.          23

Newspaper volume is measured in column inches. Volume for The Dallas Morning News was as follows (in thousands):

Total revenues at The Dallas Morning News decreased by 3.6% in 2004 when compared to 2003. In 2004, Newspaper Group revenue included a reduction of $19,600 for cash payments made under The Dallas Morning News’ voluntary advertiser plan (see “Other Matters” below). The plan included a combination of cash payments and future advertising credits. The Company expects advertisers to utilize approximately $13,800 of the credits, of which approximately $8,000 has been used as of December 31, 2004. The Dallas Morning News advertising revenues were one percent lower in 2004 compared to the prior year. Classified advertising revenues declined 4.6 percent in 2004 as compared to the prior year, primarily due to decreased volumes and rates in automotive and decreased rates in employment. Retail advertising revenues declined 3.1 percent in 2004 as compared to the prior year, primarily due to decreased linage in the department store category, partially offset by higher rates and increases in volume in furniture and automotive. General advertising revenues increased 4.0 percent in 2004 as compared to the prior year, primarily due to increased linage in the automotive and telecom categories, partially offset by lower rates in both categories. Other advertising revenues increased 4.7 percent. Total Market Coverage (“TMC”) and preprints revenue increased 2.2 percent in 2004 as compared to the prior year.

Total revenues for The Providence Journal were 4.0 percent higher in 2004 compared to 2003. General advertising revenues improved 25.5 percent in 2004 when compared to the prior year due to increased lineage in the automotive, transportation, and financial services categories. Classified advertising revenue increased 11.1 percent in 2004 compared to 2003, primarily due to increases in real estate and employment categories. Revenues from preprints and TMC increased 4.5 percent year over year, primarily due to increases in the department stores, furniture and home accessories and sporting goods categories. Retail advertising revenues were flat for 2004 when compared to 2003. Circulation revenues declined 1.2 percent in 2004 primarily due to lower Sunday circulation volumes, partially offset by a slight increase in daily circulation volumes.

At The Press-Enterprise, total revenues were up 14.0 percent in 2004 compared with 2003, primarily due to increases in classified advertising revenues and revenues from preprints and TMC. Classified advertising revenues increased 34.8 percent, primarily due to gains in the automotive and real estate categories. Retail advertising revenues increased 6.6 percent in 2004 when compared with 2003, with the largest increases in the grocery, electric, and home improvement categories. General advertising revenues increased 4.8 percent in 2004 as compared to 2003, primarily due to gains in the financial services and travel categories. Preprints and TMC revenues increased 13.3 percent primarily due to increases in the home improvement, telecom and drug store categories. Increases were also reported in other advertising revenues and commercial printing revenue. Circulation revenue was relatively flat for The Press-Enterprise when comparing 2004 to 2003.

Newspaper Group operating costs and expenses increased 5.6 percent in 2004 when compared to the prior year primarily due to increases in salaries and other direct compensation and newsprint expenses, partially offset by a decrease in tax expense. Salaries and other direct compensation increased primarily due to annual merit increases and to an increase in the number of Newspaper Group employees prior to a Company-wide reduction in force. In 2004, the Newspaper Group recorded a charge of $3,788 for severance costs and other expenses related to the reduction in force. Newsprint expenses were 6.3 percent higher in 2004 due to a 9.9 percent increase in the average cost per metric ton of newsprint. Property tax expense decreased primarily due to a $2,450 favorable settlement between The Providence Journal and the city of Providence, Rhode Island. Operating costs and expenses in 2004 also included approximately $17,631 in expenses associated with the new products introduced by the Newspaper Group in the second half of 2003. The prior year included costs of approximately $5,370 associated with the new products.

Newspaper Group earnings from operations decreased 18.4 percent in 2004 compared to 2003. Segment EBITDA for the Newspaper Group decreased $28,877, or 15.0 percent, from $192,189 for the year ended December 31, 2003, to $163,312 for the year ended December 31, 2004, primarily due to the $33,543 increase in operating costs and expenses, partially offset by the $6,969 increase in total revenues discussed above.

