UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

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

For the fiscal year ended: December 31, 2007

OR

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

Commission file no. 1-33741

A. H. Belo Corporation

Delaware		38-3765318
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
P. O. Box 224866
Dallas, Texas (Address of principal executive offices)		75222-4866 (Zip Code)

Registrant’s telephone number, including area code: (214) 977-8200

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

Title of each class		Name of each exchange on which registered
Series A Common Stock, $.01 par value Preferred Share Purchase Rights		New York Stock Exchange New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:
Series B Common Stock, $.01 par value
(Title of class)

Indicate by check mark if the registrant is a well-known seasoned issuer (as defined in Rule 405 of the Act) Yes o No þ.

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act
Yes o No þ.

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 o No þ.

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. o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer: o		Accelerated filer: o		Non-accelerated filer: þ		Smaller reporting company: o
				(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No þ.

There was no aggregate market value of the registrant’s voting stock held by nonaffiliates on June 30, 2007 due to the fact that the registrant was not incorporated until October 1, 2007.

Shares of Common Stock outstanding at March 15, 2008: 20,478,022 shares. (Consisting of 17,629,526 shares of Series A Common Stock and 2,848,496 shares of Series B Common Stock.)

Documents incorporated by reference: None

 

 

A. H. BELO CORPORATION
FORM 10-K
TABLE OF CONTENTS

		PAGE
PART I			1
Item 1. Business			1
Item 1A. Risk Factors			5
Item 1B. Unresolved Staff Comments			9
Item 2. Properties			9
Item 3. Legal Proceedings			10
Item 4. Submission of Matters to a Vote of Security Holders			11
PART II			11
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities			11
Item 6. Selected Financial Data			12
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations			12
Item 7A. Quantitative and Qualitative Disclosures about Market Risk			26
Item 8. Financial Statements and Supplementary Data			26
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure			26
Item 9A. Controls and Procedures			26
Item 9B. Other Information			26
PART III			27
Item 10. Directors, Executive Officers and Corporate Governance			27
Item 11. Executive Compensation			32
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters			55
Item 13. Certain Relationships and Related Transactions, and Director Independence			58
Item 14. Principal Accountant Fees and Services			59
PART IV			60
Item 15. Exhibits and Financial Statement Schedules			60
Signatures			62
Statements re: Computation of Ratios
Subsidiaries of the Company
Consent of Ernst & Young LLP
Certification of Chief Executive Officer Pursuant to Section 302
Certification of Chief Financial Officer Pursuant to Section 302
Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906
Independence Standards

INDEX TO FINANCIAL STATEMENTS

Balance Sheet of A.H. Belo Corporation
Report of Independent Registered Public Accounting Firm		63
Balance Sheet as of December 31, 2007		64
Note to Balance Sheet		65
Combined Financial Statements of the A.H. Belo Businesses
Report of Independent Registered Public Accounting Firm		66
Combined Statements of Operations for the Years Ended December 31, 2007, 2006 and 2005		67
Combined Balance Sheets as of December 31, 2007 and 2006		68
Combined Statements of Belo Corp’s Equity for the Three Years Ended December 31, 2007		70
Combined Statements of Cash Flows for the Years Ended December 31, 2007, 2006 and 2005		71
Notes to Combined Financial Statements		72

          Statements in this communication concerning A. H. Belo Corporation’s (“A. H. Belo” or “the Company”) business outlook or future economic performance, anticipated profitability, revenues, expenses, dividends, capital expenditures, investments, future financings, and 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; newspaper circulation matters, including changes in readership patterns and demography, and audits and related actions by the Audit Bureau of Circulations; circulation trends; technological changes; development of Internet commerce; industry cycles; changes in pricing or other actions by competitors and suppliers; regulatory, tax and legal 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, dispositions and co-owned ventures; general economic conditions; significant armed conflict; and other factors beyond our control, as well as other risks detailed elsewhere in this Annual Report on Form 10-K and in A. H. Belo’s other public disclosures, and filings with the Securities and Exchange Commission (“SEC”), including A. H. Belo’s information statement on Form 10 dated January 31, 2008.

PART I

Item 1. Business

Recent Developments

          A. H. Belo Corporation was incorporated under Delaware law on October 1, 2007, as a wholly-owned subsidiary of Belo. Corp. (“Belo”), to serve as a holding company in anticipation of the pro-rata distribution to Belo shareholders of 100 percent of the outstanding shares of A. H. Belo’s common stock. For purposes of this Annual Report, references to the “Company,” “we,” “us,” “our” and “A. H. Belo” mean A. H. Belo Corporation collectively with all of our subsidiaries unless the context otherwise requires.

          On the Distribution Date (the “Distribution Date”), Belo contributed to A. H. Belo all of Belo’s subsidiaries engaged in Belo’s newspaper business and related assets and liabilities. The assets and liabilities transferred to A. H. Belo were recorded at historical cost as a reorganization of entities under common control in the first quarter of 2008.

          On the Distribution Date, the distribution was completed in the form of a pro-rata dividend to Belo’s shareholders of 0.20 shares of A. H. Belo common stock for each share of Belo’s common stock owned at the close of business on January 25, 2008. Belo received a private letter ruling from the Internal Revenue Service (the “IRS”) to the effect that the distribution is tax-free to Belo shareholders for United States federal income tax purposes, except with respect to cash paid instead of fractional shares.

          On the Distribution Date, Belo settled or assigned intercompany indebtedness between and among Belo and its subsidiaries, including Belo’s subsidiaries engaged in the newspaper business and related assets. Belo settled accounts through contributions of such indebtedness to the capital of the debtor subsidiaries, distributions by creditor subsidiaries, and other non-cash transfers, or assigned indebtedness to A. H. Belo. As of the effective time of the distribution, Belo had contributed to the capital of A. H. Belo and its subsidiaries the net intercompany indebtedness owed to Belo by A. H. Belo and its subsidiaries and A. H. Belo assumed the indebtedness owed by Belo to the A. H. Belo subsidiaries.

          On the Distribution Date, as a consequence of the distribution, A. H. Belo became a separate public company. Belo has no further ownership interest in A. H. Belo or in any newspaper or related businesses, and A. H. Belo has no ownership interest in Belo or in any television station or related businesses. A. H. Belo’s relationship with Belo is now governed by a separation and distribution agreement and several ancillary agreements with Belo governing various relationships between A. H. Belo and Belo. A. H. Belo also co-owns certain downtown Dallas, Texas real estate used in their respective businesses.

          On February 4, 2008, in anticipation of the distribution the Company entered into a $100 million senior revolving credit facility effective as of the Distribution Date. The terms of the new credit facility are more fully described in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations”.

A. H. Belo’s Business

          A. H. Belo’s publishing roots trace to The Galveston Daily News, which began publication in 1842. Today, A. H. Belo owns three primary daily newspapers: The Dallas Morning News, The Providence Journal and The Press-Enterprise. They produce extensive local, state, national and international news. In addition to these three daily newspapers, A. H. Belo publishes various niche products in the same or nearby markets where these daily newspapers are published. Each of A. H. Belo’s daily newspapers and niche publications operates its own related Web site. A. H. Belo also operates direct mail and commercial printing businesses.

          The Dallas Morning News’ first edition was published on October 1, 1885; the newspaper is one of the leading newspapers in America. Its success is founded upon the highest standards of journalistic excellence, with an emphasis on comprehensive local news and information, and community service. The Dallas Morning News is distributed primarily in Dallas County and the 11 surrounding counties. It has earned eight Pulitzer Prizes since 1986 for its news reporting and photography.

          The Providence Journal, acquired by Belo in February 1997, is the leading newspaper in Rhode Island and southeastern Massachusetts. The Providence Journal is America’s oldest major daily newspaper of general circulation and continuous publication, and has won four Pulitzer Prizes.

          The Press-Enterprise was acquired in July 1997. The Press-Enterprise is distributed throughout Southern California’s Inland Empire area, which includes Riverside and San Bernardino Counties. It has a long history of journalistic excellence and has won one Pulitzer Prize.

          The following table sets forth circulation information concerning A. H. Belo’s primary daily newspaper operations:

		2005								2006								2007
		Daily				Sunday				Daily				Sunday				Daily				Sunday
Newspaper		Circulation(1)				Circulation				Circulation(1)				Circulation				Circulation(1)				Circulation
The Dallas Morning News			462,075	(2)			640,742	(2)			405,048	(2)			566,608	(2)			372,810	(3)			523,313	(3)
The Providence Journal			163,909	(4)			231,593	(4)			159,788	(5)			212,971	(5)			149,966	(6)			198,973	(6)
The Press-Enterprise			176,577	(7)			179,390	(7)			169,362	(7)			178,788	(7)			162,464	(8)			171,114	(8)

          The Company derives its revenues primarily from the sale of advertising and newspapers and from commercial printing. For the year ended December 31, 2007, advertising revenues accounted for approximately 81 percent of total revenues. Circulation revenues accounted for approximately 15 percent of total revenues for 2007. Prices for the Company’s newspapers are established individually for each newspaper. Commercial printing accounted for most of the remainder of the Company’s revenues.

          Belo Interactive Media (“BIM”) supports A. H. Belo’s and Belo’s Web sites, and Belo Technologies supports information technology requirements. BIM and Belo Technologies, which are owned by A. H. Belo, provide services to Belo and its television Web sites pursuant to inter-company agreements whereby Belo compensates A. H. Belo for such services.

          Web sites operated by A. H. Belo’s newspapers provide consumers with timely news and information. The newspaper-affiliated Web sites for The Dallas Morning News, The Providence Journal, and The Press-Enterprise are leading local media sites in their respective markets. Revenues for interactive media for the years ended December 31, 2007 and 2006 represented approximately 7.0 and 5.0 percent, respectively, of the total revenues and were derived principally from advertising on the various Web sites. In addition, A. H. Belo owns 6.6 percent of Classified Ventures, LLC, a joint venture of which the other owners are Gannett Co., Inc., The McClatchy Company, Tribune Company, and The Washington Post Company. The three principal online businesses Classified Ventures, LLC operates are: cars.com, apartments.com, and homegain.com. A. H. Belo has agreed to share certain ownership attributes of Classified Ventures, LLC with Belo.

          The basic material used in publishing newspapers is newsprint. Currently, most of the Company’s newsprint is obtained through a purchasing consortium of which the Company is a member. Management believes the Company’s sources of newsprint, along with available alternate sources, are adequate for the Company’s current needs.

          During 2007, the Company’s operations consumed approximately 136,546 metric tons of newsprint at an average cost of $586 per metric ton. Consumption of newsprint in the previous year was approximately 166,756 metric tons at an average cost per metric ton of $631. Newsprint prices decreased approximately 7.1 percent in 2007. Consolidation in the North American newsprint industry has reduced the number of suppliers and has led to paper mill closures and conversions to other grades of paper, which in turn has decreased overall newsprint capacity and increased the likelihood of future price increases.

          Since 2005, A. H. Belo has experienced a decline in net operating revenues and net earnings primarily due to decreased advertising revenues. The decrease in advertising revenues, particularly in the classified category, resulted from increased competition for advertising dollars from other media, particularly the Internet. In response to these decreases, A. H. Belo has launched innovative print and online products and has established strategic partnerships with major Internet companies. Since 2002, revenues from our newspaper Web sites have experienced double-digit annual growth. A. H. Belo has also in recent years focused on neighborhood and other local community news, both in print and online. In addition, A. H. Belo has implemented measures to control or decrease operating expenses. These measures include modifying distribution and marketing strategies to allow our newspapers to concentrate on circulation most valued by advertisers and restructuring our newspapers through organizational realignments.

Our Competitive Strengths and Challenges

          Our strengths are:

	•		ownership and proven management of three quality daily newspapers that have been widely recognized over the years for their distinguished journalism.
	•		the three daily newspapers’ locations in markets with projected population growth rates above the national average.
	•		a strong, cohesive senior management team with significant sector experience focused on strategic and operating issues.
	•		an initial debt-free capital structure with the financial flexibility to allocate capital toward higher-growth online initiatives, support continued innovation, and maintain a sharp focus on distinguished journalism and editorial content.
	•		resources to compete in a challenging operating environment and return cash to shareholders through an attractive dividend.
	•		strategic and financial flexibility to form partnerships and alliances unencumbered by considerations of the potential effect on Belo’s television business.

          Our newspapers, and the newspaper industry as a whole, are experiencing challenges to maintain and grow print revenues and circulation. This results from, among other factors, increased competition from other media, particularly the Internet. A prolonged decline in circulation could further affect advertising revenues; however, A. H. Belo’s newspapers have grown in total readership over the past five years. Readership, as defined by the Company, includes circulation (including ancillary niche products) and traffic on their online Web sites.

Our Strategies and Opportunities

          The Company is committed to publishing newspapers and online content of the highest quality and integrity, creating and developing innovative print and online products addressing the needs of customers and advertisers, providing an attractive dividend, and creating value for shareholders over the long-term. The Company intends to achieve these objectives through the following strategies:

	•		focusing management’s attention on operating A. H. Belo’s core newspaper businesses and related Web sites to derive maximum revenue and earnings in an Internet-centric media environment by building larger digital businesses.
	•		being attentive to the needs of our customers and advertisers by implementing initiatives to better reach consumers that advertisers most desire.
	•		innovating and continuing to develop print and online products that create sustainable incremental revenue and earnings.
	•		strengthening and improving our underlying technology platform.
	•		maintaining a conservative balance sheet.
	•		continuing our commitment of service to the local communities we serve.

Competition

          The Company faces competition for advertising, and on-line advertising dollars, and circulation, The competition for advertising, dollars comes from local, regional, and national newspapers, the Internet, magazines, broadcast, cable and satellite television, radio, direct mail, yellow pages, and other media. A. H. Belo also competes for advertising dollars with certain television stations and related Web sites owned by Belo. Increased competition has come from the Internet and other new media formats and services other than traditional newspapers, many of which are often free to users. Free circulation daily newspapers have been recently introduced in several metropolitan markets, and there can be no assurance that free daily publications, or other publications, will not be introduced in any markets in which A. H. Belo publishes its newspapers. The Dallas Morning News has one major metropolitan daily newspaper competitor in certain areas of the Dallas/Fort Worth market. The Providence Journal competes with five daily newspapers in the Rhode Island and southeastern Massachusetts markets. The Press-Enterprise competes with seven daily newspapers in the Inland Empire area of southern California.

Seasonality

          A. H. Belo’s advertising revenues are subject to moderate seasonality, with advertising revenues typically higher in the fourth calendar quarter of each year because of the holiday shopping season. The level of advertising sales in any period may also be affected by advertisers’ decisions to increase or decrease their advertising expenditures in response to anticipated consumer demand and general economic conditions.

Employees

          As of December 31, 2007, the Company had approximately 3,400 full-time and 280 part-time employees, including approximately 530 employees represented by various employee unions. All of these union-represented employees are located in Providence, Rhode Island. The Company believes its relations with its employees are satisfactory.

Available Information

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

Item 1A. Risk Factors

          Sections of this Annual Report on Form 10-K and management’s public comments from time to time may contain forward-looking statements that are subject to risks and uncertainties. These statements are based on management’s current knowledge and estimates of factors affecting our operations, both known and unknown. Readers are cautioned not to place undue reliance on such forward-looking information as actual results may differ materially from those currently anticipated. The following discussion identifies some of the factors that may cause actual results to differ materially from expectations. In addition, a number of other factors (those identified elsewhere in this document and others, both known and unknown) may cause actual results to differ materially from expectations.

Risks Resulting from the Recently Completed Distribution

          A. H. Belo has no operating history as a separate public company and may be unable to operate profitably as a stand-alone company.

          A. H. Belo has no operating history as a separate public company. Historically, because the newspaper and the television businesses that comprised Belo have been under one ultimate parent, they have been able to rely to some degree on the earnings, assets, and cash flow of each other for capital requirements. As a result of the distribution, A. H. Belo now relies only on the newspaper business and related businesses for such requirements. A. H. Belo cannot assure you that, as a separate public company, operating results will continue at historical levels, or that the Company will be profitable. Additionally, A. H. Belo has relied on Belo for various financial, administrative, and managerial services in conducting its operations. Following the distribution, A. H. Belo maintains its own credit and banking relationships and performs its own financial and investor relations functions. Although A. H. Belo employs certain key former employees of Belo following the distribution, there can be no assurance that A. H. Belo will be able to successfully put in place, or thereafter maintain, the financial functions, administration, and management necessary to operate as a separate company or that A. H. Belo will not incur additional costs operating as a separate public company. For example, prior to the distribution, A. H. Belo, as part of Belo’s business, was able to use Belo’s size to procure products and services on favorable terms. A. H. Belo could experience some increased costs as a result of the absence of such economies of scale. Any such additional or increased costs could have a material adverse effect on our business, financial condition, or results of operations.

          A. H. Belo’s historical financial information may not be indicative of our future results as a separate public company.

          The historical financial information included in this Annual Report on Form 10-K may not reflect what A. H. Belo’s results of operations, financial position, and cash flows would have been had it been a separate public company during the periods presented, or be indicative of what its results of operations, financial position, and cash flows may be in the future as a separate public company. A. H. Belo’s historical financial information reflects allocations for services historically provided by Belo, and these allocated costs may be different from the actual costs A. H. Belo will incur for these services in the future as a separate public company, including with respect to actual services provided to A. H. Belo by Belo under a services agreement and other agreements. In some instances, the costs incurred for these services as a separate public company may be higher than the share of total Belo expenses allocated to A. H. Belo historically.

          For additional information about the past financial performance of A. H. Belo’s business and the basis of the presentation of the historical financial statements, see “Item 6. Selected Financial Data,” “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and the Combined Financial Statements and the accompanying Notes included elsewhere in this Annual Report on Form 10-K.

          A. H. Belo may incur increased costs after the distribution or as a result of the distribution that may cause our profitability to decline.

          A. H. Belo needs to replicate certain systems, infrastructure, and personnel to which it no longer has access after the distribution from Belo. In addition, there may be an adverse operational effect on A. H. Belo’s business as a result of the significant time A. H. Belo’s management and other employees and internal resources will need to dedicate to building these capabilities during the first few years following the distribution that otherwise would be available for other business initiatives and opportunities. A. H. Belo may incur capital and other costs associated with developing and implementing its own support functions in these areas. These costs may exceed the costs A. H. Belo will pay to Belo during the transition period.

