Summary of Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2012

Summary of Significant Accounting Policies [Abstract]

Business and Principles of Consolidation

Business and Principles of Consolidation        Belo Corp.’s (Belo or the Company) operating segments are defined as its television stations and cable news channels within a given market. The Company has determined that all of its operating segments meet the criteria under Accounting Standards Codification (ASC) 280 to be aggregated into one reporting segment.

The consolidated financial statements include the accounts of Belo and its wholly-owned subsidiaries after the elimination of all significant intercompany accounts and transactions. Belo accounts for its interests in partnerships using the equity method of accounting, with Belo’s share of the results of operations being reported in Other Income and Expense in the accompanying consolidated statements of operations.

As further discussed in Note 2, the Company has adopted ASU No. 2011-05. In preparing the initial annual Consolidated Statement of Comprehensive Income under the provisions of ASU No. 2011-05, the Company’s presentation of total comprehensive income for the year ended December 31, 2011, within the Company’s Consolidated Statement of Shareholders’ Equity has been revised to include the recognition, as a component of total comprehensive income, of an $85,222 credit related to its Pension Plan split with A.H. Belo as discussed in Note 7. The $85,222 credit was appropriately recorded as a component of accumulated other comprehensive loss (AOCL) and included in total equity for all periods presented but was not shown in the subtotal of total comprehensive income. Excluding such amount from total comprehensive income had no effect on the Company’s Consolidated Balance Sheets, Consolidated Statements of Operations or Consolidated Statements of Cash Flows, or total shareholders’ equity as presented.

In preparing the accompanying consolidated financial statements, the Company has reviewed events that have occurred subsequent to December 31, 2012, through the issuance of the financial statements.

All amounts are in thousands, except per share amounts, unless otherwise indicated.

Cash and Temporary Cash Investments

Cash and Temporary Cash Investments        Belo considers all highly liquid instruments purchased with a remaining maturity of three months or less to be temporary cash investments. Such temporary cash investments are carried at fair value on a recurring basis using Level 1 inputs. See Note 8 for a definition of the fair value hierarchy.

Accounts Receivable

Accounts Receivable        Accounts receivable are net of a valuation reserve that represents an estimate of amounts considered uncollectible. We estimated our allowance for doubtful accounts primarily using historical net write-offs of uncollectible accounts. Belo analyzed the ultimate collectability of its accounts receivable after one year, using a regression analysis of the historical net write-offs to determine the amount of those accounts receivable that were ultimately not collected. The results of this analysis were then applied to the current accounts receivable to determine the necessary allowance. The overall reserve is then reviewed in the context of the actual portfolio at the time and appropriate adjustments are made, if necessary. Our policy is to write off accounts after all collection efforts have failed; generally, amounts past due by more than one year have been written off. Expense for such uncollectible amounts is included in station programming and other operating costs. The carrying amount of accounts receivable approximates fair value.

The following table shows the expense for uncollectible accounts and accounts written off, net of recoveries, for the years ended December 31, 2012, 2011 and 2010:

	Expense for Uncollectible Accounts		Accounts Written Off
2012	$	1,345	$	1,484
2011		1,818		2,456
2010		1,155		2,096

Risk Concentration

Risk Concentration        Financial instruments that potentially subject the Company to concentrations of credit risk are primarily accounts receivable. Concentrations of credit risk with respect to the receivables are limited due to the large number of customers in the Company’s customer base and their dispersion across different industries and geographic areas. The Company maintains an allowance for losses based upon the expected collectability of accounts receivable.

Program Rights

Program Rights        Program rights represent the right to air various forms of first-run and existing second-run programming. Program rights and the corresponding contractual obligations are recorded when the license period begins and the programs are available for use. Program rights are carried at the lower of unamortized cost or estimated net realizable value on a program-by-program basis. Program rights and the corresponding contractual obligations are classified as current or long-term based on estimated usage and payment terms, respectively. Costs of off-network syndicated programs, first-run programming and feature films are amortized on a straight-line basis over the future number of showings allowed in the contract.

Property, Plant and Equipment

Property, Plant and Equipment         Depreciation of property, plant and equipment, including assets recorded under capital leases, is provided on a straight-line basis over the estimated useful lives of the assets as follows:

	Estimated Useful Lives
Buildings and improvements		5-30 years
Broadcast equipment		5-15 years
Other		3-10 years

The Company reviews the carrying amount of property, plant and equipment for impairment whenever events and circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of property and equipment is measured by comparison of the carrying amount to the future undiscounted net cash flows the property and equipment is expected to generate. No impairment was recorded in any of the periods presented.

