| NEW YORK
NEW YORK 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.
Many large media companies regarded publishing and broadcasting as complementary, and sought to use the entertainment and news properties to feed each another.
But not every company has gained from the combination. The New York Times Co (NYT.N) sold its broadcast group in January.
"Other newspapers, I'm sure, read the details, and perhaps the CEOs are sitting in their armchairs saying, 'What will I do now?'" Benchmark Co. analyst Ed Atorino said.
Gannett Co Inc (GCI.N) is the largest U.S. newspaper publisher, and also has a broadcast operation, as do Richmond Times-Dispatch publisher Media General Inc (MEG.N) and Rocky Mountain News publisher EW Scripps Co (SSP.N).
Belo shares were up $2.78, or 16 percent, to $20.14 in Monday afternoon trade after rising as high as $21.83.
Gannett shares were 1.2 percent higher in Monday afternoon trading and Scripps shares were up 1.8 percent. Media General jumped 8.9 percent.
The newspaper company, A.H. Belo, will pay an annual dividend of 20 cents a share, while Belo will pay 30 cents. Separately, Belo said it adopted on Friday a severance plan for executives if the company is sold or otherwise faces a change of control.
Belo was named after Alfred Horatio Belo, who became the majority owner after joining The Daily News in Galveston, Texas, in 1865, according to its Web site.
Much of the company's voting power rests with descendants of the Dealey family after George Bannerman Dealey became its president in 1920. Decherd is a member of the family.
Goldman Sachs was Belo's financial advisor.
(Additional reporting by Michele Gershberg in New York and Dilipp S. Nag in Bangalore, editing by Brian Moss/Tim Dobbyn)