24         Belo Corp.

Interactive Media and Other Segments

Interactive Media revenues, which are primarily derived from advertising, increased $6,474, or 26.3 percent, from $24,595 in 2003 to $31,069 in 2004. Interactive Media operating costs and expenses increased 6.2 percent for 2004 when compared to 2003. The Interactive Media loss from operations improved from $9,118 in 2003 to $4,749 in 2004. The Interactive Media segment EBITDA loss improved from $5,541 in 2003 to $759 in 2004. 2004 Interactive Media segment EBITDA included $974 of severance costs and other expenses related to the Company’s reduction in force.

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 $1,036, or 5.5 percent, from $18,809 in 2003 to $19,845 in 2004 with revenue increases at both NWCN and TXCN. Operating costs and expenses increased 1.4 percent in 2004 as compared to 2003. Loss from operations for the Other segment improved from $3,089 in 2003 to $2,355 in 2004. Segment EBITDA for the Other segment improved from a loss of $489 in 2003 to earnings of $312 in 2004.

2003 Compared with 2002

Consolidated Results of Operations Total net operating revenues increased $8,104, or 0.6 percent, from $1,427,907 in 2002 to $1,436,011 in 2003, due to revenue increases of $12,310 in the Newspaper Group, $5,123 in Interactive Media and $1,543 in Other, partially offset by a $10,872 decrease in the Television Group.

Salaries, wages and employee benefits expense increased $11,219, or 2.2 percent, from $505,523 in 2002 to $516,742 in 2003, primarily due to increases of $9,423 in salaries expense, $5,383 in pension expense, $5,335 in medical insurance expense and $2,440 in other benefits expense. These increases were offset by a $16,586 decrease in accruals for performance-based bonuses. In 2002, salaries, wages and employee benefits also included a $1,969 credit related to the curtailment of the Company’s post-retirement medical program.

Other production, distribution and operating costs decreased $1,792, or 0.5 percent, from $380,368 in 2002 to $378,576 in 2003, primarily due to a decrease of $2,545 in repairs and maintenance, partially offset by an increase of $1,967 in insurance expense.

Newsprint, ink and other supplies increased $6,725, or 5.4 percent, from $123,489 in 2002 to $130,214 in 2003, primarily due to an increase in the average cost per metric ton of newsprint. The average cost per metric ton of newsprint was 5.4 percent higher in 2003 than in 2002. Newsprint consumption increased 1.1 percent when compared to the prior year.

Depreciation expense decreased $5,248, or 5.4 percent, from $97,032 in 2002 to $91,784 in 2003.

Interest expense decreased $11,176, or 10.7 percent, from $104,786 in 2002 to $93,610 in 2003, primarily due to lower average debt levels and the refinancing of $250,000 in fixed rate notes with lower rate revolving debt in June 2002.

Other income (expense), net decreased from income of $5,045 in 2002 to expense of $7,181 in 2003 primarily due to an increase in equity losses from Belo’s local cable news partnerships with Time Warner (the Charlotte, Houston and San Antonio cable news channels commenced operations in June 2002, December 2002 and April 2003, respectively), partially offset by a $1,796 gain in the fourth quarter of 2003 on the sale of KENS-AM, the Company’s radio station in San Antonio, Texas. In addition, other income (expense), net in 2002 included a $4,787 credit related to the favorable resolution of certain contingencies associated with the Company’s sales in the fourth quarter of 2000 of KOTV-TV in Tulsa, Oklahoma, the Messenger-Inquirer in Owensboro, Kentucky, The Gleaner in Henderson, Kentucky, and The Eagle in Bryan/ College Station, Texas and a gain of $2,375 on the sale of Belo’s interest in the Dallas Mavericks and the American Airlines Center.

The effective tax rate for both 2003 and 2002 was 38.6 percent.

As a result of the factors discussed above, the Company recorded net earnings of $128,525 ($1.11 per share) for 2003, compared with net earnings of $131,126 ($1.15 per share) for 2002.