Impairment of Goodwill and Intangible Assets

Impairment of Goodwill and Intangible Assets        The Company classifies the FCC licenses apart from goodwill as separate indefinite-lived intangible assets. The Company’s indefinite-lived intangible assets represent FCC licenses in markets (as defined by Nielsen Media Research’s Designated Market Area report) where the Company’s stations operate. Goodwill is recorded by reporting unit, with each reporting unit consisting of the television station(s) and cable news operations within a market. Goodwill and indefinite-lived intangible assets are required to be tested at least annually for impairment or between annual tests if an event occurs or circumstances change that would, more likely than not, reduce the fair value of a reporting unit below its carrying amount. The Company measures the fair value of goodwill and indefinite-lived intangible assets annually as of December 31. Impairment arises when the carrying amount of the goodwill or FCC licenses is greater than its fair value.

The Company assesses qualitative factors to establish whether it is more likely than not that the fair value of a reporting unit exceeds its carrying value. If the Company determines that the qualitative evaluation indicates that the reporting unit does not meet the more likely than not criteria of its fair value exceeding its carrying value, then further quantitative analysis is required.

For FCC licenses, the quantitative analysis for reporting units that do not pass the qualitative evaluation consists of comparing the calculated fair value of the market with its carrying amount. The calculated fair value is determined using a discounted projected cash flow analysis that assumes that the FCC licenses are held by hypothetical start-up stations. If the calculated fair value of the FCC license exceeds its carrying amount, the FCC license is not considered to be impaired.

For goodwill, the quantitative analysis for reporting units that do not pass the qualitative evaluation uses a two-step process. The first step is to identify whether a potential impairment exists by comparing the calculated fair value of a reporting unit with its carrying amount, including goodwill. The calculated fair value is determined using a discounted cash flow model that considers an estimated weighted-average cost of capital. If the calculated fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is not considered to be impaired and the second step of the impairment test is not necessary. If the carrying amount of the reporting unit exceeds the calculated fair value, a second step is performed to determine the implied fair value of the goodwill of the reporting unit by deducting the fair value of all of the individual assets and liabilities of the reporting unit from the respective fair values of the reporting unit as a whole. To the extent the implied fair value of the goodwill is less than the recorded goodwill, an impairment charge is recorded for the difference.

In performing the quantitative assessments of the Company’s goodwill and indefinite-lived intangible assets, the Company must make assumptions regarding future cash flow projections and other factors to estimate the fair value of the reporting units and intangible assets. Estimates of fair value are subjective in nature, involve uncertainties and matters of significant judgment, and are made at a specific point in time. Thus, changes in key assumptions from period to period could significantly affect the estimates of fair value. Significant assumptions used in the fair value estimates include projected revenues and related growth rates over time and in perpetuity (for 2012, perpetuity growth rates used in the quantitative analysis ranged from 1.7% to 3.0%), forecasted operating margins, estimated tax rates, capital expenditures, required working capital needs, and an appropriate risk-adjusted weighted-average cost of capital (for 2012, the weighted-average cost of capital used was 9.0%). Additionally, for the Company’s FCC licenses, significant assumptions include costs and time associated with start-up, initial capital investments, and forecasts related to overall market performance over time.

Fair value estimates are inherently sensitive, particularly with respect to FCC licenses. At December 31, 2012, in two of the Company’s 15 markets, the estimated fair value of the FCC licenses is less than 30 percent greater than their respective carrying values, with the closest market having an excess of estimated fair value over carrying value of 24 percent. A significant reduction in the fair value of the FCC licenses in either of these two markets could result in an impairment charge. As of December 31, 2012, the carrying value of the FCC licenses in those two markets represents approximately $231,415 of the Company’s total $725,399 of FCC licenses. If some or all of the aforementioned key estimates or assumptions change in the future, the Company may be required to record impairment charges related to its indefinite-lived intangible assets.

As of December 31, 2012, goodwill at the Company’s reporting units is somewhat less sensitive as, collectively, reporting units with estimated fair values exceeding their carrying values by more than 30 percent represent over 88 percent of the total investments in goodwill, and impairment charges related to FCC licenses that are recorded in any period will reduce the carrying values of those applicable reporting units prior to the goodwill impairment evaluation. In the Company’s closest market having excess of estimated fair value over carrying values, reporting unit fair value exceeded carrying value by approximately 23 percent. If some or all of the aforementioned key estimates or assumptions change in the future, the Company may be required to record impairment charges related to its goodwill.

