DEAR FELLOW SHAREHOLDERS:
Belo emerged from 2005 in an excellent position both strategically and operationally. We achieved solid financial results with record revenues for a non-political year. This performance built upon the Company’s core strengths of meeting local community needs, delivering distinguished journalistic content, and leveraging our market leadership positions. Strategy work completed in 2004 served as Belo’s road map for progress in adapting to consumers’ changing needs and pursuing innovative growth opportunities more quickly.

Media usage habits have shifted in fundamental ways and the pace of these changes accelerated in 2005. We are adjusting Belo’s traditional business model to fit this more dynamic and complex environment, expanding and diversifying our portfolio of products and services with an emphasis toward increasing interactive media offerings.

Simply stated, our goal is to continue to be the local content provider of choice in today’s consumer-driven society. We are creating new ways to bring audiences the news and information they want, whenever and wherever they want to receive it.

STRATEGY COUNCIL FORMED
I formed a senior-level Strategy Council in April 2005 to focus Belo’s investment of human and financial resources on the right opportunities, particularly in new media. The executives who comprise the Strategy Council bring a broad range of operating and corporate perspectives to this assignment. They have been tasked with three
main objectives:

• Aggressively create new opportunities to interact with audiences through online and wireless distribution that build upon the Company’s leadership in traditional media;

• Develop an industry-leading capability to understand our customers’ preferences, fulfill these through customized content and advertising, and measure their impact on sales; and

• Pursue partnerships, investments or other opprtunities in emerging businesses that draw on Belo’s strengths and create new avenues for revenue growth.

Through the Strategy Council’s influence, Belo is becoming more agile and creative in matching product offerings to rapidly-changing consumer needs in a digital world.

FOCUS ON OPERATING PRIORITIES
We pursued a specific set of priorities in 2005 that enabled Belo to reach more consumers and advertisers while achieving improved financial results.

• The integration of Belo’s interactive media content and sales organizations into their legacy companies was an unqualified success. This strategic realignment accelerated revenue gains in the fastest-growing area of Belo’s operations.

• Investing $9 million in incremental advertising and promotion in our six key markets also paid off. The Dallas Morning News heavily promoted significant changes in the main newspaper and launched innovative new products with the biggest ad campaign in the newspaper’s history, which fueled advertising revenue growth in the second half of 2005. Our large-market television stations developed targeted marketing programs to enhance their brands. And our interactive media group implemented paid search and site optimization programs, resulting in significantly increased page views, unique users and revenues.

• Discontinuing our cable news joint ventures with Time Warner freed up funds to support these increased marketing activities. We also reduced operating costs by refining TXCN’s operations, which included utilizing more news programming from our four Texas stations.

• Realigning our workforce enabled Belo to address changing business needs while streamlining overall staffing levels.

• Development work was completed for a new packaging production plant in Southern Dallas for The Dallas Morning News. We announced plans to bring a Times Square-like environment to Dallas/Fort Worth television with a new studio for WFAA-TV adjacent to the American Airlines Center downtown. And construction began on a state-of-the-art media center for The Press-Enterprise in Riverside, California.

OPERATING RESULTS
The Company posted solid financial and operating results in 2005. We overcame several revenue and expense challenges, including the absence of meaningful political advertising revenue, changes in distribution operations at The Dallas Morning News, and the impact of Hurricane Katrina.

In the Newspaper Group, revenue momentum built during the year with each quarter’s advertising revenue exceeding the previous quarter, including strong revenue growth at The Dallas Morning News in the fourth quarter. The Morning News also established new circulation baselines with its March 2005 and September 2005 audited figures.

Industry-leading ad revenue growth at The Providence Journal and The Press-Enterprise led to record revenue levels at both newspapers in 2005, continuing a multi-year trend.

Our Television Group performed well, with 12 of Belo’s 19 television stations posting record revenues for a non-political year and five of these stations achieving their highest revenues ever. We maintained or increased share of market revenues in 10 of 15 television markets, even without meaningful political advertising. In the November Nielsen ratings period, Belo stations commanded the number one or number two positions from sign-on to sign-off in 12 of 14 markets. Nielsen did not produce November 2005 ratings information for New Orleans, where Belo’s WWL-TV has long been the market leader.

Interactive media revenues hit record levels, growing almost 40 percent in 2005 compared to 2004 and posting a six-fold increase in advertising revenues since 2000. Significant increases were noted in all major online categories, with classified leading the way, up 56 percent. Our Web audiences grew impressively with a 31 percent increase in average page views per month in 2005 compared to 2004, and a 13 percent increase in unique users each month during the same period.