The Company defines Consolidated EBITDA as net earnings before interest expense, income taxes, depreciation and amortization. Consolidated EBITDA is not a measure of financial performance under GAAP. Management uses Consolidated EBITDA in internal analyses as a supplemental measure of the financial performance of the Company to assist it with determining consolidated performance targets and performance comparisons against its peer group of companies, as well as capital spending and other investing decisions. Consolidated EBITDA is also a common alternative measure of performance used by investors, financial analysts, and rating agencies to evaluate financial performance.

Belo Corp.          25

The following table presents a reconciliation of Consolidated EBITDA to net earnings for 2003 and 2002:

Consolidated EBITDA decreased $20,274 in 2003 compared to 2002, primarily due to decreases in segment EBITDA of $13,995 in the Television Group and $2,051 in the Newspaper Group, and an increase in expense in Other income (expense), net of $12,226; partially offset by increases of $5,197 in Interactive Media, $2,042 in Corporate and $759 in Other.

 Segment Results of Operations

Note: Certain amounts for the prior year have been reclassified to conform to the current year presentation.

Television Group Television Group revenues for 2003 were $646,666, or 1.7 percent lower than 2002 revenues of $657,538. Total spot revenues including political advertising decreased 2.0 percent in 2003 as compared to the prior year. Revenues from political advertising were $10,272 in 2003 compared to $48,684 in 2002. Total spot revenues excluding political advertising increased 4.5 percent in 2003 when compared to 2002. The largest increases in spot revenue excluding political advertising for 2003 were reported in the automotive, radio and television and financial services categories, while the largest decrease was in the restaurant category. Local spot revenues were 7.3 percent higher in 2003 than in 2002. The most significant increases in local spot revenues were in the Seattle/ Tacoma, Phoenix, Portland and St. Louis markets, while the largest decrease was in the Dallas/ Fort Worth market. National spot revenues were flat in 2003 when compared to 2002 with increases in the Phoenix and Dallas/ Fort Worth markets offset by decreases in the Portland and Seattle/ Tacoma markets. Spot revenues in 2002 also included approximately $9,000 of advertising revenues generated by the Company’s NBC affiliates from their broadcast of the Winter Olympics in February 2002.

26         Belo Corp.

Television Group operating costs and expenses decreased $1,787, or less than one percent, in 2003 when compared to the prior year, with decreases in performance-based bonuses, repairs and maintenance expense and outside solicitation offset by increases in salaries, medical insurance and pension expense. Segment EBITDA for the Television Group decreased $13,995, or 5.0 percent, for 2003 as compared to 2002. Earnings from operations for the Television Group decreased 3.9 percent from $234,440 in 2002 to $225,355 in 2003.

Newspaper Group Newspaper Group revenues for 2003 were $745,941, an increase of 1.7 percent over 2002 revenues of $733,631. In 2003, advertising revenue accounted for 84.6 percent of total Newspaper Group revenue while circulation revenue accounted for 12.0 percent and commercial printing accounted for most of the remaining amount.

Newspaper volume is measured in column inches. Volume for The Dallas Morning News was as follows (in thousands):

Total revenues at The Dallas Morning News were flat for 2003 when compared to 2002. The Dallas Morning News advertising revenues were less than one percent lower in 2003 compared to the prior year. Classified advertising revenues declined 6.1 percent in 2003 as compared to the prior year, primarily due to decreased volumes in classified employment advertising. The unemployment rate in the Dallas area was higher than the national average throughout 2003, which contributed to a 23.4 decrease in classified employment revenues in 2003 when compared to 2002. Excluding classified employment, advertising revenues were up 2.8 percent in 2003. Classified real estate revenues increased 6.8 percent in 2003 compared to 2002 primarily due to higher rates. Classified automotive revenues decreased 2.8 percent in 2003 compared to the prior year due to decreased volumes. Retail advertising revenues decreased 3.0 percent in 2003 when compared to the prior year primarily due to decreased linage in the department store and automotive categories, partially offset by higher rates in the department store category. General advertising revenues were 7.2 percent higher in 2003 due to higher volumes in the automotive and financial services categories and higher rates in the financial services category. Total Market Coverage (“TMC”) and preprints revenue increased 4.3 percent in 2003 as compared to the prior year. Circulation revenues at The Dallas Morning News improved 2.6 percent in 2003 when compared to the prior year period.