Based upon the assessments performed as of December 31, 2012, 2011 and 2010, the estimated fair value of all of the Company’s 15 reporting units exceeded their carrying amounts. Additionally, based on assessments performed as of December 31, 2012, 2011 and 2010, the estimated fair value of the Company’s FCC licenses exceeded their carrying amounts and no impairments of FCC licenses were identified. See Note 4.

In July 2012, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update (ASU) No. 2012-02, Intangibles –Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment. ASU 2012-02 allows companies to perform a qualitative assessment to determine whether further impairment testing of indefinite-lived intangible assets is necessary. Companies can first determine based on certain qualitative factors whether it is “more likely than not” (a likelihood of more than 50 percent) that an indefinite-lived intangible asset is impaired. The new standard is intended to reduce the cost and complexity of testing indefinite-lived intangible assets for impairment. The revised standard is effective for annual and interim impairment tests performed for fiscal years beginning after September 30, 2012 and early adoption is permitted. The Company adopted this new guidance in the fourth quarter of 2012. The new standard does not affect the manner in which the Company estimates fair value and will not affect the value of the Company’s indefinite-lived intangible assets.

In September 2011, the FASB issued ASU No. 2011-08, Intangibles-Goodwill and Other (Topic 350): Testing Goodwill for Impairment. This ASU simplifies goodwill impairment testing by adding a qualitative review step to assess whether quantitative impairment analysis is necessary. Under the amended rule, a company is required to calculate the fair value of a business that contains recorded goodwill if it concludes, based on the qualitative assessment, that it is “more likely than not” that the fair value of that business is less than its book value. If such a decline in fair value is deemed to have occurred, then the quantitative goodwill impairment test that exists under current GAAP must be completed; otherwise, goodwill is deemed to be not impaired and no further testing is required until the next annual test date (or sooner if conditions or events before that date raise concerns of potential impairment in the business). The amended goodwill impairment guidance does not affect the manner in which a company estimates fair value. The new standard is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. The value of that goodwill will not be affected by the adoption of this standard. The Company adopted the standard effective January 1, 2012.

Revenue Recognition

Revenue Recognition        Belo’s principal sources of revenue are the sale of airtime on its television stations, advertising space on the Company’s Internet websites and retransmission of its programming by cable, satellite, telephone and wireless companies. Broadcast revenues are recorded, net of agency commissions, when commercials are aired. Advertising revenues for Internet websites are recorded, net of agency commissions, as the advertisements are displayed on websites. Retransmission revenues are recognized in the period earned.

Advertising Expense

Advertising Expense        The cost of advertising is expensed as incurred. Belo incurred $8,717, $7,784, and $4,673 in advertising and promotion costs during 2012, 2011 and 2010, respectively.

Employee Benefits

Employee Benefits        Belo is self-insured for employee-related health care benefits with certain limits in place. A third-party administrator is used to process all claims. Belo’s employee health insurance liabilities are based on the Company’s historical claims experience and are 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.

Share-Based Compensation

Share-Based Compensation        The Company records compensation expense related to its stock options according to ASC 718. The Company records compensation expense related to its stock options using the fair value as of the date of grant as calculated using the Black-Scholes-Merton method. The Company records the compensation expense related to its restricted stock units (RSUs) using the fair value as of the date of grant, as adjusted for a portion of the RSUs to reflect liabilities expected to be settled in cash.

Income Taxes

Income Taxes        Belo uses the liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities, and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse.

Use of Estimates

Use of Estimates        The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

Comprehensive Income

In June 2011, the FASB issued ASU No. 2011-05, Comprehensive Income (Topic 220): Presentation of Comprehensive Income. This ASU requires companies to present the components of net income and other comprehensive income either as one continuous statement or as two consecutive statements. It eliminates the option to present components of other comprehensive income as part of the statement of changes in stockholders’ equity. The standard does not change the items that must be reported in other comprehensive income, how such items are measured or when they must be reclassified to net income. This standard is effective for interim and annual periods beginning after December 15, 2011. The FASB subsequently deferred the effective date of certain provisions of this standard pertaining to the reclassification of items out of accumulated other comprehensive income. This ASU affects presentation only and will have no effect on the Company’s financial condition, results of operations or cash flows. The Company adopted the standard effective January 1, 2012.