          A. H. Belo may incur increased expenses if the services agreement with Belo is terminated.

          In connection with the distribution, A. H. Belo entered into a services agreement with Belo. This agreement provides that A. H. Belo and Belo will furnish each other services in such areas as employee benefits administration, risk management, claims administration and reporting, tax, payroll, internal audit, and other areas where A. H. Belo and Belo may need assistance and support following the distribution. Depending on the particular service being provided, the agreement extends for up to two years after the distribution, but may be terminated earlier under certain circumstances, including a default. If the agreement is terminated, A. H. Belo may be required to obtain such services from a third party. This could be more expensive than the fees that A. H. Belo is required to pay under the services agreement.

          A. H. Belo’s directors and executive officers have significant combined voting power and significant influence over our management and affairs.

          Our directors and executive officers, hold 58.5 percent of the voting power of our outstanding voting stock as of March 15, 2008. A. H. Belo’s Series A common stock has one vote per share and Series B common stock has ten votes per share. Generally, except for certain extraordinary corporate transactions, all matters to be voted on by A. H. Belo’s shareholders must be approved by a majority of the voting power of our outstanding voting stock, voting as a single class. Certain extraordinary corporate transactions, such as a merger, consolidation, sale of all or substantially all of our property and assets, or a dissolution, the alteration, amendment, or repeal of A. H. Belo’s bylaws by shareholders, and certain amendments to A. H. Belo’s certificate of incorporation, require the affirmative vote of the holders of at least two-thirds of the voting power of our outstanding voting stock, voting as a single class. Accordingly, A. H. Belo’s directors and executive officers will have significant influence over our management and affairs and over all matters requiring shareholder approval, including the election of directors and significant corporate transactions. This ownership may limit your ability to influence corporate matters and, as a result, A. H. Belo may take actions that you, or even the majority of shareholders, do not view as beneficial.

          Certain members of management, directors, and shareholders may face actual or potential conflicts of interest.

          The management and directors of A. H. Belo and Belo own both A. H. Belo common stock and Belo common stock. Robert W. Decherd serves as the non-executive Chairman of the Board of Belo and as Chairman of the Board, president and Chief Executive Officer of A. H. Belo. Mr. Decherd and Dealey D. Herndon, his sister, serve as directors of A. H. Belo and Belo. James M. Moroney III, executive vice president of A. H. Belo and the Publisher and Chief Executive Officer of The Dallas Morning News, is their second cousin. Mr. Moroney also serves as a director of Belo. This ownership overlap and these common directors could create, or appear to create, potential conflicts of interest when A. H. Belo’s and Belo’s management and directors face decisions that could have different implications for A. H. Belo and Belo. For example, potential conflicts of interest could arise in connection with the resolution of any dispute between A. H. Belo and Belo regarding the terms of the agreements governing the distribution and the relationship between A. H. Belo and Belo thereafter. These agreements include, among others, the separation and distribution agreement, the tax matters agreement, the employee matters agreement, the services agreement, and any other agreements between the parties or their affiliates. Potential conflicts of interest could also arise out of any commercial arrangements that A. H. Belo and Belo may enter into in the future. In addition, A. H. Belo and Belo will compete with each other in Dallas/Fort Worth, where each company owns significant properties.

Risks Relating to A. H. Belo’s Business

          If A. H. Belo is unable to respond to evolving industry trends and changes in technology, its business may not be able to compete effectively.

          Print circulation and readership of A. H. Belo’s newspapers, and the newspaper industry overall, are subject to competition and, in particular, are being affected by the preferences of some consumers to receive all or a portion of their news in new media formats and from sources other than traditional newspapers, and by the proliferation of these new media formats and sources. Information delivery and programming alternatives such as the Internet, cable, direct satellite-to-home services, pay-per-view, and home video and entertainment systems have fractionalized newspaper readership. Over the past decade, the Internet, cable television programming services, and other emerging media distribution platforms have captured increasing market share, while the aggregate print circulation of the major newspapers has declined.

          Decreases in advertising spending, resulting from an economic downturn, business combinations, natural disasters, war, terrorism, or other factors specific to the communities served by the Company, could adversely affect A. H. Belo’s financial condition and results of operations. In addition, A. H. Belo’s revenues are subject to seasonal, cyclical, and other fluctuations that could adversely affect our financial condition and results of operations.

          Approximately 81 percent or more of A. H. Belo’s revenues for each of the last three fiscal years were generated from the sale of advertising appearing in its newspapers. Advertisers generally reduce their advertising spending during economic downturns, so a recession or economic downturn could have an adverse effect on A. H. Belo’s financial condition and results of operations.

          A. H. Belo’s advertising revenues depend upon a variety of other factors specific to the communities served by the Company. Changes in those factors could affect advertising revenues. These factors include, among others, the size and demographic characteristics of the local population, the concentration of retail stores, and local economic conditions in general.

          A. H. Belo’s revenues and results of operations are subject to seasonal, cyclical, and other fluctuations that are expected to continue. Seasonal and cyclical factors that affect A. H. Belo’s revenues and results of operations may be beyond A. H. Belo’s control, including changes in the pricing policies of competitors, the hiring and retention of key personnel, wage and cost pressures, changes in newsprint prices, and general economic factors. Fluctuations in revenues and results of operations may cause A. H. Belo’s stock price to be volatile.

          A. H. Belo’s businesses operate in highly competitive markets, such as Dallas/Fort Worth, and our ability to maintain market share and generate revenues depends on how effectively the Company competes with existing and new competition.

          Our businesses operate in highly competitive markets. Our newspapers compete for audiences and advertising revenue with other newspapers as well as with the Internet, magazines, broadcast, cable and satellite television, radio, direct mail, and yellow pages. A. H. Belo and Belo will compete with each other in Dallas/Fort Worth where each company owns significant properties. Some of A. H. Belo’s current and potential competitors have greater financial and other resources available to them.

          A. H. Belo’s newspaper publications generate significant percentages of their advertising revenues from limited numbers of sources. In recent years, Web sites dedicated to automotive, employment, real estate advertising, and general classified advertising have become significant competitors of A. H. Belo’s newspapers and Web sites. As a result, even in the absence of a recession or economic downturn, technological, industry, and other changes specifically affecting these advertising sources could reduce advertising revenues and adversely affect A. H. Belo’s financial condition and results of operations.

          A. H. Belo’s revenues primarily consist of advertising and paid circulation. Competition for advertising expenditures and paid circulation comes from local, regional, and national newspapers (including free daily newspapers), magazines, broadcast, cable and satellite television, radio, direct mail, yellow pages, the Internet, outdoor billboards, and other media. The National Do Not Call Registry has affected the way newspapers solicit home-delivery circulation, particularly for larger newspapers that historically have relied on telemarketing. Competition for newspaper advertising revenue is based largely upon advertiser results, advertising rates, readership, demographics, and circulation levels. Competition for circulation is based largely upon the content of the newspaper, its price, editorial quality, customer service, and other sources of news and information. Our local and regional competitors are community newspapers that are typically unique to each market, but the Company has competitors for advertising revenues that are larger and have greater financial and distribution resources. Circulation revenues and our ability to achieve price increases for our print products may be affected by competition from other publications and other forms of media available in our various markets, declining consumer spending on discretionary items like newspapers, decreasing amounts of free time, and declining frequency of regular newspaper buying among certain demographics. A. H. Belo may incur higher costs competing for advertising dollars and paid circulation, and if the Company is not able to compete effectively for advertising dollars and paid circulation, revenues may continue to decline and our financial condition and results of operations may be adversely affected.

          Decreases in circulation may adversely affect A. H. Belo’s circulation and advertising revenues.

          The table below presents the components of our net operating revenues for the last three years:

						Percentage								Percentage
Year ended December 31, (dollars in thousands)		2007				Change				2006				Change				2005
Advertising		$	600,335				(10.9	%)		$	674,140				(1.9	%)		$	687,140
Circulation			112,635				(3.1	%)			116,265				11.0	%			104,790
Other			25,698				(6.0	%)			27,328				(10.1	%)			30,414
Net operating revenues		$	738,668				(9.7	%)		$	817,733				(0.6	%)		$	822,344

          As a result of the change in distribution methods at The Dallas Morning News, circulation revenue increased approximately $24,555 in 2006. However, when measured on a comparable basis, circulation revenue actually decreased 1.8 percent in 2006 from 2005.

          A. H. Belo’s newspapers, and the newspaper industry as a whole, are experiencing challenges to maintain and grow print circulation and circulation revenues. A prolonged decline in circulation could affect the rate and volume of advertising revenues. To maintain our circulation base, A. H. Belo may incur additional costs, and may not be able to recover these costs through circulation and advertising revenues. To address declining circulation, the Company may increase spending on marketing designed to retain our existing subscriber base and continue or create niche publications targeted at specific market groups. The Company may also increase marketing efforts to drive traffic to our proprietary Web sites. There are no current plans to materially increase such spending or marketing.

          A. H. Belo anticipates that readership will become increasingly important now that the Audit Bureau of Circulations has agreed to publish readership statistics and recognize Internet use in addition to print circulation information. The Company believes this is a positive industry development but cannot predict its effect on advertising revenues.

          A significant increase in the cost of newsprint, or a reduction in the availability of newsprint, could adversely affect A. H. Belo’s publishing business.

          The basic raw material for newspapers is newsprint, which has historically been between approximately 11 percent and 14 percent of revenues. The price of newsprint historically has been volatile. Consolidation in the North American newsprint industry has reduced the number of suppliers and has led to paper mill closures and conversions to other grades of paper, which in turn has decreased overall newsprint capacity and increased the likelihood of future price increases. A. H. Belo currently purchases most of its newsprint through a purchasing consortium of which it is a member. Our inability to obtain an adequate supply of newsprint in the future or significant increases in newsprint costs could affect our financial condition and results of operations.

          Adverse results from pending or new litigation or governmental proceedings or investigations could adversely affect A. H. Belo’s financial condition and results of operations.

          From time to time A. H. Belo and its subsidiaries are subject to litigation, governmental proceedings, and investigations. Current matters include those described under “Item 3. Legal Proceedings”. Adverse determinations in any of these pending or future matters could require A. H. Belo to make monetary payments or result in other sanctions or findings that could affect our business, financial condition, and results of operations.

          A. H. Belo depends on key personnel and may not be able to operate and grow our business effectively if A. H. Belo loses the services of any of our senior executive officers or are unable to attract and retain qualified personnel in the future.

          A. H. Belo depends on the efforts of its senior executive officers. The success of our business depends heavily on our ability to retain current management and to attract and retain qualified personnel in the future. Competition for senior management personnel is intense and A. H. Belo may not be able to retain its key personnel. The Company has not entered into employment agreements with key management personnel and does not have “key person” insurance for any of our senior executive officers or other key personnel. To mitigate this risk, A. H. Belo has adopted a change in control severance plan covering key management personnel that is triggered under certain conditions if a change in control occurs.

          A. H. Belo’s business may be negatively affected by work stoppages, slowdowns, or strikes by our employees.

          Currently, one of A. H. Belo’s primary newspapers is party to collective bargaining agreements with unions representing approximately 530 of its employees. All of these agreements will expire within approximately four years, unless extended. A. H. Belo cannot assure investors about the results of negotiation of future collective bargaining agreements, whether future collective bargaining agreements will be negotiated without interruptions in our business, or the possible effect of future collective bargaining agreements on our business, financial condition, and results of operations. The Company also cannot assure investors that strikes or work stoppages will not occur in the future in connection with labor negotiations or otherwise. Any prolonged strike or work stoppage could adversely effect our business, financial condition, and results of operations.

Item 1B. Unresolved Staff Comments

          None.

Item 2. Properties

          A. H. Belo owns and operates a newspaper printing facility and distribution center in Plano, Texas, to print The Dallas Morning News and other publications. A. H. Belo also owns a distribution and collating facility for The Dallas Morning News in southern Dallas and owns a printing facility in Arlington, Texas, used for commercial printing. Additional operations of The Dallas Morning News are housed in a four-story building and in parts of a separate 17-story office building (The Belo Building) in downtown Dallas, Texas. A. H. Belo also leases space in downtown Dallas, for BIM operations, and in Irving, Texas, for a secondary data center.

          After an assessment of their respective downtown Dallas real estate needs, A. H. Belo and Belo agreed to co-own, through the creation of a limited liability company (LLC), The Belo Building, related parking sites, and specified other downtown real estate. A. H. Belo and Belo each own 50 percent of the LLC and lease from the LLC 50 percent of the available rental space in The Belo Building and related parking sites under long-term leases that are terminable under various conditions. A third party real estate services firm, engaged by the LLC, manages The Belo Building and other real estate owned by the LLC.

          In addition, A. H. Belo and Belo have agreed to exchange certain real estate interests they or their subsidiaries own in an approximately 10-acre downtown Dallas campus jointly used today by The Dallas Morning News and Belo’s WFAA-TV and Texas Cable News (TXCN). As a result of the exchange, The Dallas Morning News will own a single parcel (or contiguous parcels) containing the land and improvements that it uses in its operations, and WFAA-TV, TXCN, and Belo will likewise own a single parcel (or contiguous parcels) containing the land and improvements used by WFAA-TV and TXCN. Depending on their needs, A. H. Belo (or a related entity) and Belo (or a related entity) may also enter into lease or use agreements for specified parts of the campus real estate properties. The terms of such agreements, including the compensation to be paid, will be determined by arms-length negotiations between A. H. Belo and Belo.

          A. H. Belo owns and operates a newspaper printing facility in Providence, Rhode Island, for The Providence Journal. The remainder of The Providence Journal‘s operations is housed in an owned, five-story building in downtown Providence.

          A. H. Belo owns and operates a newspaper publishing facility and a commercial printing facility in downtown Riverside, California, for The Press-Enterprise and other company and third party publications. The Company owns a

state-of-the-art media center for The Press-Enterprise, which also houses the non-production operations of The Press-Enterprise.

          The Company has additional leasehold and other interests that are used in our activities, which are not material. The Company believes our properties are in satisfactory condition and are well maintained and that such properties are adequate for present operations.

Item 3. Legal Proceedings

          In 2004, Belo 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. In response to the overstatement, Belo implemented a voluntary advertiser plan developed by Belo management. The plan included cash payments to advertisers and future advertising credits. Payments under the plan were made without any condition that such advertisers release The Dallas Morning News from liability for the circulation overstatement. To use the credits, advertisers generally placed advertising in addition to the terms of the advertiser’s current contract. There are no unused credits.

          On August 23, 2004, August 26, 2004, and October 5, 2004, three related lawsuits were filed by purported shareholders of Belo in the United States District Court for the Northern District of Texas against Belo, Robert W. Decherd, and Barry T. Peckham, a former executive officer of The Dallas Morning News. The complaints arise out of the circulation overstatement at The Dallas Morning News announced by Belo in 2004, 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, all of whom are current or retired executive officers of Belo, and James M. Moroney III, an executive officer of The Dallas Morning News. On May 18, 2007, the court partially granted defendants’ motions to dismiss plaintiffs’ second amended complaint to the extent it dismissed plaintiffs’ complaint as to defendants John L. Sander, Dunia A. Shive, and Dennis A. Williamson. The motions to dismiss were denied as to the other defendants. On September 19, 2007, plaintiffs filed their motion for class certification; defendants filed their response to this motion on October 26, 2007. Plaintiffs filed their reply to the response on November 16, 2007. On November 26, 2007, the court denied defendants’ motion for reconsideration of the court’s denial of defendants’ motion to dismiss as to the remaining defendants. No class or classes have been certified and no amount of damages has been specified. The Company believes the complaints are without merit and intend to defend vigorously against them.

          On June 3, 2005, a shareholder derivative lawsuit was filed by a purported individual shareholder of Belo in the 191st Judicial District Court of Dallas County, Texas, against Robert W. Decherd, John L. Sander, Dunia A. Shive, Dennis A. Williamson, and James M. Moroney III; Barry T. Peckham; and Louis E. Caldera, Judith L. Craven, Stephen Hamblett, Dealey D. Herndon, Wayne R. Sanders, France A. Córdova, Laurence E. Hirsch, J. McDonald Williams, Henry P. Becton, Jr., Roger A. Enrico, William T. Solomon, Lloyd D. Ward, M. Anne Szostak, and Arturo Madrid, current or former directors of Belo. The lawsuit makes various claims asserting mismanagement and breach of fiduciary duty related to the circulation overstatement at The Dallas Morning News. On May 30, 2007, after a prior discovery stay ended, the court issued an order administratively closing the case. Under the court’s order, the case is stayed and, as a result, no further action can be taken unless the case is reinstated. The court retained jurisdiction and the case is subject to being reinstated by the court or upon motion by any party. The court’s order was not a dismissal with prejudice.

          Under the terms of the separation and distribution agreement between A. H. Belo and Belo, A. H. Belo and Belo will share equally in any liabilities, net of any applicable insurance, resulting from the circulation-related lawsuits described above.

          In 2004, the staff of the SEC notified Belo that it was conducting a newspaper industry-wide inquiry into circulation practices, and inquired specifically about The Dallas Morning News ‘ circulation overstatement. Belo briefed the SEC on The Dallas Morning News circulation situation and related matters. The information voluntarily provided to the SEC related to The Dallas Morning News, as well as The Providence Journal and The Press-Enterprise. On October 1, 2007, the SEC staff sent counsel for Belo a letter stating that the inquiry has been completed and that the SEC staff does not intend to recommend any enforcement action by the SEC.

          On October 24, 2006, eighteen former employees of The Dallas Morning News filed a lawsuit against various A. H. Belo-related parties in the United States District Court for the Northern District of Texas. The plaintiffs’ lawsuit

alleges unlawful discrimination and ERISA violations and includes allegations relating to The Dallas Morning News circulation overstatement (similar to the circulation-related lawsuits described above). In June 2007, the court issued a memorandum order granting in part and denying in part defendants’ motion to dismiss. In August 2007, the court dismissed certain additional claims. A trial date in January 2009 has been set. The Company believes the lawsuit is without merit and intends to defend vigorously against it.

          In addition to the proceedings disclosed above, a number of other legal proceedings are pending against A. H. Belo, 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 A. H. Belo’s results of operations, liquidity, or financial position.

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

          None.

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

          The Company’s authorized common equity consists of 125,000,000 shares of common stock, par value $.01 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; 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: AHC). There is no established public trading market for shares of Series B common stock. Our Series A common stock began trading on February 11, 2008, and as such, no information exists regarding high and low stock prices for the last two years. The closing price of our Series A common stock on March 15, 2008 was $11.44.

          The approximate number of shareholders of record of our Series A and Series B common stock at the close of business on March 15, 2008 was 577 and 289, respectively.