Total revenues for The Providence Journal were 2.4 percent higher in 2003 compared to 2002. Revenues from preprints and TMC increased 13.4 percent year over year, primarily due to increases in the department stores, furniture and home accessories and sporting goods categories. Retail advertising revenues improved 2.2 percent in 2003 when compared to the prior year due to gains in the automotive, sporting goods and movie theatres categories. General advertising and classified advertising revenues were flat for 2003 when compared to 2002. Circulation revenues declined 2.5 percent in 2003 primarily due to lower rates to the newspaper’s distributors, offset somewhat by a slight increase in circulation volumes.

At The Press-Enterprise, total revenues were up 5.8 percent in 2003 compared with 2002, primarily due to increases in general advertising revenues and revenues from preprints and TMC. General advertising revenues increased 30.7 percent in 2003 as compared to 2002, primarily due to gains in the telecom, financial services and insurance categories. Preprints and TMC revenues increased 16.6 percent, primarily due to increases in the home improvement, apparel and discount store categories. Retail advertising revenues declined 8.2 percent in 2003 when compared with 2002, with the largest decreases in the home furnishings, department store, food and entertainment categories. Increases were also reported in other advertising revenues and commercial printing revenue. Classified advertising revenues were 3.6 percent higher in 2003 compared to 2002. Circulation revenue was flat for The Press-Enterprise when comparing 2003 to 2002.

Newspaper Group operating costs and expenses increased 2.3 percent in 2003 when compared to the prior year primarily due to increases in newsprint, salaries, pension and medical insurance expenses, offset by a decrease in accruals for performance-based bonuses. Newsprint expense was 5.7 percent higher in 2003 due to a 5.4 percent increase in the average cost per metric ton of newsprint. As a result, Newspaper Group segment EBITDA for 2003 decreased $2,051, or 1.1 percent, when compared to 2002. Earnings from operations for the Newspaper Group decreased from $145,768 in 2002 to $144,741 in 2003.

Belo Corp.          27

Interactive Media and Other Segments

Interactive Media revenues, which are primarily derived from advertising, increased 26.3 percent, from $19,472 in 2002 to $24,595 in 2003. Interactive Media operating costs and expenses were flat for 2003 when compared to 2002. As a result of increased revenues, the Interactive Media segment EBITDA loss improved from $10,738 in 2002 to $5,541 in 2003. Loss from operations for Interactive Media decreased $5,093, from $14,211 in 2002 to $9,118 in 2003.

Other revenues consist primarily of Belo’s regional cable news operations, NWCN and TXCN and, beginning in 2003, revenues from Belo’s consumer expositions business. Revenues from Belo’s cable news operations are derived from a combination of advertising and subscriber-based fees. Other revenues increased 8.9 percent, from $17,266 in 2002 to $18,809 in 2003, reflecting a revenue increase in cable news and the inclusion of revenue from Belo’s expositions business. Operating costs and expense increased 4.8 percent in 2003 as compared to 2002 due to the addition of expenses from the expositions business. As a result, the segment EBITDA loss for the Other segment improved from $1,248 in 2002 to $489 in 2003. Loss from operations for the Other segment decreased from $3,621 in 2002 to $3,089 in 2003.

Liquidity and Capital Resources

(Dollars in thousands, except per share amounts)

Net cash provided by operations, bank borrowings and term debt are Belo’s primary sources of liquidity. Net cash provided by operations was $276,936 in 2004 compared with $257,851 in 2003 and $314,103 in 2002. 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 debt. Total debt decreased $100,750 from December 31, 2003 to December 31, 2004.