Total operating costs and expenses for Belo consolidated increased only 2.7 percent. We achieved net earnings per share of $1.12 for the year. A strong overall balance sheet enabled the Company to pay $55.7 million in dividends and repurchase 7.9 million shares of common stock at a cost of $184 million, while keeping our debt-to-cash-flow ratio at a manageable level.

EXECUTIVE LEADERSHIP CHANGES
Belo’s greatest catalyst for progress continues to be the exceptionally talented professionals who lead our Company. Belo’s accomplishments in 2005 reflect their hard work and our future will be built by them.

To increase Belo’s preparedness in an ever-changing media environment, several executive promotions were made in early 2006. Jack Sander was promoted to vice chairman. Until his retirement at the end of the year, Jack will provide valuable counsel as we pursue a variety of enterprise-wide initiatives. Dunia Shive becomes president/Media Operations, where she will apply her considerable business insights to Belo’s television, interactive and cable news operations as well as The Press-Enterprise and The Providence Journal. Dunia will continue to chair Belo’s Strategy Council. Dennis Williamson becomes executive vice president in addition to serving as chief financial officer, an acknowledgement of his increasingly important leadership role across Belo. Jim Moroney, publisher and chief executive officer of The Dallas Morning News, now reports to me, along with Jack, Dunia and Dennis, as well as Guy Kerr, senior vice president/Law and Government and Secretary, and Marian Spitzberg, senior vice president/Human Resources. To provide additional senior-level leadership for our broadcast, print and online organizations, Skip Cass and Dave Lougee were named executive vice president/Media Operations, and Wes Jackson was promoted to senior vice president/general manager, Interactive Media.

2006 PRIORITIES ESTABLISHED
This year, we are pursuing a clear set of strategic priorities to strengthen Belo’s ability to reach both current and potential customers across multiple media platforms.

• We are implementing more sophisticated methods to assess the potential value of promising new products and then to allocate adequate resources to bring the highest-potential concepts to market. These products will increase our online and traditional core competencies, while generating sustainable incremental revenues.

• We are refining organizational structures at the enterprise and operating levels. These refinements will enable us to address the needs of our audiences and advertisers more quickly, pursue new distribution channels, and apply advanced technologies in several areas.

• Numerous initiatives in 2006 will improve Belo’s technology infrastructure enterprise-wide and enable us to reallocate internal resources to meet strategic objectives.

We plan to centralize and outsource the transaction-based accounting processes of our operating units, freeing up our finance teams to concentrate on planning and analysis that support growth. Within Belo Technologies, we are establishing an enterprise-wide management protocol whereby we are consolidating core technology functions internally and out-tasking day-to-day production support for other functional areas.

The broadcast master control function, which manages the programming schedule at each Belo television station, is being centralized to gain efficiencies. We are also developing a Customer Value Management (CVM) process at The Dallas Morning News that will eventually be rolled out to Belo’s other operating units. CVM will give us much deeper insights into our customer base. We plan to mine information aggregated from various databases across Belo operations, as well as from external data sources, to develop content and marketing programs that target, attract and retain larger audiences.

• All Belo operating companies are charged with capitalizing on every available opportunity to reach revenue and EBITDA goals. We continue to focus on growing revenues and audiences in six key Belo markets – Dallas/Fort Worth, Houston, Seattle/Tacoma, Phoenix, Providence and Riverside – because these markets generate about 80 percent of the Company’s total revenue and consolidated EBITDA (before corporate expense).

Major product enhancements and new products introduced at The Dallas Morning News in the third quarter of 2005 will influence 2006 financial results. Designed to appeal to readers in specific areas of the Dallas/Fort Worth market and attract young adults, these products include five zoned Metro editions; 16 reader-written Neighbors publications; seven themed lifestyle magazines; a new daily GuideLive entertainment section; and F!Deluxe, a fashion publication distributed in high-income areas.

The Morning News will also benefit from its recent decision to eliminate daily distribution outside the greater Dallas/Fort Worth area. All Belo newspapers will eliminate third-party barter circulation from reported circulation figures and limit other third-party circulation, focusing on the home-delivery and single-copy circulation that matters most to advertisers.

We continue to develop specialty publications as effective ways for advertisers to reach different demographic groups. These are Al Dia in Dallas/Fort Worth and La Prensa and El D in Riverside, serving the growing Hispanic communities, and Quick, a fast-read, tabloid-format publication targeting 18 to 34-year-old adults in Dallas/Fort Worth.

The Providence Journal and The Press-Enterprise are poised for continued growth, in step with the vibrant communities they serve. The Press-Enterprise recently added streaming video of local weather forecasts to its Web site, and both newspapers plan to expand their digital news formats during 2006.