          A. H. Belo’s dividend is expected to be $1.00 per share, annually. The declaration and payment of dividends is subject to the discretion of A. H. Belo’s Board of Directors, and any determination as to the payment of such dividends, as well as the amount and timing of such dividends, will depend on, among other things, A. H. Belo’s results of operations and financial condition, earnings, capital requirements, debt covenants, other contractual restrictions, prospects, applicable law, general economic and business conditions, and other future factors that A. H. Belo’s Board of Directors deems relevant. A. H. Belo cannot provide any assurance that any dividends will be declared and paid, due to factors previously stated in “Item 1A. Risk Factors”. In addition, the Company entered into a bank credit facility agreement that contains a negative covenant requiring the Company to be in pro forma compliance with the Fixed Charge Coverage ratio (the ratio of interest and other fixed charges to the Company’s consolidated EBITDA less capital expenditures), before any dividends can be paid.

Issuer Purchases of Equity Securities

          The Company did not repurchase any Series A or Series B common stock during the quarter ended December 31, 2007.

Sales of Unregistered Securities

          In connection with its incorporation, on October 1, 2007, A. H. Belo issued 1,000 shares of A. H. Belo common stock, par value $.01 per share, to Belo Holdings, Inc., a subsidiary of Belo, in consideration of an aggregate capital contribution of $1,000 by Belo Holdings. A. H. Belo did not register this issuance of securities under the Securities Act because it did not involve any public offering of securities.

          In connection with the distribution, Belo and Belo Holdings contributed to A.H. Belo the stock of all subsidiaries engaged in the newspaper and related businesses along with certain real estate and other assets and liabilities

associated with the newspaper and related businesses to A. H. Belo. The assets and liabilities transferred to A. H. Belo will be recorded at historical cost as a reorganization of entities under common control in the first quarter of 2008. In consideration for these capital contributions, A. H. Belo issued to Belo and Belo Holdings a total of 17,603,448 shares of A. H. Belo Series A common stock and 2,848,547 shares of A. H. Belo Series B common stock. A. H. Belo did not register these issuances of securities under the Securities Act because they did not involve any public offering of securities.

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, 2007. 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 the Combined Financial Statements and the Notes thereto.

		As of and for the years ended December 31,
In thousands		2007				2006				2005				2004				2003
Total net operating revenues		$	738,668			$	817,733			$	822,344			$	779,142			$	763,652
Total operating expenses(a)			1,056,100				760,376				721,251				689,460				645,378
Earnings (loss) from operations		$	(317,432	)		$	57,357			$	101,093			$	89,682			$	118,274
Other income and expense(b)			(31,067	)			(30,310	)			(22,913	)			(15,648	)			(18,065	)
Income tax (expense) benefit			1,487				(11,868	)			(30,361	)			(28,745	)			(38,458	)
Net earnings (loss)(a)(c)		$	(347,012	)		$	15,179			$	47,819			$	45,289			$	61,751
Total assets		$	619,710			$	994,815			$	981,661			$	963,215			$	968,889
Long-term portion of notes payable to Belo Corp.(d)		$	378,916			$	353,893			$	332,710			$	306,398			$	279,425

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

          The following information should be read in conjunction with the other sections of this Annual Report on Form 10-K, including “Item 1. Business,” “Item 1A. Risk Factors,” “Item 6. Selected Financial Data,” “Item 7A. Quantitative and Qualitative Disclosures about Market Risks,” “Item 9A. Controls and Procedures” and the Combined Financial Statements and the Notes thereto. Management’s Discussion and Analysis of Financial Condition and Results of Operations contains a number of forward-looking statements, all of which are based on our current expectations and could be affected by the uncertainties and risk factors described throughout this filing and particularly in “Item 1A.. Risk Factors.”

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

          All dollar amounts are in thousands, except per share amounts.

OVERVIEW

A. H. Belo

          On October 1, 2007, Belo Corp. (“Belo”) announced a plan to distribute its newspaper publishing business into a separate public company, A. H. Belo Corporation (“A. H. Belo” or the “Company”).

          The Board of Directors of Belo determined that separating Belo’s newspaper and other businesses from Belo’s television business was in the best interests of Belo and Belo’s shareholders. A.H. Belo believes that the company’s structure with no initial debt and other features, will give A. H. Belo the financial and operational flexibility to take advantage of opportunities in the newspaper sector and meet the changing needs of the media marketplace today and in the future. In arriving at its decision, the Board considered many factors including the effect of the Internet and other transformational technologies on consumers, advertisers, and traditional media such as newspapers and television, the consolidation of media ownership and the rapid ascent of new media businesses, the prospects for positive changes in media ownership regulation, and the competitive positions and strengths of Belo’s newspapers and television stations and the local markets they serve. Net operating revenues for A. H. Belo were approximately $738,668, $817,733, and $822,344 for the fiscal years ended December 31, 2007, 2006 and 2005, respectively. Net (loss) earnings were $(347,012), $15,179 and $47,819 for the fiscal years ended December 31, 2007, 2006 and 2005, respectively.

          On February 8, 2008, the distribution was completed and A. H. Belo and Belo entered into a separation and distribution agreement under which Belo transferred substantially all of the assets and liabilities associated with its newspaper and related businesses to A. H. Belo. The assets and liabilities transferred to A. H. Belo will be recorded at historical cost as a reorganization of entities under common control in the first quarter of 2008. The distribution was in the form of a pro-rata, tax-free dividend to Belo’s shareholders of 0.20 shares of A. H. Belo common stock for each share of Belo common stock owned at the close of business on January 25, 2008.

          A. H. Belo’s business consists of three primary daily newspapers, various niche products in the same or nearby markets, and direct mail and commercial printing businesses. A. H. Belo operates within the United States and competes against similar and other types of media on a local, regional, and national basis. A. H. Belo also operates news and information Web sites, participates in several interactive alliances, and offers a broad range of Internet-based products.

          The following table summarizes the net operating revenues for each of A. H. Belo’s three daily newspapers for the years ended December 31, 2007, 2006, and 2005:

		Year ended December 31,
		2007				2006				2005
The Dallas Morning News		$	457,418			$	497,887			$	496,776
The Press-Enterprise			129,675				157,185				159,628
The Providence Journal			151,575				162,661				165,940
Net operating revenues		$	738,668			$	817,733			$	822,344

          Total revenues decreased approximately 9.7 percent in 2007 when compared to 2006. Total newspaper advertising revenues were down approximately 10.9 percent in 2007 when compared to 2006. Advertising revenues associated with the Company’s Web sites increased approximately 19.5 percent in 2007 when compared to 2006. Subject to economic conditions and related advertiser responses to consumer spending patterns, the Company expects newspaper advertising revenues to decrease in 2008 but not at the levels experienced in 2007. Decreases at The Providence Journal and The Press-Enterprise are expected to be more substantial than at The Dallas Morning News.

          The Company is required to assess goodwill impairment annually at the reporting unit level using the methodology prescribed by Statement of Financial Accounting Standards (SFAS), 142 “Goodwill and Other Intangible Assets.” The goodwill impairment test initially consists of the comparison of the implied fair value of a reporting unit with its carrying value. For the Company, a reporting unit consists of the newspaper operations in each individual market. The Company performed its annual goodwill impairment testing as of December 31, 2007 and based on the results, recognized impairment charges to reduce goodwill attributable to The Providence Journal by $242,794 and The Press-Enterprise by $101,630. The impairment charges resulted primarily from a decline in the estimated fair value of the individual businesses due to lower than estimated market growth rates versus prior year estimates and projected

increases in newsprint costs. The $344,424 impairment is a non-cash charge to earnings and, as such, will not affect the Company’s liquidity, cash flows from operating activities or debt covenants, or have any impact on future operations.

          A. H. Belo intends for the discussion of its financial condition and results of operations that follows to provide information that will assist in understanding its 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 its financial statements.

Basis of Presentation

          The combined financial statements in this Annual Report on Form 10-K include the accounts of Belo comprising its newspaper businesses and related assets. Operating expenses in the historical income statements reflect all of the direct expenses of the business together with allocations of certain Belo corporate expenses that have been charged to the Company based on use or other methodologies which the Company believes were appropriate for such expenses. See Combined Financial Statements, Note 1—Summary of Significant Accounting Policies. In our opinion, these assumptions and allocations have been made on a reasonable and appropriate basis under the circumstances. A. H. Belo’s and Belo’s various operating units currently share news and information content at no cost.

          The historical financial information included in this Annual Report may not reflect what A. H. Belo’s results of operations, financial position, and cash flows would have been had it been a separate public company during the periods presented or be indicative of what its results of operations, financial position, and cash flows may be in the future when it is a separate public company. A. H. Belo’s historical financial information reflects allocations for services historically provided by Belo, and the Company expects these allocated costs to be different from the actual costs A. H. Belo will incur for these services in the future as a separate public company, including with respect to actual services A. H. Belo expects will be provided by Belo under a services agreement and other inter-company agreements. In some instances, the costs incurred for these services as a separate public company may be higher than the share of total Belo expenses allocated to A. H. Belo historically. In addition, the historical financial information does not reflect the increased costs associated with being a separate public company, including expected changes in our cost structure, personnel needs, financing, and operations of our business as a result of the distribution.

RESULTS OF OPERATIONS
(Dollars in thousands, except per share amounts)

Combined Results of Operations for the Years Ended December 31, 2007, 2006 and 2005

						Percentage								Percentage
Year ended December 31,		2007				Change				2006				Change				2005
Net operating revenues		$	738,668				(9.7	%)		$	817,733				(0.6	%)		$	822,344
Operating costs and expenses			(1,056,100	)			38.9	%			(760,376	)			5.4	%			(721,251	)
Earnings from operations			(317,432	)			(653.4	%)			57,357				(43.3	%)			101,093
Other income (expense)			(31,067	)			2.5	%			(30,310	)			32.3	%			(22,913	)
Earnings before income taxes			(348,499	)			(1388.5	%)			27,047				(65.4	%)			78,180
Income tax (expense) benefit			1,487				(112.5	%)			(11,868	)			(60.9	%)			(30,361	)
Net earnings		$	(347,012	)			(2386.1	%)		$	15,179				(68.3	%)		$	47,819

Net Operating Revenues

          The table below presents the components of A. H. Belo’s net operating revenues for the last three years:

						Percentage								Percentage
Year ended December 31,		2007				Change				2006				Change				2005
Advertising		$	600,335				(10.9	%)		$	674,140				(1.9	%)		$	687,140
Circulation			112,635				(3.1	%)			116,265				11.0	%			104,790
Other			25,698				(6.0	%)			27,328				(10.1	%)			30,414
Net operating revenues		$	738,668				(9.7	%)		$	817,733				(0.6	%)		$	822,344

          In 2007, advertising revenues accounted for 81.3 percent of the Company’s revenues compared to 82.4 percent in 2006 and 83.6 percent in 2005. In 2007, circulation revenue accounted for 15.2 percent of total of the Company’s

revenues compared to 14.2 percent in 2006 and 12.7 percent in 2005. In all three years, commercial printing made up most of the remainder of the Company’s revenues.

The table below presents the components of The Dallas Morning News net operating revenues for the last three years:

		Percentage								Percentage
Year ended December 31,		2007				Change				2006				Change				2005
Advertising		$	366,516				(9.8	%)		$	406,514				(2.8	%)		$	418,066
Circulation			70,244				(0.3	%)			70,445				23.9	%			56,875
Other			20,658				(1.3	%)			20,927				(4.2	%)			21,835
Net operating revenues		$	457,418				(8.1	%)		$	497,886				0.2	%		$	496,776

          Net operating revenues for The Dallas Morning News decreased by $40,468, or 8.1 percent, in the year ended December 31, 2007, as compared to the year ended December 31, 2006. Advertising revenues decreased by $39,998, or 9.8 percent, in the year ended December 31, 2007, compared to the year ended December 31, 2006. General advertising revenues decreased $17,196, or 27.0 percent, in the year ended December 31, 2007, compared to the year ended December 31, 2006, primarily due to decreases in the financial, telecommunications and travel categories. Classified advertising revenues decreased $14,739, or 11.2 percent, primarily due to decreases in the real estate, automotive and employment categories. Retail advertising revenue decreased $6,852, or 7.8 percent, in the year ended December 31, 2007, compared to the year ended December 31, 2006, primarily due to a decrease in the furniture category. Circulation revenue remained flat for the year ended December 31, 2007, compared to the year ended December 31, 2006.

          Net operating revenues for The Dallas Morning News increased by $1,110, or 0.2 percent, in the year ended December 31, 2006, as compared to the year ended December 31, 2005. At The Dallas Morning News, circulation revenue increased $13,570, or 23.9 percent, in the year ended December 31, 2006, as compared with the year ended December 31, 2005, primarily due to an estimated increase of $24,555 related to a change in distribution methods from a buy-sell arrangement to a fee-for-delivery arrangement. In 2005, the Company implemented a change in arrangements with certain distributors of home delivery and single copy sales from a buy-sell arrangement to a fee-for-delivery arrangement similar to the Company’s other newspapers. Subscription revenues under buy-sell arrangements with most distributors are recorded based on the net amount received from the distributor, who then resells newspapers to contractors and subscribers, whereas subscription revenues under fee-based delivery arrangements with distributors are recorded based on the amount received from the subscriber. The operating expenses for the delivery fees paid to the distributors are recorded in distribution costs as they are incurred. Under the previous arrangements, The Dallas Morning News recorded circulation revenue based on the net payment received from distributors. Accordingly, this change increased both circulation revenues and distribution costs related to these distributors. Advertising revenues were not affected by this change. Circulation revenues attributable to the change in distribution methods are expected to continue at approximately the current level. The Dallas Morning News has experienced a decrease in circulation over the past few years, some of which resulted from decisions to reduce the distribution area of the newspaper to approximately a 100-mile radius from the center of Dallas. Efforts to improve the circulation involved a promotional campaign that included discounts of approximately $7,795 for the year ended December 31, 2006. The decreases in circulation revenue due to the discounts partially offset the increases in circulation revenue due to the change in distribution methods. The Dallas Morning News is moving to concentrate its circulation efforts on its core readership. The Dallas Morning News expects circulation and circulation revenue to fluctuate during this process. The increases in circulation revenue were partially offset by decreases in advertising revenue. Total advertising revenues decreased $11,552, or 2.8 percent, in the year ended December 31, 2006, when compared to the year ended December 31, 2005. General advertising revenues decreased $2,273, or 3.4 percent, in the year ended December 31, 2006, as compared to the year ended December 31, 2005, primarily due to decreases in the automotive and telecommunications categories. Retail advertising revenue decreased $6,622, or 7.0 percent, in the year ended December 31, 2006, compared to the year ended December 31, 2005, primarily due to decreases in the department stores, furniture, and general retail categories. Classified advertising revenue, including Internet revenue, decreased $7,681, or 5.5 percent, in the year ended December 31, 2006, as compared to the year ended December 31, 2005, primarily due to decreases in the automotive and real estate categories, partially offset by an increase in the employment category.

          The following table presents the components of The Providence Journal net operating revenues for the last three years:

						Percentage								Percentage
Year ended December 31,		2007				Change				2006				Change				2005
Advertising		$	125,874				(6.9	%)		$	135,189				(1.0	%)		$	136,503
Circulation			25,072				(5.7	%)			26,601				(6.6	%)			28,492
Other			629				(27.8	%)			871				(7.8	%)			945
Net operating revenues		$	151,575				(6.8	%)		$	162,661				(2.0	%)		$	165,940

          Net operating revenues for The Providence Journal decreased by $11,086, or 6.8 percent, in the year ended December 31, 2007, compared to the year ended December 31, 2006. Advertising revenues decreased $9,315, or 6.9 percent, for the year ended December 31, 2007, compared to the year ended December 31, 2006. Classified advertising revenue decreased $4,027, or 8.1 percent, in the year ended December 31, 2007, compared to the year ended December 31, 2006, primarily due to decreases in the automotive, employment and real estate categories. Retail advertising revenues decreased $3,769, or 8.6 percent, due to decreases in the automotive, building and home improvement, furniture and home accessories, and gaming categories for the year ended December 31, 2007, compared to the year ended December 31, 2006. General advertising revenues decreased $1,299, or 44.2 percent, in the year ended December 31, 2007, compared to the year ended December 31, 2006, primarily due to decreases in the automotive and travel and transportation categories. Circulation revenue declined $1,529, or 5.7 percent, in the year ended December 31, 2007, compared to the year ended December 31, 2006, primarily due to lower overall circulation.

          Net operating revenues for The Providence Journal decreased $3,279, or 2.0 percent, in the year ended December 31, 2006, as compared to the year ended December 31, 2005. Advertising revenues were relatively flat for the year ended December 31, 2006, compared to the year ended December 31, 2005. Retail advertising revenues decreased $2,821, or 6.0 percent, due to decreases in the automotive, furniture and home accessories, and telecommunications categories for the year ended December 31, 2006, compared to the year ended December 31, 2005. General advertising revenues decreased $1,422, or 32.6 percent, for the year ended December 31, 2006, compared to the year ended December 31, 2005, primarily due to decreases in the automotive, travel, and pharmaceutical categories. These decreases in retail and general advertising revenues were partially offset by an increase in classified advertising revenue. Classified advertising revenue increased $1,170, or 2.4 percent, in the year ended December 31, 2006, compared to the year ended December 31, 2005, primarily due to increases in the real estate and other categories partially offset by decreases in the employment and automotive categories. Circulation revenue declined $1,891, or 6.6 percent, in the year ended December 31, 2006, compared to the year ended December 31, 2005, primarily due to lower overall circulation and an increase in discounts related to promotional campaigns.

          The table below presents the components of The Press-Enterprise net operating revenues for the last three years:

						Percentage								Percentage
Year ended December 31,		2007				Change				2006				Change				2005
Advertising		$	107,945				(18.5	%)		$	132,438				(0.1	%)		$	132,571
Circulation			17,319				(9.9	%)			19,218				(1.1	%)			19,423
Other			4,411				(20.2	%)			5,529				(27.6	%)			7,634
Net operating revenues		$	129,675				(17.5	%)		$	157,185				(1.5	%)		$	159,628

          Net operating revenues for The Press-Enterprise decreased $27,510, or 17.5 percent, in the year ended December 31, 2007, compared to the year ended December 31, 2006. Total advertising revenues decreased $24,493, or 18.5 percent, in the year ended December 31, 2007, compared to the year ended December 31, 2006. Classified advertising revenues decreased $18,122, or 28.8 percent, primarily due to decreases in the employment, real estate and automotive categories. Retail advertising revenues decreased $2,638, or 13.3 percent, primarily due to decreases in the department store, home improvement, home furnishings, grocery, and discount categories. Part-run advertising decreased $1,589, or 12.8 percent, primarily due to decreases in the furniture and home improvement categories. General advertising revenues decreased $1,289, or 11.5 percent, in the year ended December 31, 2007, compared to the year ended December 31, 2006, primarily due to decreases in the financial and automotive categories. Circulation revenue at The Press-Enterprise decreased $1,899, or 9.9 percent, when comparing the year ended December 31, 2007 to

the year ended December 31, 2006. Commercial printing and other revenue at The Press-Enterprise declined $1,118, or 20.2 percent, for the year ended December 31, 2007, compared to the year ended December 31, 2006.