At December 31, 2004, Belo had $1,100,000 in fixed-rate debt securities as follows: $300,000 of 7¹/8% Senior Notes due 2007; $350,000 of 8% Senior Notes due 2008; $200,000 of 7³/4% Senior Debentures due 2027; and $250,000 of 7¹/4% Senior Debentures due 2027. The weighted average effective interest rate for these debt instruments is 7¹/2%. The Company has $150,000 of additional debt securities available for future issuance under a shelf registration statement filed in April 1997. Future issuances of fixed-rate debt may be used to refinance variable-rate debt in whole or in part or for other corporate needs as determined by management. On February 2, 2004, the Company retired $6,400 of Industrial Revenue Bonds due 2020 using borrowings under its revolving credit facility.

At December 31, 2004, the Company had a $720,000 variable-rate revolving credit facility. Borrowings under the credit facility are made on a committed revolving credit basis or an uncommitted competitive advance basis through a bidding process. Revolving credit loans bear interest at a rate determined by reference to LIBOR or a defined alternate base rate, as requested by the Company. The rate obtained through competitive bidding is either a LIBOR rate adjusted by a marginal rate of interest or a fixed rate, in either case as specified by the bidding bank and accepted by Belo. Commitment fees of up to .375 percent of the total unused commitment amount accrue and are payable under the credit facility. At December 31, 2004, borrowings under the credit facility were $33,000 and the weighted average interest rate for borrowings under the credit facility, which includes a ..175 percent commitment fee, was 3.9 percent. Borrowings under the credit facility mature upon expiration of the agreement on November 29, 2006. In addition, the Company has an uncommitted line of credit of $50,000, of which $37,150 was outstanding at December 31, 2004. The uncommitted line of credit has a variable interest rate. 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. All unused borrowings under the Company’s revolving credit facility and uncommitted line of credit are available for borrowing as of December 31, 2004.

The Company is required to maintain certain financial ratios as of the end of each quarter, as defined in its revolving credit agreement. At December 31, 2004, the Company was in compliance with these requirements.

During 2004, Belo paid dividends of $43,731, or 38 cents per share, on Series A and Series B Common Stock outstanding, compared with $38,613, or 34 cents per share, during 2003 and $33,537, or 30 cents per share, during 2002.

In 2004, the Company purchased 2,887,500 shares of its Series A Common Stock under a stock repurchase program pursuant to authorization from Belo’s Board of Directors in July 2000. The remaining authorization for the repurchase of shares as of December 31, 2004 under this authority was 14,545,419 shares. In addition, the Company has a stock repurchase program authorizing the purchase of up to $2,500 of common stock annually. During 2004, no shares were repurchased under this program. There is no expiration date for either of these repurchase programs. The total cost of the treasury shares purchased in 2004 was $78,148. All shares repurchased were retired during the year ended December 31, 2004. In 2004, the Company received proceeds from the exercise of stock options of $33,274, compared with $32,903 in 2003 and $31,239 in 2002. The Company intends to purchase shares of Belo common stock in 2005 approximately equal to the number of employee stock options exercised during the period, plus an additional one to two million shares, depending on market conditions.

28         Belo Corp.

The table below summarizes the following specified commitments of the Company as of December 31, 2004:

Total capital expenditures for 2004 of $79,562 were primarily for Television Group and Newspaper Group equipment. As of December 31, 2004, required future payments for capital projects in 2005 were approximately $7,266. Belo expects to finance future capital expenditures using cash generated from operations and, when necessary, borrowings under the revolving credit agreement.

The Company has completed an extensive review of long-term capital needs, and capital spending in 2005 is currently expected to be approximately $120,000. Significant capital projects at WWL-TV, The Press-Enterprise and The Dallas Morning News are expected to be completed over the next five years.

As a result of the Company-wide reduction in force in 2004, the Company expects to eliminate approximately $16,000 annually in future salaries and benefits expense. In addition, Belo’s interactive media businesses and Web sites will be integrated into their related operating companies in 2005 to maximize revenue growth. Also, the refining of operations and programming at TXCN is expected to move TXCN from a segment EBITDA loss contribution of $1.6 million in 2004 to slightly positive segment EBITDA contribution in 2005.

