Belo to spin off newspaper business, shares surge
NEW YORK (Reuters) - Belo Corp (BLC.N) will spin off its newspapers into a new company called A.H. Belo Corp, sending its shares up as much as 25 percent and raising the possibility of similar steps by other publishers.
Belo, which will keep 20 television stations and their Web sites, said on Monday the spin-off was triggered by major changes in the media industry, which have made print and broadcast assets a focus for divergent investor groups.
"Dividing Belo into two companies will give investors a greater insight into two distinct businesses," Chief Executive Robert Decherd said on a call with analysts on Monday.
Decherd will become chairman and CEO of A.H. Belo and nonexecutive chairman of Belo Corp. Dunia Shive, Belo chief operating officer, will become CEO of the new Belo Corp.
Belo aims to show off the value of the broadcasting business without being hurt by advertising declines at its newspapers and a migration of readers to the Web.
The two Belo companies have no plans to sell themselves, or cut editorial jobs because of the split, executives said. Cuts will likely come from the corporate side.
"There is no plan B," Decherd told Reuters in an interview. "We're in the business to stay. I'm not going to be the CEO of a newspaper company for 'the next step.'"
One source familiar with the deal said other publishers with broadcast assets may follow Belo's move. Broadcasters have reaped relatively steady revenue while experimenting with a growing online audience.
"Any one of the companies that are integrated today will absolutely analyze this," the source said, but declined to comment on knowledge of specific activity.
Belo and its board began considering changes to the company as long as 18 months ago, as the slide in newspaper revenue and circulation accelerated, the source said. Its flagship newspaper, The Dallas Morning News, said Decherd began a review in April.
UNWINDING TV FROM PRINT
The newspaper company will be spun off in a tax-free distribution of A.H. Belo shares to Belo Corp. shareholders, with the transaction expected in the first quarter of 2008.
A.H. Belo will include The Dallas Morning News, The Providence Journal and The Press-Enterprise in Riverside County, California, as well as their Web sites, direct mail and commercial printing businesses.
The two companies will stay in Dallas, but will maintain separate offices, Decherd said. They will continue to share news and editorial resources.
The A.H. Belo segment posts annual revenue of about $750 million and employs 3,800 people. The broadcast business has annual revenue of over $750 million and about 3,200 employees. Continued...