          Net operating revenues for The Press-Enterprise decreased $2,443, or 1.5 percent, in the year ended December 31, 2006, as compared to the year ended December 31, 2005. Total advertising revenues were relatively flat in the year ended December 31, 2006, compared with the year ended December 31, 2005. Classified advertising revenues, including Internet revenues, increased $1,902, or 3.1 percent, primarily due to an increase in the real estate category. Preprints revenues increased $1,064, or 5.3 percent, primarily due to increases in the drug store and home furnishings categories. Offsetting these increases were decreases in retail and general advertising revenues and commercial printing revenue. Retail advertising revenues decreased $1,225, or 5.8 percent, primarily due to decreases in the department store and grocery categories. General advertising revenues decreased $2,129, or 16.0 percent, in the year ended December 31, 2006, when compared with the year ended December 31, 2005, primarily due to decreases in the telecommunications and automotive categories. Circulation revenue at The Press-Enterprise decreased $205, or 1.1 percent. Commercial printing and other revenue at The Press-Enterprise declined $2,105, or 27.6 percent, for the year ended December 31, 2006, compared to the year ended December 31, 2005.

Operating Costs and Expenses

          The Company’s operating costs and expenses increased $295,724, or 38.9 percent, in the year ended December 31, 2007, as compared to the prior year period primarily due to a non-cash charge for goodwill impairment, decreases in salaries, wages and employee benefits and a decrease in newsprint, ink and other supplies. Salaries, wages and employee benefits decreased $25,317, or 7.8 percent, for the year ended December 31, 2007 compared to the year ended December 31, 2006, primarily due to the voluntary severance program for newsroom employees at The Dallas Morning News initiated in the third quarter 2006 which reduced headcount. In addition to the voluntary severance program, the Company recognized a reduction in estimated pension expense of approximately $8,488 primarily due to the Company’s curtailment of its defined benefit pension plan effective March 31, 2007 and an increase in the discount rate applied to future pension obligations. These decreases were partially offset by an increase in workers’ compensation expense. In the fourth quarter 2007, the Company recorded a non-cash charge for goodwill impairment of $344,424, of which $242,794 related to The Providence Journal and $101,630 related to The Press-Enterprise based on assessments performed for the year ended December 31, 2007. The Company is required to test goodwill at least annually for impairment. See Combined Financial Statements, Note 3 — Goodwill and Intangible Assets for more information.

          Newsprint, ink and other supplies decreased $30,274, or 22.8 percent, for the year ended December 31, 2007 compared to the year ended December 31, 2006, with decreases in newsprint consumption and average cost per metric ton. During 2007, The Company’s publishing operations consumed approximately 136,546 metric tons of newsprint at an average cost of $586 per metric ton. Consumption of newsprint in the previous year was approximately 166,756 metric tons at an average cost per metric ton of $631.

          The Company’s operating costs and expenses increased $39,125, or 5.4 percent, in the year ended December 31, 2006, as compared to the prior year period primarily due to increases in salaries, wages, and employee benefits and other production, distribution, and operating costs partially offset by a decrease in newsprint, ink, and other supplies. Salaries, wages, and employee benefits increased $16,257, or 5.3 percent, primarily due to severance costs, incremental share-based compensation expenses, and increased pension expense due to an announced pension curtailment. These increases were partially offset by decreases totaling $7,123 in sales commissions, estimated self-insured medical expenses, and workers’ compensation insurance costs. Other production, distribution, and operating costs increased primarily due to increased distribution costs of $16,756 and outside services costs of $21,186. The increase in distribution costs is due to approximately $19,550 in costs related to the change in distribution methods at The Dallas Morning News. A. H. Belo expects this increased level of distribution costs at The Dallas Morning News to continue. Outside services increased primarily due to increased consulting expenses primarily related to readership, sales and technology initiatives. Newsprint, ink, and other supplies decreased $9,126, or 6.4 percent, for the year ended December 31, 2006, as compared to the year ended December 31, 2005, due to the Company’s strategic decisions to limit third-party circulation and to reduce the distribution area of The Dallas Morning News and lower advertising volumes. The 17.4 percent decrease in consumption was partially offset by an increase in the average cost per metric ton of newsprint of 12.4 percent.

          Interest expense increased $3,020, or 9.5 percent, in 2007, compared to an increase of $8,153, or 34.5 percent, in 2006. This is primarily due to year-over-year increases in the balances on notes payable to Belo. Certain subsidiaries had entered into notes payable arrangements with Belo. The notes accrued interest at prime plus one percent and had various

payments terms. In conjunction with the distribution, Belo contributed to the capital of A. H. Belo all inter-company indebtedness owed by A. H. Belo to Belo or assigned the notes to A. H. Belo on or prior to the Distribution Date. The contribution or assignment effectively extinguished all liabilities of A. H. Belo to Belo under such notes.

          Other income, net increased $2,263, or 150.5 percent in 2007, when compared to 2006. This is primarily due to a gain recognized on the disposal of fixed assets of $2,250. Other income, net increased $756, or 101.1 percent, in 2006, compared to 2005 primarily due to the forgiveness of a note payable from a subsidiary to Belo. The forgiveness was related to the final wind down of the Company’s trade show business.

          Income taxes decreased $13,355 or 112.5 percent, for the year ended December 31, 2007, compared to the year ended December 31, 2006, primarily due to lower taxable income. Income taxes decreased $18,493, or 60.9 percent, for the year ended December 31, 2006, compared with the year ended December 31, 2005, primarily due to lower taxable income and adjustments related to the implementation of the State of Texas margin tax. In May 2006, the State of Texas enacted legislation replacing its franchise tax with a new margin tax. Despite an effective date of January 1, 2008, the enactment of the Tax Reform Bill represents a change in tax law and SFAS 109, “Accounting for Income Taxes” requires that effects of the change must be reflected in the financial statements in the quarter in which the new tax is enacted. The effective tax rate for 2007, 2006, and 2005 was (0.4) percent, 43.9 percent, and 38.8 percent, respectively. The effective tax rate is higher than the statutory tax rate primarily due to state income taxes.

Critical Accounting Policies and Estimates

          A. H. Belo’s financial statements are based on the selection and application of accounting policies that require management to make significant estimates and assumptions. The Company believes that the following are some of the more critical accounting policies currently affecting A. H. Belo’s financial position and results of operations. See the Combined Financial Statements, Note 1—Summary of Significant Accounting Policies, for additional information concerning significant accounting policies.

          Revenue Recognition. Newspaper advertising revenue is recorded, net of agency commissions, when the advertisements are published in the newspaper. Advertising revenues for 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. Subscription revenues under buy-sell arrangements with distributors are recorded based on the net amount received from the distributor, whereas subscription revenues under fee-based delivery arrangements with distributors are recorded based on the amount received from the subscriber. Commercial printing revenue is recorded when the product is shipped.

          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 additional impairment charges for these assets.

          The Company’s intangible assets and goodwill result from its significant business acquisitions, which occurred prior to 1998. In connection with these acquisitions, the Company obtained appraisals of the significant assets purchased. The excess of the purchase price over the fair value of the assets acquired was recorded as goodwill. At December 31, 2007, A. H. Belo had net investments of $307,788 in property, plant and equipment, $119,667 in goodwill, and $40,426 in intangible assets, which consist of subscriber lists.

          Prior to January 1, 2002, all of the acquired intangible assets were classified together as “goodwill and intangible assets” in the Company’s combined financial statements and were amortized over a composite life of 40 years. On January 1, 2002, upon adoption of Statement of Financial Accounting Standard (SFAS), 142 “Goodwill and Other Intangible Assets,” the Company ceased amortization of its goodwill.

          Goodwill is tested at least annually by reporting unit for impairment. For the Company, a reporting unit consists of the newspaper operations in each individual market. As a result of the assessment as of December 31, 2007, the Company incurred a non-cash charge to goodwill of approximately $344,424 in the fourth quarter of 2007 related to goodwill impairment at two of the Company’s reporting units: The Providence Journal and The Press-Enterprise. There is no tax effect related to the impairment charge, and this non-cash charge will not affect the Company’s liquidity, cash flows from operating activities, debt covenants, or have any effect on future operations. Based on the assessments performed as of December 31, 2006 and 2005, the Company did not record any impairment charges related to goodwill or intangible assets.

          The Company reviews the carrying value of property, plant and equipment for impairment whenever events and circumstances indicate that the carrying value of an asset may not be recoverable. Recoverability of property and equipment is measured by comparison of the carrying amount to the future net cash flows the property and equipment is expected to generate. Based on assessments performed during the years ended December 31, 2007, 2006 and 2005, the Company did not record any impairment losses related to property, plant, and equipment.

          Contingencies. A. H. 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 A. H. Belo’s combined 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.

          Share-Based Compensation. The Company records the compensation expense related to its stock options according to SFAS 123R, as adopted on January 1, 2006. The Company records the compensation expense related to its 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 using the fair value as of the date of grant.

Recent Accounting Pronouncements

          In December 2007, the FASB issued SFAS No. 141(R), “Business Combinations.” SFAS 141R establishes principles and requirements for how the acquirer of a business recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree. The statement also provides guidance for recognizing and measuring the goodwill acquired in the business combination and determines what information to disclose to enable users of the financial statement to evaluate the nature and financial effects of the business combination. SFAS 141R is effective for financial statements issued for fiscal years beginning after December 15, 2008. Accordingly, any business combinations the Company engages in will be recorded and disclosed following existing accounting principles until January 1, 2009. The Company expects SFAS No. 141R will have an impact on our combined financial statements when effective, but the nature and magnitude of the specific effects will depend upon the nature, terms and size of the acquisitions, if any, that are consummated after the effective date.

          In February 2007, the FASB issued SFAS 159, “The Fair Value Option for Financial Assets and Liabilities.” This statement permits entities to measure many financial instruments and certain other items at fair value. The objective is to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. SFAS 159 is effective for financial statements issued for fiscal years beginning after November 15, 2007. The Company is evaluating the effects of this new standard, but currently believes that adoption will not have a material impact on our financial position or results of operations.

          In September 2006, the FASB issued SFAS 157, “Fair Value Measurements.” SFAS 157 establishes, among other items, a framework for fair value measurements in the financial statements by providing a single definition of fair value, provides guidance on the methods used to estimate fair value, and increases disclosures about estimates of fair value. SFAS 157 will be effective for financial assets and liabilities in financial statements issued for fiscal years beginning after November 15, 2007, and will be effective for non-financial assets and liabilities in financial statements issued for fiscal years beginning after November 15, 2008. The Company is evaluating the effect of the adoption of this standard.

Liquidity and Capital Resources

Operating Cash Flows

          Net cash provided by operations was $62,147, $49,497 and $91,206 in the years ended December 31, 2007, 2006, and 2005, respectively. The changes in cash flows from operations are caused primarily by changes in net earnings (loss) and normal changes in working capital requirements. The Company used net cash provided by operations to fund capital expenditures and to invest in a joint venture.

Investing Cash Flows

          Net cash flows used for investing activities were $43,002, $65,315 and $61,395 in the years ended December 31, 2007, 2006, and 2005, respectively. These cash flows are primarily attributable to capital expenditures and an investment in a joint venture.

Capital Expenditures

          Total capital expenditures were $41,117, $68,356 and $52,860 in 2007, 2006, and 2005, respectively. These were primarily for the Company’s facilities and equipment and corporate-driven technology initiatives. The Company expects to finance future capital expenditures, which are expected to total approximately $25,000 in 2008, using cash generated from operations and, when necessary, borrowings under the bank credit agreement.

          In the first quarter 2007, the Company took possession of a new distribution and collating facility for The Dallas Morning News in southern Dallas (the “South Plant”). The total cost of the South Plant land, improvements, buildings and equipment is projected to be approximately $50,000. Of the total estimated costs, approximately $48,173 has been incurred as of December 31, 2007.

          In the first quarter 2007, The Press-Enterprise moved into its new 150,000 square foot, five-story office building to centralize all news, editorial, advertising, sales and marketing, technology, production support, and administrative functions. The total cost of the project is projected to be approximately $40,000. Of the total estimated costs, approximately $35,522 has been incurred as of December 31, 2007.

Financing Cash Flows

          Net cash flows provided by (used for) financing activities were $(22,792), $14,899 and $(27,343) in the years ended December 31, 2007, 2006, and 2005, respectively. These cash flows are primarily attributable to dividends and distributions paid to Belo offset by borrowings from Belo pursuant to notes payable. The notes accrue interest at prime plus one percent and have various payment terms. In conjunction with the distribution transaction, Belo contributed to the capital of A. H. Belo all inter-company indebtedness owed by A. H. Belo to Belo or assigned the notes to A. H. Belo.

          The Company entered into a Credit Agreement dated as of February 4, 2008 with JPMorgan Chase Bank, N.A., J.P. Morgan Securities Inc., Banc of America Securities LLC, Bank of America, N.A. and certain other lenders party thereto (the “Credit Agreement”) effective as of the Distribution Date. The Credit Agreement has a five-year term that expires in February 2013. The facility provided for under the Credit Agreement may be used for working capital and other general corporate purposes, including letters of credit.

          The Credit Agreement consists of a $100 million senior unsecured five-year revolving credit facility. Revolving credit borrowings under the Credit Agreement will bear interest at a variable interest rate based on either LIBOR or a base rate, in either case plus an applicable margin that varies depending upon the Company’s leverage ratio.

          The Credit Agreement contains a number of restrictions on the Company’s business, including, but not limited to, restrictions on the Company’s (and certain of its subsidiaries’) ability to incur indebtedness; grant liens on assets; make certain restricted payments; merge, consolidate, or sell assets; engage in transactions with affiliates; enter into restrictive agreements; enter into sale-leaseback transactions; and to make certain investments. In addition, the Company is subject to a leverage ratio covenant and a fixed charge coverage ratio covenant. The Credit Agreement also contains affirmative covenants and events of default, including a cross-default to certain other debt. Failure to comply with these covenants, or the occurrence of an event of default, could result in acceleration of the Company’s debt and other financial obligations under the Credit Agreement.

          The Credit Agreement requires the Company’s material subsidiaries to guarantee the obligations of the Company under the Credit Agreement.

Contractual Obligations

          The table below summarizes the following commitments of the Company as of December 31, 2007. See also Combined Financial Statements, Note 9 — Commitments.

Nature of
Commitment		Total				2008				2009				2010				2011				2012				Thereafter
Capital expenditures and licenses		$	6,568			$	5,936			$	632			$	—			$	—			$	—			$	—
Non-cancelable operating leases			11,895				5,081				3,459				1,957				876				514				8
Total		$	18,463			$	11,017			$	4,091			$	1,957			$	876			$	514			$	8

Other

          A. H. Belo has various options available to meet its 2008 capital and operating commitments, including cash on hand, short term investments, a five year revolving credit facility and internally generated funds. A. H. Belo believes its current financial condition and credit relationships are adequate to fund both its current obligations as well as near-term growth.

UNAUDITED PRO FORMA FINANCIAL STATEMENTS

          The unaudited pro forma financial statements of the Company presented below consist of the unaudited pro forma balance sheet as of December 31, 2007 and the unaudited pro forma statement of operations for the year ended December 31, 2007. The unaudited pro forma financial statements presented below should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the combined financial statements, and the notes related thereto, included elsewhere in this Annual Report on Form 10-K. The unaudited pro forma financial statements have been prepared giving effect to the elimination of the notes payable to Belo and the distribution as if these transactions occurred as of December 31, 2007, for the unaudited pro forma balance sheet, and as of January 1, 2007, for the unaudited pro forma statement of operations.

          On October 1, 2007, Belo announced a plan to distribute its newspaper publishing business to its shareholders to create a separate public company. On October 1, 2007, Belo also formed a new, wholly-owned subsidiary, A. H. Belo, to serve as the holding company for its newspaper business and related businesses.

          On the Distribution Date, Belo contributed all of its subsidiaries engaged in newspaper business and related assets and liabilities to A. H. Belo. The assets and liabilities transferred to A. H. Belo were recorded at historical cost as a reorganization of entities under common control in the first quarter of 2008.

          On the Distribution Date, Belo settled or assigned intercompany indebtedness between and among Belo and its subsidiaries, including Belo’s subsidiaries engaged in the newspaper business and related assets. Belo settled accounts through contributions of such indebtedness to the capital of the debtor subsidiaries, distributions by creditor subsidiaries, and other non-cash transfers, or assigned such notes to A. H. Belo. As of the effective time of the distribution, Belo had contributed to the capital of A. H. Belo and its subsidiaries the net intercompany indebtedness owed to Belo by A. H. Belo and its subsidiaries and A. H. Belo assumed the indebtedness owed by Belo to the A. H. Belo subsidiaries.

          On the Distribution Date, the distribution was completed in the form of a pro-rata dividend to Belo’s shareholders shares of 0.20 A. H. Belo Series A common stock for every share of Belo Series A common stock, and 0.20 shares of A. H. Belo Series B common stock for every share of Belo Series B common stock owned as of the close of business on January 25, 2008.

          On the Distribution Date, as a consequence of the distribution, A. H. Belo became a separate public company. Belo has no further ownership interest in A. H. Belo or in any newspaper or related businesses, and A. H. Belo has no ownership interest in Belo or in any television station or related businesses. A. H. Belo’s relationship with Belo is now governed by a separation and distribution agreement and several ancillary agreements with Belo governing various relationships between A. H. Belo and Belo. A. H. Belo and Belo also co-own certain downtown Dallas, Texas, real-estate used in their respective businesses.

          Belo’s contributions to A. H. Belo’s equity will also be adjusted for transfers of certain additional assets and liabilities as of the distribution date. However, the effect of such adjustments is not expected to be material to the pro forma financial position of A. H. Belo as of December 31, 2007

          The unaudited pro forma balance sheet and unaudited pro forma statements of operations included in this Annual Report on Form 10-K have been derived from our financial statements included elsewhere in this Annual Report on Form 10-K and do not purport to represent what our financial position and results of operations actually would have been had the distribution and related transactions occurred on the dates indicated or to project our financial performance for any future period.