On July 23, 2004, Belo 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 $39,070 ($5,093 of which was invested in 2004) had been made related to the Time Warner joint ventures. A charge of $11,678 related to the discontinuation of the joint ventures was recorded in the third quarter of 2004. Discontinuing the news channel joint ventures with Time Warner is expected to increase cash flow by approximately $10,000, annually, and eliminate this amount in losses in Other Income and Expense.

In 2004, the Company made contributions to its defined benefit pension plan totaling $30,800. These contributions exceed the Company’s required minimum contribution for ERISA funding purposes. The Company does not expect to make any additional contributions in 2005.

On October 22, 2004, a new tax law, the American Jobs Creation Act of 2004 (the “Jobs Creation Act”) was enacted. Among other provisions, the Jobs Creation Act allows a deduction for income from qualified domestic production activities, which deduction will be phased in from 2005 through 2010. The Company is currently evaluating the impact of the new law on its future taxable income. For financial reporting purposes, any deductions for qualified domestic production activities will be accounted for as a special deduction rather than as a rate reduction. Accordingly, any benefit from the deduction will be reported in the period in which the deduction is claimed on the Company’s tax return.

The Company believes its current financial condition and credit relationships are adequate to fund both its current obligations as well as near-term growth.

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 The Dallas Morning News, 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 The Dallas Morning News resulted from the aggressive pursuit of circulation goals by former senior circulation managers using incentive contests, bonuses and low newspaper wholesale rates to stimulate circulation growth, 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 Dallas Morning News 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, al dia, Quick and the Denton Record-Chronicle. Based on this

Belo Corp.          29

review, the investigators concluded that the circulation distribution processes at these other publications were significantly different from those used at The Dallas Morning News.

On August 16, 2004, the Company announced a voluntary advertiser plan developed by management in response to the circulation overstatement. As a result, the Company recorded a charge of $23.5 million in 2004 related to the advertiser plan, of which approximately $19.6 million, consisting of cash payments to advertisers, was classified as a reduction of revenues and approximately $3.9 million, consisting of related costs, was included in other operating costs. Approximately 18,600 checks, net of undeliverable checks, were mailed or delivered to advertisers as part of the plan. As of February  25, 2005, 89.5 percent of the checks have cleared, representing 92.3 percent of the dollars. The Dallas Morning News’ payments to affected advertisers under the plan were made without the condition that such advertisers release The Dallas Morning News from liability for the circulation overstatement. The plan also included future advertising credits. To use the credits, advertisers generally must place advertising in addition to the terms of each advertiser’s current contract. Credits earned may be used by the end of an advertiser’s contract period or February 28, 2005, whichever is later. The Company currently expects advertisers to use approximately $13.8 million of the credits, of which approximately $8.0 million had been used as of December 31, 2004. The Company believes that the advertising credits were a modest deterrent to advertising revenue growth at The Dallas Morning News in the fourth quarter of 2004 and expects a similar impact in the first quarter of 2005.

On February 3, 2005, The Dallas Morning News filed its Publisher’s Statement with the Audit Bureau of Circulations (“Audit Bureau”) for the six-month period ended September 30, 2004. The reported circulation figures represent a decrease of 5.4 percent daily and 11.7 percent Sunday compared to the prior year period. The Audit Bureau advised The Dallas Morning News on January 21, 2005, that the Audit Bureau will not be issuing an audit report of the newspaper’s circulation for the twelve months ended March 31, 2004 or the six months ended September 30, 2004, as it had originally planned.

The Audit Bureau concluded not to issue 2004 audit report for The Dallas Morning News due primarily to the absence of reliable records of independent contractors to support revised circulation figures for city single copy sales. The Audit Bureau advised The Dallas Morning News that sufficient records and data do exist to confirm the accuracy of circulation figures for the six-month period ended September 30, 2004 for all areas other than city single copy sales, and that these figures appear to be materially accurate. That Audit Bureau conclusion is consistent with the conclusion reached by the independent investigation conducted for the Audit Committee of Belo’s Board of Directors, which was completed in September 2004. The Audit Bureau’s bylaws require that the Audit Bureau’s Board of Directors approve the release of any Publisher’s Statement not subject to subsequent audit, and The Dallas Morning News requested such approval for the September 2004 Publisher’s Statement. The contents of the Publisher’s Statement were reviewed and discussed with the Audit Bureau prior to filing, including the methodologies used to estimate circulation in city single copy sales where reliable records do not exist for the entire period. On March 7, 2005, The Dallas Morning News was advised that the Audit Bureau’s Board of Directors declined the request.