Within the Television Group, Belo stations are leveraging their market-leading positions to pursue significant revenue opportunities presented by the Super Bowl, Winter Olympics, and political issues and elections. Belo’s television portfolio includes four ABC stations that aired the Super Bowl, the television industry’s single-biggest advertising venue; last year we only had one FOX affiliate broadcasting the game. The Winter Olympics delivered incremental revenue in the first quarter, and in the fall, political issues and elections, including U.S. Congressional or gubernatorial races in 13 Belo markets, will present robust advertising opportunities.

• We continue to make significant investments in interactive media to extend this business’ impressive advertising growth, primarily in the classified category. In recruitment classifieds, our new resale and distribution agreement with Yahoo! HotJobs is helping advertisers at The Dallas Morning News and The Providence Journal extend their reach to a broader audience of job seekers. In the automotive sector, we are generating increased traffic to our sites by promoting cars.com, the nation’s premier automotive classified online brand, locally and nationally with other strategic partners. And we are marketing our real estate sites as the best place to access the broadest selection of local listings for existing homes, new homes and rentals, and differentiating these sites further by incorporating local community information.

Through a registered database of more than seven million active users along with a permission e-mail database of 2.4 million users for Belo Web sites, we are gaining valuable insights into our users’ news and information needs and customizing content and advertising on demand to fit those needs. We are also integrating online advertising options with our traditional newspaper outlets and specialty publications.

Overall, Belo enters 2006 with significant operating momentum. We are optimistic about the revenue growth potential in our businesses this year and the many strategic opportunities available to us.

DISTINGUISHED JOURNALISM AND CONTENT
I am particularly proud of the response by WWL-TV, Belo’s CBS affiliate in New Orleans, to one of the worst natural disasters in our nation’s history. WWL was the only local station to stay on the air throughout Hurricane Katrina, broadcasting round-the-clock for 14 straight days, supported by professionals throughout the Belo system. WWL used broadcasting facilities at the station’s transmitter site, Louisiana State University and Louisiana Public Broadcasting Company in Baton Rouge after being forced to evacuate WWL’s own facilities in the French Quarter. WWL posted continuous video news feeds on its Web site, as well as blogs and message boards. Other media outlets around the nation and the world redistributed WWL’s news reports. WWL truly became the light in the storm for the people of New Orleans, wherever they were located or relocated, and for those concerned about them.

Belo’s response to the crisis extended to fundraising efforts at Belo media companies that helped raise more than $20 million to support hurricane relief efforts for the Gulf Coast region. Through the generosity of hundreds of current and former employees, Belo directors, business colleagues and friends, another $672,000 was contributed directly to the WWL-TV Employee Relief Fund.

The Dallas Morning News set the standard for newspaper coverage of Hurricanes Katrina and Rita, and its staff produced an exceptional book chronicling the storms and subsequent recovery efforts. Net proceeds from Eyes of the Storm go to relief funds. Copies of the book can be ordered at DallasNews.com or belo.com.

Exemplary journalistic efforts earned Belo media companies and professionals some of our industry’s most coveted awards in 2005. These included a national Edward R. Murrow Award for KTVB in Boise; 38 regional Murrow awards, more than any other media company nationwide; the USC Annenberg Walter Cronkite Award for Excellence in Television Political Journalism for WFAA-TV in Dallas/Fort Worth and KING-TV in Seattle/Tacoma; the 2004 Livingston Award for Young Journalists honoring Reese Dunklin of The Dallas Morning News; the EPpy Award honoring Projo.com as the Best Overall Newspaper Internet Service; and more awards given to Al Dia by the Texas Associated Press Managing Editors than to any other Spanish-language newspaper in Texas.

We take great pride in these many forms of recognition because they confirm the quality of Belo’s journalists’ work and its importance to the local communities we serve. As we evolve our portfolio of media products to reach people in new ways, the quality of content produced by colleagues throughout Belo gives us a distinct competitive edge.

LEGACIES
Stephen Hamblett, chairman, chief executive officer and president of The Providence Journal Company from 1987 until its merger with Belo in 1997, chief executive officer and publisher of The Providence Journal from 1997 to 1999, chairman of The Providence Journal Company from 1997 to 2000, and a valued member of Belo’s board from 1997 to 2005, died in December 2005. Steve will always be remembered and revered for his passionate pursuit of journalistic excellence. We are greatly saddened by his passing, but know that his legacy lives on through one of America’s greatest newspapers, The Providence Journal.

I celebrate my colleagues all across Belo who work every day to earn the trust and confidence of our audiences. Their passion for this business and their contributions to local communities are unmatched. Belo employees have made our Company one of America’s most respected media companies and a sound investment for our shareholders. I thank you for your continued support and look forward to another successful year in pursuit of shared objectives.