A. H. BELO CORPORATION
UNAUDITED PRO FORMA BALANCE SHEET
As of December 31, 2007

          

		A. H. Belo								A. H. Belo
(In thousands, except share and per share		Businesses				Pro Forma				Corporation
amounts)		Historical				Adjustments				Pro Forma
Current assets:
Cash and temporary cash investments		$	6,874			$	—			$	6,874
Accounts receivable—net			90,792				—				90,792
Inventories			11,407				—				11,407
Deferred income taxes			4,744				—				4,744
Prepaids and other current assets			8,202				—				8,202
Total current assets			122,019				—				122,019
Property, plant and equipment, net			307,788				—				307,788
Intangible assets, net			40,426				—				40,426
Goodwill, net			119,667				—				119,667
Other assets			29,810				—				29,810
Total assets		$	619,710			$	—			$	619,710
Current liabilities:
Accounts payable		$	25,384			$	—			$	25,384
Accrued compensation and benefits			31,161				—				31,161
Accrued interest on notes payable to Belo Corp.			35,148				(35,148	)(a)			—
Other accrued expenses			3,822				—				3,822
Advance subscription payments			24,495				—				24,495
Current portion of notes payable to Belo Corp.			392				(392	)(a)			—
Total current liabilities			120,402				(35,540	)			84,862
Deferred income taxes			19,189				—				19,189
Notes payable to Belo Corp.			378,916				(378,916	)(a)			—
Other liabilities			14,263				—				14,263
Shareholders’ equity:
Belo Corp.’s equity			86,940				414,456	(a)			—
							(501,584	)(b)
Preferred stock, $0.01 par value. Authorized 2,000,000 shares; none issued			—				—				—
Common stock, $0.01 par value. Authorized 125,000,000 shares:
Series A: Issued 17,603,244 shares at December 31, 2007			—				176	(b)			176
Series B: Issued 2,848,628 shares at December 31, 2007			—				28	(b)			28
Additional paid-in capital			—				501,380	(b)			501,380
Total shareholders’ equity			86,940				414,456				501,396
Total liabilities and shareholders’ equity		$	619,710			$	—			$	619,710

          See notes to unaudited pro forma financial statements

A. H. BELO CORPORATION

UNAUDITED PRO FORMA STATEMENT OF OPERATIONS

For the Year Ended December 31, 2007

		A. H. Belo								A. H. Belo
(In thousands, except share and per		Businesses				Pro Forma				Corporation
share amounts)		Historical				Adjustment				Pro Forma
Net operating revenues:
Advertising		$	600,335			$	—			$	600,335
Circulation			112,635				—				112,635
Other			25,698				—				25,698
Total net operating revenues			738,668				—				738,668
Operating costs and expenses(e)
Salaries, wages and employee benefits			297,630				—				297,630
Other production, distribution and operating costs			259,231				—				259,231
Newsprint, ink and other supplies			102,501				—				102,501
Goodwill impairment			344,424								344,424
Depreciation			45,815				—				45,815
Amortization			6,499				—				6,499
Total operating costs and expenses			1,056,100				—				1,056,100
Loss from operations			(317,432	)			—				(317,432	)
Other income and expense
Interest expense on notes payable to Belo Corp.			(34,834	)			34,834	(c)			—
Other income, net			3,767				—				3,767
Total other income and expense			(31,067	)			34,834				3,767
Earnings (loss)
Earnings (loss) before income taxes			(348,499	)			34,834				(313,665	)
Income tax expense (benefit)			(1,487	)			12,711	(d)			11,224
Net earnings (loss)		$	(347,012	)		$	22,123			$	(324,889	)
Pro forma basic and diluted loss per share(f)										$	(15.89	)
Pro forma weighted average shares outstanding(f)											20,449

          See notes to unaudited pro forma financial statements.

A. H. BELO CORPORATION
NOTES TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS

          For further information regarding the historical financial statements of A. H. Belo, refer to the combined financial statements and the notes related thereto included in this Annual Report on Form 10-K.

          The unaudited pro forma balance sheet includes the following adjustments as of December 31, 2007:

	(a)		The elimination of the notes payable to Belo and its subsidiaries and related accrued interest as a result of the contribution of such notes to the capital of A. H. Belo or assignment of the notes to A. H. Belo; and
	(b)		The issuance of 17,603,244 shares of common stock of A. H. Belo Series A common stock, par value $.01, and 2,848,628 shares of A. H. Belo Series B common stock, par value $.01, at a distribution ratio of 0.20 shares of A. H. Belo common stock for each corresponding share of Belo common stock outstanding.

The accompanying pro forma statements of operations reflect the following pro forma adjustments:

	(c)		The elimination of historical interest expense on the notes due to Belo as a result of the contribution of such notes to the capital of A. H. Belo or assignment to A. H. Belo of such notes;
	(d)		The estimated income tax effect of entry (d) above is at the applicable statutory rates. The effective income tax rate of 36.5 percent for the year ended December 31, 2007 differs from the federal statutory rate of 35 percent due primarily to the effect of state income taxes. The year ended December 31, 2007 includes a reduction of income tax expense of $1,896 for the effect of the enactment of the Texas margin tax. See the Combined Financial Statements, Note 8—Income Taxes.
	(e)		The pro forma statements of operations do not include adjustments to costs and expenses resulting from the inter-company agreements. A. H. Belo expects that the effect of these agreements on A. H. Belo’s future results would not be material.
	(f)		Earnings per share information has been computed as if the shares of our common stock were issued and outstanding based on the weighted average shares of Belo common stock outstanding and the distribution ratio.

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

          A. H. Belo has exposure to changes in the price of newsprint. The average price of newsprint in 2008 is expected to increase, although specific pricing increases and the timing of price variations cannot be predicted. A. H. Belo believes the newsprint environment for 2008, giving consideration to both cost and supply, to be manageable through existing relationships and sources.

          A. H. Belo entered into the Credit Agreement in February 2008. Revolving credit borrowings under the Credit Agreement bear interest at a variable interest rate. A change in future interest rates could affect the rate and amount of interest paid by A. H. Belo on any future borrowings under the Credit Agreement and could result in a change in A. H. Belo’s pretax earnings and cash flows.

Item 8. Financial Statements and Supplementary Data

          The Combined Financial Statements, together with the Report 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 Combined 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

          The Company carried out an evaluation under the supervision and with the participation of the Company’s management, including the Company’s President and Chief Executive Officer and Senior 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 President and Chief Executive Officer and Senior 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 combined subsidiaries) required to be disclosed in the Company’s SEC 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 President and Chief Executive Officer and Senior Vice President/Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Management’s Report on Internal Control over Financial Reporting

          This Annual Report does not include a report of management’s assessment regarding internal control over financial reporting or an attestation report of our registered independent public accounting firm due to a transition period established by the rules of the SEC for newly public companies. Beginning with our annual report for our fiscal year ending December 31, 2008, Section 404 of the Sarbanes-Oxley Act of 2002 will require us to include a report by our management on our internal controls over financial reporting. This report must contain an assessment by management of the effectiveness of our internal controls over financial reporting as of the end of our fiscal year and a statement as to whether or not our internal controls are effective. Our annual report for fiscal year ending 2008 must also contain a statement that our independent auditors have issued an attestation report on the effectiveness of our internal controls.

          In connection with our spin-off from Belo on February 8, 2008, responsibility for all corporate accounting, finance and internal audit functions of our Company was transferred from personnel at Belo to our corporate personnel. The Company has created our own functions, or engaged third parties to provide these functions, to replace those previously performed by Belo. These changes, although significant, are not likely to materially affect our internal control over financial reporting.

Item 9B. Other Information

          None.

PART III

Item 10. Directors, Executive Officers and Corporate Governance

Directors and Executive Officers

          The persons listed below are executive officers and directors of A. H. Belo as of February 8, 2008. Our bylaws provide that the Board of Directors be divided into three classes, approximately equal in number, with staggered terms of three years so that the term of one class expires at each annual meeting. The bylaws further provide that a director will retire on the date of the next annual meeting of shareholders following his or her 68th birthday. Each of the persons identified below as a member of the Board of Directors will serve until the annual meeting set forth below. All A. H. Belo directors, other than Robert Decherd and Dealey Herndon, meet the NYSE listing standards for independence.

Name		Principal Positions and Directorships
Robert W. Decherd		Chairman of the Board, President and Chief Executive Officer(1)(2)(5)
James M. Moroney III		Executive Vice President and Publisher and Chief Executive Officer, The Dallas Morning News (6)
Donald F. (Skip) Cass, Jr.		Executive Vice President and Secretary (7)
Alison K. Engel		Senior Vice President/Chief Financial Officer and Treasurer (8)
Daniel J. Blizzard		Senior Vice President(9)
Louis E. Caldera		Director(1)(3)(10)
Douglas G. Carlston		Director(1)(4)(11)
Dealey D. Herndon		Director(1)(4)(12)
Laurence E. Hirsch		Director(1)(3)(13)
J. McDonald Williams		Director(1)(2)(14)

Corporate Governance

Introduction

          A. H. Belo’s Board of Directors has adopted corporate governance guidelines, approved a code of business conduct and ethics applicable to A. H. Belo directors, officers, and employees, and adopted a charter for each Board committee. Our Board will periodically review and evaluate A. H. Belo’s corporate governance policies and practices in light of the Sarbanes-Oxley Act of 2002, SEC regulations implementing this legislation, corporate governance listing standards adopted by the New York Stock Exchange (“NYSE”) and evolving best practices. The Nominating and Corporate Governance Committee reviews A. H. Belo’s corporate governance guidelines and Board committee charters annually and recommends changes to the board as appropriate. A. H. Belo’s corporate governance documents are posted on our Web site at www.ahbelo.com under “Investor Relations” and are available in print, without charge, upon written or oral request to A. H. Belo Corporation, Attn: Donald F. Cass, Jr., Secretary, P.O. Box 224866, Dallas, TX 75222-4866.

Director Independence

          To assist it in making determinations of a director’s independence, the Board has adopted independence standards, which are set forth in A. H. Belo’s corporate governance guidelines, the applicable portion of which is filed with this Form 10-K as Exhibit 99.1. These standards incorporate the director independence criteria included in the NYSE listing standards, as well as additional, more stringent criteria established by the Board. The Board has determined that the following directors are independent under these standards: Louis Caldera, Doug Carlston, Larry Hirsch, and Don Williams. Each of the Audit, Compensation, and Nominating and Corporate Governance Committees is composed entirely of independent directors. In accordance with SEC requirements, NYSE listing standards and the independence standards set forth in A. H. Belo’s corporate governance guidelines, all members of the Audit Committee meet additional independence standards applicable to audit committee members.

Meetings of the Board

          The Board held one meeting in 2007 and took action by unanimous written consent twice. Each incumbent director attended 100 percent of the meetings held by the Board and of the meetings held by all committees on which he or she served. Directors are expected to attend annual meetings of shareholders; the first Annual Meeting of Shareholders is expected to be held in May 2009.

Committees of the Board

          A. H. Belo’s Board of Directors has established several standing committees to assist in the discharge of its responsibilities. These committees are an audit committee, a compensation committee, and a nominating and corporate governance committee. Due to the size of the Board, each independent director will serve on each of the three standing committees. Effective December 2007, each of the Board’s standing committees consists of Louis Caldera, Doug Carlston, Larry Hirsch, and Don Williams, each of whom is an independent director under the NYSE listing standards and under the independence standards set forth in A. H. Belo’s corporate governance guidelines. Dealey Herndon and Robert Decherd will not serve on any of these standing committees. The Board of Directors may also establish other committees as it deems appropriate, in accordance with applicable Delaware law, NYSE regulation, the corporate governance guidelines, and the bylaws.

          Audit Committee. Louis E. Caldera chairs the Audit Committee. The Audit Committee is responsible for the appointment, compensation, and oversight of the independent auditors. The Audit Committee also represents the Board in overseeing A. H. Belo’s financial reporting processes, and, as part of this responsibility, consults with our independent auditors and with personnel from A. H. Belo’s internal audit and financial staffs with respect to corporate accounting, reporting, and internal control practices.

          The Board has determined that each member of the Audit Committee meets both the SEC and the NYSE standards for independence. In addition, the Board has determined that at least one member of the Audit Committee meets the NYSE standard of having accounting or related financial management expertise. The Board has also determined that at least one member of the Audit Committee, Louis Caldera, the chairman of the Audit Committee, meets the SEC criteria of an “audit committee financial expert.”

          Compensation Committee. Douglas G. Carlston chairs the Compensation Committee. The Compensation Committee evaluates the performance of the chief executive officer and sets his or her compensation level based on this evaluation. The Compensation Committee makes recommendations to the Board for base salaries of other executive officers and compensation for non-management directors, approves bonus levels and stock option awards for executive officers, and administers among other plans, the Company’s 2008 Incentive Compensation Plan, the A. H. Belo Savings Plan, the A. H. Belo Change in Control Severance Plan, the A. H. Belo Pension Transition Supplement Plan, and the A. H. Belo Pension Transition Supplement Restoration Plan. The Committee also has responsibility for senior executive succession planning.

          A. H. Belo did not exist prior to October 1, 2007 and therefore the compensation for the A. H. Belo named executive officers reflected herein was determined by the Belo Compensation Committee rather than the A. H. Belo Compensation Committee. To assist the Belo Compensation Committee and management in assessing and determining appropriate, competitive compensation for our executive officers, the Committee annually engages an outside compensation consultant. Hewitt was retained through February 2007 with respect to prospective 2007 executive compensation recommendations. The scope of Hewitt’s engagement was to provide ongoing recommendations regarding executive compensation consistent with Belo’s business needs, its pay philosophy, market trends and the latest legal and regulatory considerations; to provide market data as background to annual decisions regarding CEO and senior management base salary, bonus and long-term incentive amounts; to advise the Belo committee as to best practices for working effectively with management while representing shareholders’ interests; and to provide other services as the Belo Compensation Committee may request. The Belo Compensation Committee uses supplemental survey information compiled by its compensation consultant, along with other survey information, to develop recommendations for base salary, short-term cash compensation, and long-term incentive compensation for executive officers, including the chief executive officer. The Belo Compensation Committee develops these compensation recommendations with input from its compensation consultant. When considering these recommendations, the Belo Compensation Committee has full access to the compensation consultant during meetings at which compensation recommendations are considered. In February 2007, the Belo Compensation Committee engaged mercer as its compensation consultant going forward. The scope of Mercer’s engagement was to undertake a comprehensive review of Belo’s executive compensation programs, and to assist in executive compensation recommendations for year-end 2007 and for 2008. For additional information regarding the operation of the Belo Compensation Committee, including the role of consultants and management in the process of determining the amount and form of executive compensation, see the Company’s Compensation Discussion and Analysis (CD&A) below.

          Nominating and Corporate Governance Committee. J. McDonald Williams chairs the Nominating and Corporate Governance Committee and serves also as the Board’s Lead Director. The responsibilities of the Nominating and Corporate Governance Committee include the identification and recommendation of director candidates and the review of qualifications of directors for continued service on the Board. The Nominating and Corporate Governance Committee also has responsibility for shaping A. H. Belo’s corporate governance practices, including the development and periodic review of the corporate governance guidelines and the Board committee charters.

          In evaluating director nominees, the Nominating and Corporate Governance Committee considers a variety of criteria, including an individual’s character and integrity; business, professional, and personal background; skills; current employment; community service; and ability to commit sufficient time and attention to the activities of the Board. The committee considers these criteria in the context of the perceived needs of the Board as a whole and seeks to achieve a diversity of backgrounds and perspectives on the Board.

          The Nominating and Corporate Governance Committee employs a variety of methods for identifying and evaluating director nominees. The Committee reviews the size and composition of the Board as part of the annual Board evaluation process and makes recommendations to the Board as appropriate. If vacancies on the Board are anticipated, or otherwise arise, the Nominating and Corporate Governance Committee considers various potential candidates for directors. Candidates may come to the Committee’s attention through current Board members, shareholders, or other persons.

          The policy of the Nominating and Corporate Governance Committee, as set forth in A. H. Belo’s corporate governance guidelines, is to consider a shareholder’s recommendation for nominee(s) when the shareholder supplies the information required for director nominations under the advance notice provisions set forth in Article II, Section 13 of A. H. Belo’s bylaws within the time periods set forth in such section of the bylaws. Shareholders desiring to submit a nomination for director should consult A. H. Belo’s bylaws, which are available upon request, for more specific information prior to submitting a nomination. The Committee evaluates shareholder-recommended nominees based on the same criteria it uses to evaluate nominees from other sources.

          After the Nominating and Corporate Governance Committee identifies a potential candidate, there is a mutual exploration process, during which A. H. Belo seeks to learn more about a candidate’s qualifications, background, and level of interest in A. H. Belo, and the candidate has the opportunity to learn more about A. H. Belo. A candidate may meet with members of the Nominating and Corporate Governance Committee, other directors, and senior management. Based on information gathered during the course of this process, the Nominating and Corporate Governance Committee makes its recommendation to the Board. If the Board approves the recommendation, the candidate is nominated for election by A. H. Belo’s shareholders.

          The Board convenes executive sessions of non-management directors without Company management at each regularly-scheduled meeting. The Lead Director is responsible for presiding at the executive sessions of the non-management directors. In addition, the independent directors meet in executive session at least annually. Board committee chairs preside at executive sessions of their respective committees.

Communications with the Board

          The Company has a process for shareholders and other interested parties to communicate with the Board. These parties may communicate with the Board by writing c/o the corporate Secretary, P.O. Box 224866, Dallas, Texas 75222-4866. Communications intended for a specific director or directors (such as the Lead Director or non-management directors) should be addressed to his, her, or their attention c/o the corporate Secretary at this address. Communications received from shareholders are forwarded directly to Board members at, or as part of the materials mailed in advance of, the next scheduled Board meeting following receipt of the communications. The Board has authorized management, in its discretion, to forward communications on a more expedited basis if circumstances warrant or to exclude a communication if it is illegal, unduly hostile or threatening, or similarly inappropriate. Advertisements, solicitations for periodical or other subscriptions, and other similar communications generally are not forwarded to the directors.

Section 16(a) Beneficial Ownership Reporting Compliance

          Federal securities laws require that A. H. Belo’s executive officers and directors, and persons who own more than ten percent of a registered class of A. H. Belo common stock, file reports with the SEC within specified time periods disclosing their beneficial ownership of A. H. Belo common stock and any subsequent changes in beneficial ownership of A. H. Belo common stock. No Section 16 reports were required to be filed on behalf of the directors and officers in 2007. Initial reports on Form 3 for all directors and officers were required to be filed on January 22, 2008, but filed one day late due to administrative error.

Code of Business Conduct and Ethics

          A. H. 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.ahbelo.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 SEC or the NYSE, on the Company’s Web site. Information on A. H. Belo’s Web site is not incorporated by reference into this Annual Report on Form 10-K.