The Audit Bureau is presently auditing The Dallas Morning News circulation for the six months ending March 31, 2005, and has advised The Dallas Morning News that it expects to release that audit report during the second quarter of 2005. For that six month reporting period, The Dallas Morning News’ circulation is expected to be approximately 481,000 daily and 661,000 Sunday, decreases of approximately 47,000 newspapers daily versus March 2004, or 8.9 percent, and 95,000 newspapers Sunday, or 12.6 percent.

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 Dallas Morning News’ circulation overstatement. The Company has briefed the SEC on The Dallas Morning News circulation situation and related matters. The information voluntarily provided to the SEC relates to The Dallas Morning News, 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.

Item 7A. Quantitative and Qualitative Disclosures about Market Risks

The market risk inherent in the financial instruments issued by Belo represents the potential loss arising from adverse changes in interest rates. See Note 5 to the Consolidated Financial Statements for information concerning the contractual interest rates of Belo’s debt. At December 31, 2004 and 2003, the fair value of Belo’s fixed-rate debt was estimated to be $1,209,138 and $1,249,437, respectively, using quoted market prices and yields obtained through independent pricing sources, taking into consideration the underlying terms of the debt, such as the coupon rate and term to maturity. The carrying value of fixed-rate debt was $1,100,000 at both at December 31, 2004 and 2003.

Various financial instruments issued by Belo are sensitive to changes in interest rates. Interest rate changes would result in gains or losses in the market value of Belo’s fixed-rate debt due to differences between the current market interest rates and the rates governing these instruments. A hypothetical 10 percent decrease in interest rates would increase the fair value of

30         Belo Corp.

the Company’s fixed-rate debt by $47,644 at December 31, 2004 ($51,481 at December 31, 2003). With respect to the Company’s variable-rate debt, a 10 percent change in interest rates would have resulted in an immaterial annual change in Belo’s pretax earnings and cash flows at December 31, 2004 and 2003.

In addition to interest rate risk, Belo has exposure to changes in the price of newsprint. The average price of newsprint is expected to be higher in 2005 than in 2004, although the amount and the timing of any increase cannot be predicted with certainty. Belo believes the newsprint environment for 2005, giving consideration to both cost and supply, to be manageable through existing relationships and sources.

Item 8. Financial Statements and Supplementary Data

The Consolidated Financial Statements, together with the Reports of Independent Registered Public Accounting Firm, are included elsewhere in this Annual Report on Form 10-K. Financial statement schedules have been omitted because the required information is contained in the Consolidated Financial Statements or related Notes, or because such information is not applicable.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures

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

During the quarter ended December 31, 2004, 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.

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 Annual Report on Form 10-K. 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 SEC 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.

Belo Corp.          31

Management’s Report on Internal Control over Financial Reporting

SEC rules implementing Section 404 of the Sarbanes-Oxley Act require our 2004 Annual Report on Form 10-K to contain a management’s report regarding the effectiveness of internal control and an independent accountants’ attestation on management’s assessment of our internal control over financial reporting. As a basis for our report, we tested and evaluated the design, documentation, and operating effectiveness of internal control.

Management is responsible for establishing and maintaining effective internal control over financial reporting of Belo Corp. and subsidiaries (the Company). There are inherent limitations in the effectiveness of any internal control, including the possibility of human error and the circumvention or overriding of controls. Accordingly, even effective internal controls can provide only reasonable assurance with respect to financial statement preparation. Further, because of changes in conditions, the effectiveness of internal control may vary over time.

Management has evaluated the Company’s internal control over financial reporting as of December 31, 2004. This assessment was based on criteria for effective internal control over financial reporting described in the standards promulgated by PCAOB and in the Internal Control–Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, management believes that Belo maintained effective internal control over financial reporting as of December 31, 2004.

Ernst & Young LLP, the Company’s Independent Registered Public Accounting Firm, has issued an attestation report on management’s assessment of the Company’s internal control over financial reporting. It appears immediately following this report.

32         Belo Corp.

Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders

Belo Corp.

We have audited management’s assessment, included in the accompanying Management’s Report on Internal Control over Financial Reporting, that Belo Corp. and subsidiaries maintained effective internal control over financial reporting as of December 31, 2004, based on criteria established in Internal Control–Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express an opinion on management’s assessment and an opinion on the effectiveness of the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, evaluating management’s assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, management’s assessment that Belo Corp. and subsidiaries maintained effective internal control over financial reporting as of December 31, 2004, is fairly stated, in all material respects, based on the COSO criteria. Also, in our opinion, Belo Corp. and subsidiaries maintained, in all material respects, effective internal control over financial reporting as of December 31, 2004, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Belo Corp. and subsidiaries as of December 31, 2004 and 2003, and the related consolidated statements of earnings, shareholders’ equity, and cash flows for each of the three years in the period ended December 31, 2004 and our report dated March 3, 2005 expressed an unqualified opinion thereon.

/s/ ERNST & YOUNG LLP

Dallas, Texas

March 3, 2005

Belo Corp.          33

Item 9B. Other Information

None.

PART III

Item 10. Directors and Executive Officers of the Registrant

The information set forth under the headings “Stock Ownership – Section 16(a) Beneficial Ownership Reporting Compliance,” “Proposal One: Election of Directors,” and “Executive Officers” contained in the definitive Proxy Statement for the Company’s Annual Meeting of Shareholders to be held on May 10, 2005 is incorporated herein by reference.

Belo has a Code of Business Conduct and Ethics that applies to all directors, officers and employees, which can be found at the Company’s Web site, www.belo.com. The Company will post any amendments to the Code of Business Conduct and Ethics, as well as any waivers that are required to be disclosed by the rules of either the Securities and Exchange Commission or the New York Stock Exchange, on the Company’s Web site. Information on Belo’s Web site is not incorporated by reference into this Annual Report on Form 10-K.

The Company’s Board of Directors has adopted Corporate Governance Guidelines and charters for the Audit, Compensation, and Nominating and Governance Committees of the Board of Directors. These documents can be found at the Company’s Web site, www.belo.com.

A shareholder can also obtain a printed copy of any of the materials referred to above by contacting the Company at the following address:

Item 11. Executive Compensation

The information set forth under the heading “Executive Compensation– Summary Compensation Table,

On March 2, 2005, the Board of Directors of the Company ratified the recommendation of the Compensation Committee to use consolidated net income as the measure of performance for senior executives under the shareholder-approved 2004 Belo Executive Compensation Plan in order to determine annual performance bonus amounts for 2005 under the Plan.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The information set forth under the heading “Stock Ownership” contained in the definitive Proxy Statement for the Company’s Annual Meeting of Shareholders to be held on May 10, 2005 is incorporated herein by reference.

Information regarding the number of shares of common stock available under the Company’s equity compensation plans is included under the caption entitled “Executive Compensation– Equity Compensation Plan Information” contained in the definitive Proxy Statement for the Company’s Annual Meeting of Shareholders to be held on May 10, 2005 and is incorporated herein by reference.

Item 13. Certain Relationships and Related Transactions

The information set forth under the heading “Executive Compensation– Certain Relationships” contained in the definitive Proxy Statement for the Company’s Annual Meeting of Shareholders to be held on May 10, 2005 is incorporated herein by reference.

34         Belo Corp.

Item 14. Principal Accountant Fees and Services

The information set forth under the heading “Proposal Two: Ratification of the Appointment of Independent Registered Public Accounting Firm” contained in the definitive Proxy Statement for the Company’s Annual Meeting of Shareholders to be held on May 10, 2005 is incorporated herein by reference.

PART IV

Item 15. Exhibits and Financial Statement Schedules

Belo Corp.          35

36         Belo Corp.

Belo Corp.          37

Signatures