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

A. H. Belo Corporation
P.O. Box 224866
Dallas, Texas 75222-4866
Attn: Corporate Secretary
Telephone: (214) 977-8200

Item 11. Executive Compensation

Compensation Discussion and Analysis

          A. H. Belo did not exist prior to October 1, 2007 and therefore the 2007 compensation for the A. H. Belo named executive officers reflected herein was not determined by A. H. Belo’s Compensation Committee. Accordingly, this Compensation Discussion and Analysis describes the compensation philosophy applied by Belo to its named executive officers with respect to the fiscal year ended December 31, 2007, and the ways in which A. H. Belo anticipates its compensation philosophy will be similar to or differ from Belo in 2008. The Board of Directors and Compensation Committee of A. H. Belo are expected to review the elements of executive compensation during fiscal year 2008 and to make appropriate adjustments for the Company as it now exists.

          The named executive officers of A. H. Belo are Robert W. Decherd, James M. Moroney III, Donald F. (Skip) Cass, Jr., Alison K. Engel, and Daniel J. Blizzard. Of these named executive officers, only Mr. Decherd was a named executive officer in Belo’s 2007 proxy statement. Mr. Moroney, executive vice president of A. H. Belo and publisher of The Dallas Morning News, was a member of the Belo management committee, but was not a named executive officer in the 2007 Belo proxy statement. However, his compensation was subject to the oversight of and review by the Belo Compensation Committee. Mssrs. Cass and Blizzard and Ms. Engel did not serve on the Belo Management Committee during fiscal year 2007. As a result, the 2007 compensation of Mr. Cass, Ms. Engel and Mr. Blizzard was not subject to the direct oversight of the Belo compensation committee. Therefore, throughout this Compensation Discussion and Analysis, references to the historical 2007 executive compensation program are relevant with respect to Mr. Decherd, and the compensation elements applicable to the other individuals are described separately where appropriate.

Overview of Compensation Program

          Historically, the Compensation Committee of the Belo Board of Directors has overseen, and following the distribution the Compensation Committee of the A. H. Belo Board of Directors will oversee, A. H. Belo’s overall compensation structure, policies, and programs. The committee has the responsibility for establishing, implementing, and continually monitoring adherence to the Company’s compensation philosophy.

Compensation Objectives

          Belo adopted, and following the distribution A. H. Belo will adopt, compensation policies to achieve the following objectives:

	•		establish a competitive compensation program;
	•		attract and retain high-caliber executive talent in positions that most directly affect the Company’s overall performance;
	•		motivate and reward executives for achievement of the Company’s financial and non-financial performance objectives;
	•		encourage coordinated and sustained effort toward maximizing the Company’s value to its shareholders; and
	•		align the long-term interests of executives with those of the Company’s shareholders.

Setting Executive Compensation

          To assist the Belo Compensation Committee and management in assessing and determining appropriate, competitive compensation for Belo executive officers in 2006, the committee engaged an outside compensation consultant, Hewitt Associates LLC. Mercer LLC (“Mercer”) provided consultation beginning in February

2007, and it is anticipated that Mercer will serve as both Belo’s and A. H. Belo’s Compensation Committee consultant in 2008.

Historical Setting of Executive Compensation by Belo

          Surveys and Determination of the Median. Belo used several different compensation surveys to prepare 2007 compensation recommendations for consideration by its Compensation Committee. For base salary and total target cash compensation, Belo referenced the Towers Perrin Media Industry CDB Executive Compensation Database, referred to as the Towers Perrin Media Survey. The Towers Perrin Media Survey consisted of compensation survey information from 118 companies with media operations that include newspapers, television stations, television networks, magazines, radio stations, information publishing, and Internet/online services commonly classified as media. The median annual revenue for all participants in the Towers Perrin Media Survey was $897 million. Belo does not choose the participants in the Towers Perrin Media Survey, nor did it provide to its Compensation Committee the individual names of the 118 participant companies, other than the peer group selections discussed below.

          Belo identified 27 companies within the Towers Perrin Media Survey that shared with Belo similar characteristics in terms of focus on media operations (i.e., newspaper, television stations, and Internet operations). Survey data from this group of peer companies, referred to as the Towers Perrin Peer Group, provided Belo with supplemental information for both base salary and total target cash compensation for the executive officers. The companies included in the Towers Perrin Peer Group, the median annual revenue of which was $5.3 billion, were:

§ Advance Publications		§ Albritton Communications		§ American Broadcasting Companies, Inc.
§ Capitol Broadcasting		§ CBS Corporation		§ Cox Enterprises
§ Dow Jones & Company, Inc.		§ The E. W. Scripps Company		§ Fisher Communications
§ Fox Broadcasting		§ Freedom Communications		§ Gannett Co., Inc.
§ Hearst-Argyle Television, Inc.		§ The Hearst Corporation		§ Landmark Communications
§ The McClatchy Company		§ McGraw-Hill Companies Inc.		§ Media General, Inc.
§ Meredith Corporation		§ NBC Universal, Inc.		§ The New York Times Company
§ Seattle Times		§ Tribune Company		§ Turner Broadcasting
§ Viacom Inc.		§ The Washington Post Company		§ Yahoo!

          For December 2006 and February 2007 long-term incentive compensation recommendations, Belo referenced the Towers Perrin CDB Executive Compensation Database for General Industry participants, referred to as the Towers Perrin General Survey. The Towers Perrin General Survey is a database of approximately 820 companies that participate in Towers Perrin’s compensation survey, with 113 companies that have revenues in the $1 billion to $3 billion range. Of these 113 companies, the median revenue for which was $1.9 billion, 86 companies submitted long-term incentive compensation data. Belo does not choose the participants in the Towers Perrin General Survey, nor does Towers Perrin disclose to Belo the names of the companies that comprise the subsets. The Belo compensation committee found that the larger sample pool of similarly-sized companies in the subset provided a better source of long-term incentive data than was available by limiting such information strictly to the Towers Perrin Peer Group because of the widely varying compensation practices in the media industry. Long-term incentive grant practices in the media industry have undergone change in the past several years that is, in part, a result in the shift in advertising dollars away from newspapers and the consolidation of advertising providers throughout the industry. The Belo compensation committee believes that a larger population of survey respondents from across industries provided a more reliable basis for recommending long-term compensation, and that assessing long-term incentive grant practices from a broader group provided more stability to its long-term incentive compensation analysis. Belo did not observe the same volatility in base salary and annual incentive compensation practices from the results of the Towers Perrin Media Survey. Representative industries included in the Towers Perrin General Survey included aerospace/defense; automotive and transportation; chemicals; computers, hardware, software and services; consumer products; electronics and scientific equipment; food and beverage; metals and mining; oil and gas; pharmaceuticals; and telecommunications.

          In addition, during 2007, Belo’s compensation consultant provided Belo with a supplemental summary of compensation information from a select group of public media companies’ proxy filings, referred to as the Proxy Study, that provided total compensation information for their executive officers from Belo’s peer companies. The Belo Compensation Committee considers the companies in the Proxy Study to be similarly situated peer media companies with operational characteristics similar to Belo. The Belo Compensation Committee uses the Proxy Study as a retrospective comparison of the average and 50th percentile compensation levels for similar industry executive officer positions. The companies included in the Proxy Study were:

§ Dow Jones & Company, Inc.		§ The E. W. Scripps Company		§ Gannett Co., Inc.
§ Hearst-Argyle Television, Inc.		§ Lee Enterprises, Inc.		§ The McClatchy Company
§ Media General, Inc.		§ Meredith Corporation		§ The New York Times Company
§ Tribune Company		§ The Washington Post Company

          Process and Role of Management. Belo used each of these referenced surveys in the manner described to develop recommendations for base salary, annual cash incentive compensation, and long-term incentive compensation for its executive officers, including its chief executive officer. These median-level recommendations, which were developed with input from the Belo Compensation Committee’s then-current compensation consultant, were presented by Marian Spitzberg, Belo’s senior vice president/Human Resources, to Belo’s Chief Executive Officer, Robert Decherd. Robert and Marian adjusted these recommendations after taking into account each individual executive officer’s recent performance, as well as his or her experience, level of responsibility, and contributions to Belo’s long-term goals during the current year. The Belo compensation recommendations, together with the compensation histories and the percentile rankings for base salary and total cash compensation of Belo’s named executive officers relative to the Towers Perrin Peer Group, were then presented to the Belo Compensation Committee, which had full access to its compensation consultant, Robert Decherd, Marian Spitzberg, and the Belo human resources staff who were involved in the formulation of recommendations. After consideration of the recommendations and adequate opportunity to address specific questions and concerns, the Belo Compensation Committee made final compensation recommendations for the Belo named executive officers, excluding Belo’s chief executive officer, to the non-management members of Belo’s Board of Directors for their approval. In its deliberations, the Belo board considered Belo’s compensation objectives and philosophy in light of the recommendations. Based on its review and analysis, the non-management members of Belo’s Board approved the final compensation to be awarded to each named executive officer, with the exception of Belo’s chief executive officer. The Belo committee evaluated and determined Belo’s chief executive officer’s compensation after following the same process. In this regard, the compensation committee reviewed and received the same peer group information, except that market data for chief executive officer compensation was provided to Belo’s Compensation Committee without any specific compensation recommendation.

          Timing of Decisions. Historically, the Belo Compensation Committee has had three regularly-scheduled meetings each year in or around February, July, and December. The committee usually also has special meetings by telephone or in person periodically as necessary to address compensation issues that may arise from time to time. With respect to 2007 compensation for Belo executive officers, the Belo Compensation Committee held the following meetings to review, discuss, and set or recommend compensation levels:

November 2006		Set 2007 financial performance targets; reviewed recommendations for 2007 base salaries, individual cash incentive opportunities and performance-related restricted stock unit awards
December 2006		Determined or recommended, as applicable, 2007 base salaries
		Determined or recommended 2007, as applicable, individual cash incentive opportunities
		Granted 2007 performance-related restricted stock unit and stock option awards
February 2007		Established a maximum incentive award pool to ensure tax deductibility under section 162(m) of the Code
July 2007		Reviewed and discussed compensation issues, policies, and trends
December 2007		Considered and approved preliminarily 2007 cash incentive bonuses and time-based restricted stock unit awards based on estimated 2007 financial performance
February 2008		Certified 2007 financial performance relative to 2007 cash incentive bonuses and restricted stock unit awards, including the number of performance-related restricted stock units earned in respect of 2007 performance

Setting of A. H. Belo Executive Compensation Going Forward

          A. H. Belo’s named executive officers’ 2008 compensation was initially set by Belo in December 2007. Thereafter, the A. H. Belo Compensation Committee will oversee executive compensation at A. H. Belo and the

committee may or may not continue to take an approach similar to that described above in setting compensation for its executive officers. The Company anticipates using, either directly or through A. H. Belo’s Compensation Committee compensation consultant, several methods to compare our executive compensation practices to those of other comparable newspaper companies. These include: using publicly available market surveys to match the roles of our named executive officers to roles in the surveys; conducting total compensation studies; and conducting an analysis of our named executive officers’ compensation for use in establishing levels for overall long-term incentive awards and setting compensation for the named executive officers. The Company expects to evaluate the base salary, annual cash incentive awards, and long-term incentives provided to the named executive officers of peer newspaper and media companies. The Company expects to extract this data from publicly available sources with assistance from our compensation consultant.

Elements of 2007 Executive Compensation

          Historical Belo Elements of Compensation. For the fiscal year ended December 31, 2007, the principal elements of compensation for Belo’s named executive officers were:

	•		base salary;
	•		annual cash incentive opportunity;
	•		long-term equity incentive compensation; and
	•		retirement and other benefits.

          The structure of Belo’s executive compensation program is set forth in the Belo Corp. 2004 Executive Compensation Plan, as amended, which was approved by Belo’s shareholders and administered by the Belo Compensation Committee. The Company refers to the Executive Compensation Plan as the ECP. The Belo ECP provides for two elements of compensation: short-term cash incentives (performance bonus), and long-term equity-based compensation. Awards under the ECP are supplemental to an ECP participant’s base salary.

          Officers of Belo and its subsidiaries, including Belo’s chief executive officer and its other executive officers, are eligible to participate in the ECP. Additional ECP participants are selected by the Belo Compensation Committee based on management’s evaluation of an individual’s ability to affect significantly Belo’s profitability.

          Elements of A. H. Belo Executive Compensation Going Forward. Following the distribution, A. H. Belo expects to use a combination of compensation elements similar to those used historically by Belo as further described below.

          Base Salary—Historical. Base salaries for Belo executive officers are reviewed annually. In determining base salaries for 2007, Belo gathered base salary data from the Towers Perrin Media Survey and the Towers Perrin Peer Group for compensation comparisons. The data provided by these two surveys includes certain statistical factors that make it possible to predict the median (50th percentile data) for both base salary and total target cash compensation.

          Belo uses this survey data, as applicable to each Belo executive officer, to prepare estimates of median pay for base salary and total target cash compensation for each executive officer, including its chief executive officer. Because the survey data provided to Belo by Towers Perrin and its compensation consultant each year generally relates to the prior year, and current year information is not yet available, the compensation survey data was “aged” by 3 percent to take into account Belo’s general merit increase guideline that factors in consumer price index and inflation. Recommendations above the median may be made when warranted on account of an individual executive’s outstanding performance, promotion, or retention concerns. Recommendations below the median may also be made when warranted.

          As discussed above, the Belo compensation committee reviewed the base salary recommendations for 2007 and made final recommendations to the Belo board, except with respect to Belo’s chief executive officer, for which the compensation committee has final approval. For 2007, base salaries for the A. H. Belo named executive officers were compared to market data for similarly situated officers included in the survey data and in each case, their base salaries set forth in the Summary Compensation Table fell within an acceptable range of the estimated median as follows: Robert Decherd — 92 percent of the median; Jim Moroney — 103 percent of the median; Skip Cass — 91 percent of the median; Ali Engel — 79 percent of the median; and Dan Blizzard — 103 percent of the median.

          Base Salary—Going Forward. The 2008 base salaries for the A. H. Belo named executive officers were initially set by Belo in December 2007 and were ratified by the A. H. Belo Compensation Committee in January 2008. Median market information for the A. H. Belo named executive officers was provided by Mercer for consideration by the Compensation Committee. This market information was based on analyses of data from the Towers Perrin Media Survey for 2007 and available proxy data of other peer media companies. The 2008 base salaries for the A. H. Belo named executive officers were set as follows: Jim Moroney — $550,000; Skip Cass — $465,000; Ali Engel — $250,000; and Dan Blizzard — $240,000. Robert Decherd’s base salary was initially set at $800,000; however, in February 2008, Robert Decherd voluntarily took a reduction in his 2008 base salary, which the A. H. Belo Compensation Committee approved in March 2008. Robert’s base salary is now set at $250,000 which is significantly below the market median. Jim Moroney’s base salary is approximately 4 percent above the median, while Ms. Engel’s base salary is materially below the market median for her position but represents a significant increase over her 2007 base salary in light of her recent promotion to chief financial officer of A. H. Belo. Relevant market data was not available for Mr. Cass’ and Mr. Blizzard’s positions, and the committee considered their experience and responsibilities along with their relative positions within the organization and retention needs. Following the distribution, the A. H. Belo Compensation Committee will review, determine, and adjust the base salaries of our named executive officers annually.

          Annual Cash Incentive Opportunity—Historical. Consistent with Belo’s objective of motivating and rewarding executives for achievement of Belo’s financial and non-financial performance objectives, each Belo executive officer is eligible to receive annual cash incentive compensation based on financial performance objectives established in the annual financial plan (the “Financial Plan”), approved by Belo’s Board of Directors at the beginning of each year. The performance goals are communicated to Belo executive officers at the beginning of each year. The financial performance objectives vary from year to year and reflect the cyclical nature of Belo’s businesses due to fluctuating advertising demand, for example, relating to election years, the Olympics, and other U.S. sports events, in addition to taking into consideration industry factors that include decreases in newspaper circulation, significant changes in demand for print classified advertising, changes in media use habits by consumers and advertisers, and other competitive conditions, including recruiting and retaining talent.

          The Belo Compensation Committee establishes an annual performance-based incentive pool for each senior executive, as permitted by the ECP and in compliance with the performance-based compensation exemption under section 162(m) of the Internal Revenue Code of 1986, as amended, referred to as the Code. This performance pool (3 percent of Belo’s consolidated net income for Robert Decherd) provides a maximum for the award of cash and certain equity incentives under the ECP, described below, and is designed to allow for tax deductibility of the compensation awarded within the pool. Because they were not named executive officers of Belo for 2007, Messrs. Moroney, Cass, and Blizzard and Ms. Engel were not subject to a section 162(m) incentive pool for purposes of 2007 incentive compensation awards. As described below, they were Belo ECP participants in 2007. Based upon Belo’s 2007 financial performance, cash bonuses were awarded to Belo senior executives by first considering the amounts that would have been paid to the senior executives under the method described below for calculating bonuses for other ECP participants.

          Under the ECP, the Belo Compensation Committee establishes a target bonus opportunity expressed as a percentage of base salary based on competitive market information using the Towers Perrin Media Survey. The Belo Compensation Committee targets the median, or 50^th percentile, of the Towers Perrin Media Survey and the Towers Perrin Peer Group for annual cash incentives. The target bonus opportunity for 2007 for Robert Decherd was set by the Belo Compensation Committee at 90 percent. The other A. H. Belo named executive officers in the Summary Compensation Table had 2007 target bonus opportunities set as follows: Jim Moroney, 65 percent; Skip Cass, 50 percent; Ali Engel, 30 percent; and Dan Blizzard, 30 percent. Target bonus opportunities for 2008 (relating to Belo performance) for each of the A. H. Belo named executive officers are shown in the “Grants of Plan-Based Awards in 2007” table in the “Estimated Future Payouts Under Non-Equity Incentive Plan Awards” column.

          The target bonus of 90 percent of base salary for Robert Decherd for 2007 was below the median target bonus of 100 percent as indicated by the Towers Perrin Media Survey. Jim Moroney’s target bonus of 65 percent of base salary was greater than the survey indicated median of 50 percent for newspaper chief executives; however, the Belo compensation committee believed this greater target bonus opportunity was appropriate after considering his responsibilities associated with serving on the Management Committee of Belo and his length and breadth of experience with the company. The committee did not consider the market median target bonus percentages for Messrs. Cass and Blizzard and Ms. Engel for 2007 individually, but rather considered their compensation packages as a whole, including

total target cash compensation, as part of the entire ECP group, which was approved as a whole at the Belo Compensation Committee’s December 2006 meeting.

          Actual bonus amounts earned by ECP participants may range from zero to a maximum bonus of 200 percent of the target bonus opportunity established by the Belo Compensation Committee, depending on the level of achievement of Financial Plan target. For 2007, the Belo Compensation Committee approved financial performance ranges for Belo’s named executive officers based on Belo’s Financial Plan, as shown in the table below. Bonus payout for performance between points is prorated.

						Opportunity Payout
Performance Level		2007 EPS Goals				Based on Achievement
Maximum		$	1.06			200 percent
Target		$	0.97			100 percent
Threshold		$	0.82			10 percent
Below Threshold		Less than $0.82				0 percent

          The above EPS goals were applicable for Robert Decherd, Ali Engel, Skip Cass, and Dan Blizzard for 2007. Non-equity incentive awards for Mr. Moroney were based upon attainment of certain financial goals set for The Dallas Morning News rather than Belo’s EPS. Belo believes that linking bonus opportunity directly to financial performance, with an opportunity to earn a 200 percent payout of target bonus amount if maximum performance is achieved, provides participants with significant motivation to achieve the company’s financial objectives.

          Actual EPS of ($2.57) for the year ended December 31, 2007 was adjusted at Belo’s Compensation Committee’s discretion. The primary adjustments included the elimination of the effect of expenses related to the spin-off of A. H. Belo and non-cash charges related to goodwill impairment. Negative adjustments to reported EPS included share-based compensation expense and variances related to changes in newsprint prices. The adjusted EPS of $0.97, which was approved by the Belo Compensation Committee, was then compared to the EPS target of $0.97 and an achievement of 100 percent of target resulted. Financial results for The Dallas Morning News resulted in Jim Moroney receiving 78.7% of his target bonus for 2007.

          A proposed cash bonus under the ECP formula was then calculated for each Belo named executive officer by applying this achievement percentage to each individual’s target bonus opportunity. For example, in 2007, Robert Decherd’s base salary of $985,000 and target bonus percentage of 90 percent would qualify him for a 100 percent target bonus payout of $886,500. The target-level incentive payments paid by Belo to the A. H. Belo named executive officers are quantified in the “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table.

          The Belo Compensation Committee then also assessed the performance and the substantial roles of each of its executive officers with respect to the spin-off transaction, which was not contemplated when the financial goals were established. In recognition of their extraordinary effort and commitment in the successful planning, execution and implementation of the complex details of the spin-off transaction while at the same time continuing to guide, manage and operate Belo in a rapidly evolving and challenging operating environment, the Belo Compensation Committee also approved special cash bonus awards for the named executive officers. As such, the Belo Compensation Committee recommended special cash bonus awards for 2007 of $2,113,500 for Robert Decherd, which was subject to the successful completion of the distribution, and $130,000 for Jim Moroney, $78,800 for Skip Cass, $41,300 for Ali Engel, and $21,800 for Dan Blizzard. The cash awards to the named executive officers in excess of the ECP formula are reported in the “Bonus” column of the Summary Compensation Table.

          Annual Cash Incentive Opportunity—Going Forward. In connection with the distribution, A. H. Belo adopted an Incentive Compensation Plan (ICP) that is generally similar to that of Belo’s ECP. The A. H. Belo ICP provides for an annual cash incentive opportunity that will be based on a target bonus expressed as a percentage of a named executive officer’s annual base salary. The 2008 target bonus opportunities, expressed as a percentage of base salary, for each of A. H. Belo’s named executive officers other than Robert Decherd were set as follows: Jim Moroney — 70 percent; Skip Cass — 60 percent; Ali Engel — 50 percent; and Dan Blizzard — 40 percent. These A. H. Belo named executive officers’ target bonus opportunities do not materially vary from the median range of market data, except that relevant market data was not available for Mr. Cass’ or Mr. Blizzard’s positions and the committee considered each executive’s experience and responsibilities along with his relative position within the organization and retention needs. In determining the appropriate target bonus percentage for each A. H. Belo named executive officer, the Belo Compensation Committee used Mercer estimates of the market median. A. H. Belo has

determined that the following financial performance measures will be used to measure 2008 achievements under the ICP: (revenue; interactive revenue; expenses and earnings before interest, taxes, depreciation and amortization). The cash incentive opportunity for James M. Moroney III, executive vice president and Publisher and Chief Executive Officer of The Dallas Morning News, will be based in part on the performance of The Dallas Morning News and in part on the consolidated performance of A. H. Belo.

          On March 25, 2008, the Compensation Committee ratified the recommendation of its Board of Directors to change the compensation structure of Robert Decherd. Mr. Decherd’s new compensation package will be cash-based and performance-oriented, with an annual target bonus opportunity based on the same four measures of A. H. Belo financial performance. If all target levels are achieved, Mr. Decherd will receive a cash bonus of four times his annual base salary. If maximum performance levels are achieved, Mr. Decherd will receive a cash bonus of seven times his annual base salary. The minimum threshold for any cash incentive payment will be at 85 percent of the revenue target and 60 percent of target with respect to each of the other three measures of financial performance. Mr. Decherd’s actual bonus, if any, will be determined by extrapolating between the minimum and target, or between target and maximum, based on actual levels of performance. Mr. Decherd will not receive any additional long-term incentive compensation with respect to 2008 compensation. Each year, the Compensation Committee will determine target and maximum multiples, the performance measures, and the weighting to be given to each performance measure.

          Long-Term Equity Incentive Compensation—Historical. Belo awards long-term equity incentive grants, or LTI compensation, to executive officers as part of its overall compensation package. These awards are designed to offer competitive compensation that encourages the retention and motivation of key executives, and rewards them based upon market-driven results. The ECP provides the Belo Compensation Committee with discretion to require performance-based standards to be met before awards vest. Generally, the Belo Compensation Committee determines each executive officer’s intended LTI compensation value, then determines the allocation of the LTI compensation award among three types of equity instruments available under the ECP: stock options, time-based RSUs, referred to as TBRSUs, and performance-related RSUs, referred to as PBRSUs. Belo’s LTI equity awards described below are designed to meet its compensation objectives in three ways. First, stock options encourage and reward strong stock price performance, thus aligning the executive’s interests with those of shareholders. Second, PBRSUs reward the achievement of Belo’s cumulative annual financial performance goals. Finally, TBRSUs encourage executives to remain with the Company and to focus on its long-term success. Since the ultimate value of the LTI compensation awards depends upon the performance of Belo common stock, the interests of the Belo executive officers are aligned with the financial interests of Belo’s shareholders.

          Stock Option Awards—Historical. No stock option awards were made to A. H. Belo’s named executive officers during 2007. Generally, stock option awards are granted for shares of Belo Series B common stock at an exercise price equal to the closing market price of Belo’s Series A common stock on the date of grant. The option awards vest 40 percent on the first anniversary of the date of grant, an additional 30 percent on the second anniversary, and the remaining 30 percent on the third anniversary of the date of grant. All options expire on the tenth anniversary of the date of grant. The amounts in the Summary Compensation Table, under the column “Option Awards,” include the accounting expense recognized in 2007 by Belo in accordance with FAS 123R for prior year option grants to the named executive officers. See also the “Option Exercises and Stock Vested in 2007” table for the amounts realized by the executive officers from option exercises in 2007.

          Time-Based Restricted Stock Unit Awards—Historical. TBRSUs awarded to ECP participants, including Belo executive officers, are based on continued employment with Belo and vest at the end of a three-year period. The Belo Compensation Committee believes that the three-year cliff vesting feature of the TBRSUs optimizes their retention effect, and because the ultimate value of the award depends on Belo’s stock price, aligns the recipient’s interest with the maximization of shareholder value. TBRSU awards made to Belo executive officers are granted out of a performance incentive pool amount set for each executive, as discussed previously. These awards are generally made in February following the year of grant when Belo’s financial performance for the prior fiscal year can be determined, the incentive pool amount established, and individual performance considerations assessed. However, this past year TBRSU awards were made in December rather than February, in light of the spin-off transaction.

          Performance-Related Restricted Stock Units—Historical. PBRSUs may be awarded to Belo ECP participants, including Belo executive officers. These awards are earned based upon the same performance criteria, financial performance achievement levels, and payout levels established annually for short-term cash incentives. When the actual number of PBRSUs earned is determined following the close of the fiscal year, the PBRSUs vest at a rate of 33-1/3 percent per year over a three-year period.

          December 2006 Grants. In December 2006, the Belo Compensation Committee made certain LTI compensation grants in the form of PBRSUs to be earned based on 2007 financial performance. The actual amount of the award earned was determined in February 2008 when 2007 financial performance was determined. The Belo Compensation Committee generally strives to set LTI compensation levels near the median of the Towers Perrin General Survey. That survey data is presented in terms of a multiple of an ECP participant’s (including executive officers’) base salary. The resulting LTI compensation recommendations at the median level for Belo executive officers other than Robert were then provided to Robert and Marian Spitzberg for their review and consideration. Based on their review of the information available for each of the executive officers, and after consideration of retention and succession planning issues and the performance and potential of each individual, an LTI compensation recommendation for each executive officer was prepared for the Belo Compensation Committee’s review and approval. These recommendations were at or only slightly below the median for each of the named executive officers, with the exception of Ms. Engel, whose LTI award was slightly less than double the estimated median. Ms. Engel received this award based on the committee’s assessment of her contributions to the operations of the Belo and potential for future contributions, along with a recognition of the need to provide substantive reward for long-term retention. Hewitt, the Belo Compensation Committee’s then-current compensation consultant, determined that 2007 survey data for Robert Decherd’s long-term compensation had perceived limitations because the survey-indicated median levels appeared to deviate substantially from historical market trends, and would have resulted in an award recommendation significantly above prior year percentage increases. As a result, the LTI compensation level for Robert indicated in December 2006 was provided to the Belo Compensation Committee without any recommended

upward adjustment from his award level for the previous year, which was approximately at the median level at the time of the award in December 2005.

          The Belo Compensation Committee determined that one-half of the median-level LTI compensation would be awarded in the form of PBRSUs for its named executive officers, except Robert Decherd, as follows: Jim Moroney — 24,140 units; Skip Cass — 19,070 units; Ali Engel — 3,180 units; and Dan Blizzard — 2,380 units. These target level awards were subject to 2007 financial performance criteria as established by the Belo Compensation Committee. The remaining one-half of the recommended LTI compensation was reserved for awards of TBRSUs. Skip Cass, Ali Engel, and Dan Blizzard received these TBRSUs in December 2006, while awards of TBRSUs for Robert Decherd and Jim Moroney were made in February 2007 in recognition of final 2006 performance, as discussed below. Robert Decherd’s LTI compensation, which was equivalent to the previous year’s market median, was divided into thirds: 157,320 options awarded for 2006 financial performance, 52,440 PBRSUs to be earned in 2007, and the remaining one third in the form of TBRSUs awarded in February 2007, also in recognition of final 2006 performance. See discussion of February 2007 TBRSU Grants below.

          February 2007 TBRSU Grants. In February 2007, the Belo Compensation Committee made LTI compensation awards in the form of TBRSUs based on Belo 2006 financial performance using LTI recommendations for grants previously approved by the Belo Compensation Committee in December 2006 for Robert Decherd and Jim Moroney. The grant date fair value of these awards is reported under the column “Grant Date Fair Value of Stock and Option Awards” in the “Grants of Plan-Based Awards in 2007 Table.” Additionally, the amounts in the Summary Compensation Table, under the column “Stock Awards,” include the accounting expense recognized in 2007 by Belo in accordance with FAS123R for these awards to A. H. Belo named executive officers.

          December 2007 Grants. In December 2007, in light of the impending spin-off transaction, the Belo compensation committee made LTI compensation awards to the executive officers and to certain other officers of Belo, including those who would become executive officers of A. H. Belo. To emphasize the importance of retaining these executives in the smaller post-spin companies in a changing business environment, and to encourage focus on Belo’s business goals during the transition period following the spin-off, the Belo Compensation Committee determined that the December 2007 LTI compensation awards would be made in the form of TBRSUs. Because a large portion of the ultimate value of the LTI compensation awards depends upon the performance of Belo common stock, the interests of the executive officers are aligned with the financial interests of Belo’s shareholders. A portion of the ultimate value of LTI awards will also depend upon the stock price of A. H. Belo to the extent awards were subject to the distribution of A. H. Belo common stock at the time of the spin-off.

          The Belo Compensation Committee made recommendations for LTI compensation levels in December 2007 through the matching of the positions of Belo’s executives with data for similar positions in companies the size of Belo prior to the spin-off. The data for the named executives was obtained primarily from the Proxy Study and in consultation with Mercer for positions not specifically identified in the Proxy Study, particularly for Messrs. Cass and Blizzard. Recommendations for the December 2007 LTI awards were presented to the Belo Compensation Committee for each of the named executives that were between the median and 75th percentile as indicated by market data, except for Ms. Engel and Mr. Blizzard. LTI recommendations for Ms. Engel and Mr. Blizzard were made at levels that exceeded the 75th percentile.

          In December 2007, awards of Belo TBRSUs were made to the A. H. Belo named executive officers as follows: Robert Decherd — 157,640 units; Jim Moroney — 57,160 units; Skip Cass — 45,130 units; Ali Engel — 18,050 units; and Dan Blizzard — 12,030 units. These awards were valued at the closing market price of Belo common stock on the date of the award, or $16.62 per unit. The awards are intended to recognize, reward, and retain executive talent during and following the distribution. With the exception of Mr. Decherd, whose award is equivalent to the recommended market median, each of the other named executive officer long-term incentive compensation awards materially exceeds the market median. The awards for Mr. Moroney and Mr. Cass fall in a range that is less than the 75th percentile of the market-based survey and were determined to be warranted in light of the Company’s retention needs prior to and after the distribution. The awards for Ms. Engel and Mr. Blizzard are both in excess of the 75th percentile of the survey, however, the committee believes the awards are appropriate especially in light of Ms. Engel’s below-market median base salary and Mr. Blizzard’s overall contributions to the Company, as well as retention requirements.

          The grant date fair value of these TBRSU awards for each of the A. H. Belo named executive officers are reported under the column “Grant Date Fair Value of Stock and Option Awards” in the “Grants of Plan-Based Awards in 2007” table. Belo did not make any grants of PBRSUs to its named executive officers during 2007 in respect of 2008 financial performance in light of the spin-off transaction.

          February 2008 Grants. In February 2008, Belo assessed the December 2006 target grant of PBRSUs against 2007 financial performance, and PBRSUs were paid to A. H. Belo’s named executive officers at 100 percent of target,

except for Jim Moroney, who earned 78.7% of his target award. The amounts in the Summary Compensation Table, under the column “Stock Awards,” include the accounting expense recognized by Belo in 2007 in accordance with FAS 123R for PBRSU awards to the named executive officers.

          Long-Term Incentive Compensation—Going Forward. Our named executive officers will be entitled to receive long-term equity awards from time to time as determined by the A. H. Belo Compensation Committee under the A. H. Belo ICP commensurate with their respective post-distribution positions of responsibility. The Company anticipates that long-term incentive awards under the A. H. Belo ICP may consist of stock options, TBRSUs, PBRSUs, or other awards permitted under the plan. In March 2008, the Compensation Committee approved a 2008 compensation package for the chief executive officer, Robert Decherd, that included no additional LTI awards with respect to 2008 compensation.

          Stock Option Awards—Going Forward. The Company has not determined if and when in 2008 there will be grants of stock option awards for A. H. Belo common stock. If the A. H. Belo Compensation Committee determines that stock option awards are appropriate, then they would likely be granted for shares of A. H. Belo Series B common stock at an exercise price equal to the closing market price of A. H. Belo’s Series A common stock on the date of grant. Under the new A. H. Belo ICP, vesting and expiration is similar to that under the Belo ECP.

          Time-Based Restricted Stock Unit Awards—Going Forward. The Company may grant TBRSU awards to our named executive officers for A. H. Belo common stock. If the A. H. Belo Compensation Committee determines that TBRSU awards are appropriate, then they would most likely be granted under terms and conditions similar to those described above for Belo under A. H. Belo’s ICP.

          Performance-Related Restricted Stock Unit Awards—Going Forward. The Company may grant PBRSU awards to our named executive officers for A. H. Belo common stock. If the A. H. Belo Compensation Committee determines that PBRSU awards are appropriate, then they would most likely be granted under terms and conditions similar to those described above for Belo under A. H. Belo’s ICP.

          Retirement Benefits—Historical. Through March 31, 2007, Belo offered pension benefits to certain employees through its tax qualified Pension Plan. Effective March 31, 2007, the Pension Plan was frozen and all affected employees were provided with transition benefits, including the granting of five years of additional credited service. In addition, Belo maintained the Belo Supplemental Executive Retirement Plan, or SERP, for key executives, approved by the Belo Compensation Committee, Belo’s SERP is an account-balance plan, and does not guarantee a specific benefit amount to participants. The primary purpose of the SERP was to provide retirement benefits to key executives that were intended to restore retirement benefits restricted by IRS limits on qualified plans, such as the Pension Plan and the Belo Savings Plan (401(k) Plan) in which our executive officers also participate. Through 2007, Belo made annual contributions to the SERP on behalf of each of its executive officers who were also participants in the SERP; however, effective January 1, 2008, Belo suspended contributions to the SERP and authorized the distribution of all SERP benefits to participants, including Robert Decherd, Jim Moroney, and Skip Cass, in a lump-sum payment made in January 2008. Ms. Engel and Mr. Blizzard were not Belo SERP participants. For additional discussion of the Pension Plan and the SERP, see “Post-Employment Benefits—Pension Plan” and “Non-Qualified Deferred Compensation—Supplemental Executive Retirement Plan” below.

          Retirement Benefits—Going Forward. The Compensation Committee of A. H. Belo is evaluating supplemental retirement plans for its key executives.

Change in Control and Severance Benefits

          Employment Agreements and Benefit Plans—Historical. At December 31, 2007, Belo did not have any individual employment severance agreements with any of its executive officers. Under Belo’s ECP, the compensation and benefits of all plan participants, which include Belo’s executive officers, may be affected by a change in control of Belo. Generally under the ECP, a change in control event means the first of the following to occur, unless the Belo board of directors has adopted a resolution stipulating that such event will not constitute a change in control for purposes of the ECP:

	•		commencement or public announcement of a tender offer for all or any part of Belo’s common stock;
	•		acquisition of more than 30 percent of all shares of Belo common stock;
	•		shareholder approval of a merger in which Belo does not survive as an independent public company;
	•		shareholder approval of a sale or disposition of all or substantially all of the Belo’s assets; or
	•		specified changes in the majority composition of Belo’s board.

          Following a change in control of Belo, ECP bonuses are paid in full at the higher of target or forecasted full-year results in the year of the change in control; stock options held by management, including sales executives and non-employee directors, become fully-vested and are immediately exercisable; TBRSUs vest and are payable in full immediately; and PBRSUs vest at the higher of target or forecasted full-year results in the year of the change in control; and all vested units are payable in full immediately. See “Potential Payments on Termination or Change in Control at December 31, 2007” for additional discussion.

          In addition, effective October 1, 2007, following a review performed by Mercer of change in control severance plans at media peer companies and based on general industry data, Belo adopted a change in control severance plan. Companies included in the media peer group review were Gannett Co., Inc, Tribune Company, The Washington Post Company, The New York Times Company, the E.W. Scripps Company, Dow Jones & Company, Inc., The McClatchy Company, Meredith Corporation, Lee Enterprises, Inc., Media General, Inc., and The Hearst Corporation. General industry data was obtained from the Mercer 350 study, a study of compensation trends and market practices conducted for The Wall Street Journal that analyzes 350 of the largest United States public companies with median 2006 revenue of $7.9 billion. Over 70 percent of the companies in each group provide participation in change in control severance plans to key executives. Belo’s severance plan was adopted in light of media industry consolidation, including a number of notable industry mergers, in order to promote executive retention and reduce the level of uncertainty and distraction that is likely to result from a change in control or potential change in control of Belo. Belo does not design its other elements of compensation in anticipation of a change in control, but instead change in control payments provide security to executives in the event of job loss in a triggering

transaction. The Belo plan provides for severance benefits for designated participants in the event of a change in control of Belo and a termination of employment under specified circumstances. The triggering change in control events under the severance plan are similar to the triggering events under Belo’s ECP. The initial participants, as designated by the Belo Compensation Committee, are Belo’s executive officers. Additional participants may be designated by the committee from time to time.

          Participants in the change in control severance plan are approved by the Belo Compensation Committee and are entitled to benefits upon termination of employment within 24 months of a change in control of Belo if such termination is (1) involuntary other than for “cause” as defined in the plan or (2) voluntary for “good reason” as defined in the plan. In addition, a participant may voluntarily terminate employment for any reason or without reason during the 30 day period immediately following the first anniversary of a change in control and will be entitled to receive payments and benefits under the plan. The triggering of severance benefits upon the occurrence of both a change in control and termination of employment is a common feature of change in control benefits surveyed. Belo also believes that the ability of a participant to trigger change in control benefits during a one-month period following the first anniversary of a change in control assures continuity of senior management by giving senior executives an incentive to stay following a change in control, knowing that they will not experience a loss of severance benefits should there ultimately be incompatibility with new ownership or management. Upon such termination, a participant will receive his or her base salary in effect at the time of change in control, plus the greater of (i) current target bonus in effect prior to the change in control or (ii) actual bonus (defined as the average of the last three years’ bonus payments), multiplied by the severance multiple set forth below:

		Severance
Position		Multiple
Chief Executive Officer			3.0
Members of Belo’s Management Committee (other than CEO)			2.5
Executive Vice Presidents and Senior Vice Presidents (other than Management Committee members)			2.0
Vice Presidents			1.5

          In addition, a participant will receive a cash payment in lieu of (1) employer-provided contributions to the Belo Savings Plan and the Pension Transition Supplement Plan for a number of years equal to the participant’s severance multiple; (2) cost of medical and dental benefits in excess of employee premiums for a number of years equal to the participant’s severance multiple; and (3) reimbursement for employment outplacement services up to $25,000 and legal expenses incurred to enforce participant’s rights under the plan.

          The severance multiples for participants in the Belo plan are in the range of typical multiples in the plans surveyed by Mercer. If all or a portion of any payment or distribution by Belo under the plan is subject to excise tax, then Belo will make a “gross-up” payment to the terminated employee, designed to cover the excess tax liability.

          Employment Agreements or Arrangements—Going Forward. In connection with the distribution transaction, and upon consultation with Mercer, Belo provided certain retention and special bonuses to a selected group of executives and managers, including those of A. H. Belo. The retention incentive bonuses were intended to counter the effect of an offer by a potential employer during the uncertain time before, during, and after the distribution of A. H. Belo and will serve to retain key employees in important positions who have institutional knowledge that would be difficult to replace or restore during and after the distribution. The Belo compensation committee approved retention bonuses for Skip Cass, Ali Engel, and Dan Blizzard. The retention bonus is comprised of a payment to be made 90 days following the distribution date that is equivalent to 20 percent of the executive’s base salary, plus an assurance that such executive’s bonus for 2008 (payable in early 2009) will be equivalent to the greater of target or actual bonus achieved for 2008 under the A. H. Belo ICP. Estimated total retention bonuses are as follows: Skip Cass, $372,000; Ali Engel, $175,000; and Dan Blizzard, $144,000.

          Change in Control Severance Plan—Going Forward. A. H. Belo has a change in control severance plan similar to that of Belo’s plan described above covering specified participants that would be triggered, among other circumstances, if there is a “change in control” (as defined to include the acquisition of 30 percent or more of the combined voting power of our outstanding voting stock) and a qualifying termination (or constructive termination) of employment during the 24-month period following a change in control. In addition, a participant may voluntarily terminate employment for any reason or without reason during the 30-day period immediately following the first anniversary of a change in control and will be entitled to receive payments and benefits under the severance plan. The triggering events would result in the payment of specified severance benefits, including a lump sum multiple of participant’s compensation, outplacement services, vesting of long-

term incentive awards, and “gross up” payment if necessary to satisfy certain tax payments relating to the severance payments. The distribution was not a change in control event under the plan. For additional discussion, see “2007 Belo Executive Compensation—Termination of Employment and Change in Control Arrangements.”

          Pension Transition Supplement Restoration Plan—Historical. Effective April 1, 2007, Belo adopted the Pension Transition Supplement Restoration Plan, or the Restoration Plan, as a non-qualified plan, to provide the portion of PTS Plan benefit that cannot be provided under the PTS Plan because of Code limitations on the amount of qualified plan benefits. Generally under the Restoration Plan, a change in control will occur on the date that:

	•		any person or group acquired more than 50 percent of the total fair market value or total voting power of Belo stock;
	•		any person or group acquired 30 percent or more of the total voting power of Belo stock;
	•		a majority of the members of Belo’s Board are replaced during any 12-month period by persons not appointed or endorsed by a majority of Belo’s Board prior to the date of such appointment or election; or
	•		any person or group acquired Belo assets having a total gross fair market value of 40 percent or more of the total gross fair market value of all Belo assets. Since there were zero account balances in the Restoration Plan as of December 31, 2007, no benefits are listed in the “Non-Qualified Deferred Compensation for 2007” table.

          Upon the occurrence of a change in control, the Belo Compensation Committee has the right, but not the obligation, to terminate the Restoration Plan and distribute the entire balance of participants’ accounts to the participants.

          Other—Historical. Upon a change in control, the trust that held assets to fund SERP benefits would have become irrevocable and, subject to the prior claims of Belo’s creditors, the assets of the trust would not have been recoverable by Belo until all SERP benefits had been paid. As discussed in “Non-Qualified Deferred Compensation,” the SERP was suspended effective January 1, 2008 and account balances were distributed to the participants. Because all Pension Plan participants are fully vested in their benefits under that plan, a change in control would have no effect upon participants’ benefits. In addition, the ECP provides for accelerated vesting of equity awards for terminating employees who meet the criteria for early retirement (age 55 or more with three years of service). Except in connection with the recently adopted change in control severance plan, Belo’s named executive officers do not receive tax “gross up” payments to compensate them for taxes incurred as a result of payments or benefits received in connection with a change in control or termination of employment. The distribution of A. H. Belo was not a change in control under the Belo plans.

          In addition to the change in control provisions in these plans, Belo has general severance guidelines that may or may not be followed in any particular instance when an executive officer leaves Belo. These guidelines do not entitle executive officers to any specific severance benefit or amount of benefit in the event of termination of employment. For additional discussion, see “Termination of Employment and Change in Control Arrangements” and the “Potential Payments on Termination or Change in Control at December 31, 2007” table, below.

          Employee Benefit Plans—Going Forward. The change in control provisions in the A. H. Belo ICP and the
A. H. Belo Pension Transition Supplement Restoration Plan contain terms and conditions similar to those contained in the Belo plans described above.

Compensation Committee Interlocks and Insider Participation

          Doug G. Carlston (Chair), Louis E. Caldera, Laurence E. Hirsch and J. McDonald Williams have served as members of the A. H. Belo Compensation Committee since December 2007. No member of the A. H. Belo Compensation Committee during 2007 was a current or former officer or employee of A. H. Belo or had any relationship with A. H. Belo requiring disclosure under “Item 13. Certain Relationships and Related Transactions, and Director Independence.” None of Belo’s executive officers served as a director or as a member of the Compensation Committee (or other committee serving an equivalent function) of any other entity that had an executive officer serving as a director or as a member of A. H. Belo’s Compensation Committee during 2007.

Compensation Committee Report

          In accordance with its written charter adopted by our Board, the Compensation Committee has oversight of the Company’s overall compensation structure, policies and programs. In exercising its oversight responsibility, the Committee has retained a compensation consultant to advise the Committee regarding market and general compensation trends.

          The Committee, after consultation with its compensation consultant, has reviewed and discussed the Compensation Discussion and Analysis with management, which has the responsibility for preparing the Compensation Discussion and Analysis. Based upon this review and discussion, the Committee recommended to our Board that the Compensation Discussion and Analysis be included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission for the fiscal year ended December 31, 2007.

COMPENSATION COMMITTEE
Douglas G. Carlston, Chair
Louis E. Caldera
Laurence E. Hirsch
J. McDonald Williams

2007 Belo Executive Compensation

          The following information summarizes annual and long-term compensation awarded to, earned by, or paid to A. H. Belo’s principal executive officer, principal financial officer, and its three other most highly-paid executive officers (the “named executive officers”) for services in all capacities to Belo and its subsidiaries for the fiscal years ended December 31, 2007 and 2006, respectively. All references in the following tables to stock, stock options, and restricted stock units relate to awards of stock, stock options, and restricted stock units granted by Belo. These amounts do not necessarily reflect the compensation those persons will receive following the spin-off of A. H. Belo, which could be higher or lower, because historical compensation was determined by Belo and future compensation levels will be determined based on the compensation policies, programs, and procedures established by A. H. Belo’s compensation committee.

Summary Compensation Table
																										Change in
																										Pension
																										Value and
																										Non-qualified
																						Non-Equity				Deferred				All Other
Name and														Stock				Option				Incentive Plan				Compensation				Compen-
Principal										Bonus				Awards				Awards				Compensation				Earnings				sation				Total
Position		Year				Salary				($)(1)				($)(2)				($)(2)				($)(3)				($)(4)				($)(5)				($)
(a)		(b)				(c)				(d)				(e)				(f)				(g)				(h)				(i)				(j)
Robert W. Decherd			2007			$	985,000			$	2,113,500			$	4,967,189			$	503,115			$	886,500			$	174,230			$	574,892			$	10,204,426
Chairman of the Board,			2006			$	925,000			$	11,300			$	1,499,519			$	1,873,307			$	1,088,700			$	52,722			$	288,945			$	5,739,493
President and Chief Executive Officer
James M. Moroney III			2007			$	528,000			$	130,000			$	396,624			$	186,302			$	270,000			$	47,574			$	82,497			$	1,640,997
Executive Vice President,			2006			$	510,000			$	5,900			$	86,971			$	394,824			$	144,100			$	26,378			$	77,832			$	1,246,005
Publisher and CEO, The Dallas Morning News
Donald F. (Skip) Cass, Jr.			2007			$	450,000			$	78,800			$	396,211			$	92,543			$	225,000			$	20,730			$	39,321			$	1,302,605
Executive Vice President			2006			$	420,000			$	71,200			$	109,866			$	190,415			$	253,300			$	9,160			$	34,656			$	1,088,597
and Secretary
Alison K. Engel			2007			$	183,700			$	41,300			$	69,722			$	6,640			$	55,200				—			$	14,625			$	371,187
Senior Vice President/			2006			$	175,000			$	21,100			$	15,121			$	8,475			$	68,700				—			$	13,049			$	301,445
Chief Financial Officer and Treasurer
Daniel J. Blizzard			2007			$	207,500			$	21,800			$	49,807			$	23,688			$	62,300				—			$	14,625			$	379,720
Senior Vice President			2006			$	201,500				—			$	14,448			$	47,001			$	79,100				—			$	8,937			$	350,986

		Belo Savings
		Plan								SERP
		Contribution($) (a)								Contribution($) (b)
Name		2007				2006				2007				2006
Robert W. Decherd		$	11,925			$	7,260			$	541,754			$	271,055
James M. Moroney III		$	11,925			$	7,260			$	70,572			$	70,572
Donald F. (Skip) Cass, Jr.		$	11,925			$	7,260			$	27,396			$	27,396
Alison K. Engel		$	14,625			$	13,049			$	—				—
Daniel J. Blizzard		$	14,625			$	8,937			$	—				—

The 2007 SERP contribution for Robert Decherd indicated above includes $360,932 as a make-up contribution attributable to his previous participation in Belo’s Management Security Plan (“MSP”), which was terminated December 31, 1999. Of this make-up amount, $270,699 is an acceleration of benefits scheduled to be made in 2009, 2010 and 2011. In light of Belo’s decision to suspend the SERP effective January 1, 2008, these future contributions were made in January 2008 just prior to the SERP account distribution. For more information, see “Non-Qualified Deferred Compensation for 2007” on page 51. Because Ali Engel and Dan Blizzard do not participate in the Pension Plan, each is eligible for a larger company contribution to their Belo Savings Plan account. Neither Ms. Engel nor Mr. Blizzard was a participant in the SERP during 2006 or 2007.

Additionally, amounts in the All Other Compensation column (i) for 2007 include $8,760 and $7,420 for life insurance purchased for Robert Decherd in 2007 and 2006, respectively, and $12,453 and $3,210 for tax gross-ups in 2007 and 2006, respectively. Of these amounts, $3,520 is related to the life insurance mentioned previously and $8,933 relates to Belo’s MSP make-up contribution to the SERP in 2007. The 2006 gross-ups for life insurance and MSP make-up contributions were $2,982 and $2,233, respectively.

The total value of executive perquisites and personal benefits did not exceed $10,000 for any named executive officer.

The following table summarizes cash-based and equity awards that were granted under the Belo ECP during 2007.

Grants of Plan-Based Awards in 2007
																					Time-
																					Based
																					RSUs
																					All Other
																					Stock					Grant
								Estimated Future Payouts													Awards:					Date Fair
								Under Non-Equity Incentive													Number of					Value of
								Plan Awards(1)													Shares of					Stock
			Grant					Threshold				Target				Maximum					Stock or					Awards
Name			Date					($)				($)				($)					Units(2)					($)(3)
(a)			(b)					(c)				(d)				(e)					(i)					(l)
Robert W. Decherd				2/28/2007					—				—				—					50,920				$	948,640
				12/7/2007				$	72,000			$	720,000			$	1,440,000					157,640				$	2,619,977
James M. Moroney III				2/28/2007					—				—				—					23,440				$	436,687
				12/7/2007				$	38,500			$	385,000			$	770,000					57,160				$	949,999
Donald F. (Skip) Cass, Jr.				12/7/2007				$	27,900			$	279,000			$	558,000					45,130				$	750,061
Alison K. Engel				12/7/2007				$	12,500			$	125,000			$	250,000					18,050				$	299,991
Daniel J. Blizzard				12/7/2007				$	9,600			$	96,000			$	192,000					12,030				$	199,939

          For 2007, the proportion of equity-based compensation in relation to total compensation, excluding changes in pension value and above-market interest from non-qualified deferred compensation plans, for each of the named executive officers was as follows: Robert Decherd-55 percent; Jim Moroney-37 percent; Skip Cass-38 percent; Ali Engel-21 percent; and Dan Blizzard-19 percent.

Equity Holdings and Value Realization

          The following table contains information on all Belo Corp. equity awards that were outstanding as of December 31, 2007.

Outstanding Equity Awards at Fiscal Year-End 2007
			Option Awards																	Stock Awards
																								Market
																								Value of
			Number of				Number of													Number of				Shares or
			Securities				Securities													Shares or				Units of
			Underlying				Underlying													Units of				Stock
			Unexercised				Unexercised				Option									Stock That				That
			Options(#)				Options(#)				Exercise				Option					Have Not				Have Not
			Exercisable				Unexercisable				Price				Expiration					Vested				Vested
Name			(1)				(1)				($)				Date					#(2)				($)(3)
(a)			(b)				(c)				(e)				(f)					(g)				(h)
Robert W. Decherd				62,928				94,392			$	18.0900				12/13/2016					32,692			$	570,148
				78,400				33,600			$	21.6200				12/09/2015					59,500			$	1,037,680
				200,000							$	25.2000				12/03/2014					52,440			$	914,554
				200,000							$	27.9400				12/05/2013					50,920			$	888,045
				200,000							$	21.5900				12/06/2012					157,640			$	2,749,242
				410,000							$	17.8800				11/30/2011
				332,136							$	17.3125				12/01/2010
				340,000							$	19.1250				12/16/2009
				200,000							$	17.7500				12/16/2008
James M. Moroney III				19,250				8,250			$	21.6200				12/09/2015					871			$	15,190
				85,000							$	25.2000				12/03/2014					13,900			$	242,416
				75,000							$	27.9400				12/05/2013					18,988			$	331,151
				76,000							$	21.5900				12/06/2012					23,440			$	408,794
				104,000							$	17.8800				11/30/2011					57,160			$	996,870
				100,000							$	17.3125				12/01/2010
				90,500							$	19.1250				12/16/2009
				50,000							$	17.7500				12/16/2008
Donald F. (Skip) Cass, Jr.				14,350				6,150			$	21.6200				12/09/2015					8,000			$	139,520
				34,000							$	25.2000				12/03/2014					5,166			$	90,095
				34,000							$	27.9400				12/05/2013					19,070			$	332,581
				34,000							$	21.5900				12/06/2012					1,570			$	27,381
				43,000							$	17.8800				11/30/2011					19,070			$	332,581
				24,000							$	19.1250				12/16/2009					45,130			$	787,067
Alison K. Engel				2,450				1,050			$	21.6200				12/09/2015					2,000			$	34,880
																					3,180			$	55,459
																					3,180			$	55,459
																					460			$	8,022
																					18,050			$	314,792
Daniel J. Blizzard				3,500				1,500			$	21.6200				12/09/2015					2,000			$	34,880
				9,000							$	25.2000				12/03/2014					2,380			$	41,507
				8,000							$	27.9400				12/05/2013					2,380			$	41,507
				8,600							$	21.5900				12/06/2012					12,030			$	209,803