Belo Corp.announced this morning that it intends to spin off its newspapers and publishing operations into a separate, publicly traded company.

The spinoff would make Belo Corp. the nation's largest publicly traded pure-play broadcast television firm, with 20 stations, plus cable properties.

The new publicly traded company, A.H. Belo Corp., will own and operate Belo's current newspapers and related Web sites. Those include The Dallas Morning News, The Providence (R.I.) Journal, The Press-Enterprise of Riverside, Calif., and the Denton Record-Chronicle.

Editor's note: Belo Corp. will continue to own and operate 20 television stations and their associated Web sites. Belo is the owner of KING TV and KING5.com, KONG-TV, NorthWest Cable News and NWCN.com, KREM-TV and KREM.com, KSKN-TV , KGW-TV and KGW.com, KTVB-TV and KTVB.com and Zidaho.com in the Pacific Northwest.

Company leaders said the spinoff should increase the value of investors' holdings in both print and broadcast operations, and should allow both companies to adjust more rapidly to changing conditions in their markets.

DMN / David Woo

Robert Decherd, left, and Dunia Shive.

Robert W. Decherd, who is chairman, chief executive officer and president of the current Belo Corp., will hold those positions at A.H. Belo Corp.

At Belo Corp., Mr. Decherd will be non-executive chairman. Dunia Shive, Belo's president and chief operating officer, will become Belo's president and chief executive officer.

Mr. Decherd said Belo's board approved the corporate restructuring Friday afternoon after trading ended on the New York Stock Exchange. The split was the result of a review he launched in April.

"It's old news to ... anyone who follows the media industry that the view of these two sectors has changed fairly dramatically in the last three to five years. There are profound changes underway in both the newspaper publishing and the television broadcasting businesses," Mr. Decherd said in an interview Sunday.

"While we think our company has done an exceptional job in navigating through all those changes, we stepped back earlier this year and asked the hard questions: Are we structured in the best way possible to flourish in the future, and if not, what are the choices available to us?" he said. "The outcome is the idea of spinning off the newspaper assets and related assets into the new company."

AP File photo

The Dallas Morning News sign in Dallas, Texas.

The separation into two publicly traded companies will be "giving each of these companies tremendous benefits and agility in terms of being competitive, investing in these companies in ways to allow them to flourish and to continue to draw great talent to both of what I think will be wonderful companies," he said.

The spinoff, expected to be completed in early 2008, is still subject to certain regulatory approvals, but the company said it will not amount to a change of ownership for the purpose of Federal Communications Commission licensing of its television stations.

The split will give Belo Corp. shareholders shares in both the old and the new firms, equal to the value of their investment in the current company. Belo said the ratio of Belo Corp. to AH. Belo shares will be determined by the price of each of the securities on the date of issuance of the shares of the spun-off company. Following the spinoff, shares will be traded separately.

Belo is traded on the New York Stock Exchange under the stock symbol BLC, and closed Friday at $17.36 per share. Executives say they will seek to list the new A.H. Belo Corp. on the NYSE as well, under a symbol that has yet to be determined.

After the split, each of the companies is projected to have annual revenues of about $750 million. The television company would have about 3,200 employees, the newspaper company about 3,800.

The television firm would have higher profit margins, as is typical for the industry. Newspaper print margins have been falling industry-wide due to competition from Internet advertising, but profits on newspaper Web sites have been rising rapidly, albeit from a smaller base.

Belo Corp. will keep its current $1.2 billion in debt; A.H. Belo will be launched with no debt, executives said.

That lack of debt "puts the newspapers in a position to win," Mr. Decherd said.

"The worrywart crowd's view of newspapers" is not only that their operating prospects are uncertain but that some pure newspaper companies have taken on debt in recent years, he said.

"So if you come out with a company comprised of newspapers of this quality and no debt on the balance sheet, I think is going to be a very good story from an investors' standpoint," he said.

Some investors and analysts have asked when Belo would take steps to unlock the value of its assets. Some have argued that the company could improve its overall value to investors by separating the print and broadcast operations, partly because different sorts of investors place different values on print versus broadcast assets.

Citigroup media analyst Eileen Furukawa, in a July 29 report to investors, said that Belo's stock was priced artificially low - so low that investors were attributing little or no value to the newspaper assets.

If investors valued Belo's TV stations similarly to that of other publicly traded television companies, they were getting Belo's "newspapers essentially for free," Ms. Furukawa wrote.

On July 30, Belo reported to the U.S. Securities and Exchange Commission that during the first half of 2007 its newspaper group had earnings before interest, taxes, depreciation and amortization of $72.8 million, on revenues of $407 million. The television group reported revenues of $368 million and earnings of $150.2 million. .

Ms. Shive said that "one of the results we would expect to achieve out of this transaction is that the two different prices [for the separated companies] would trade greater than the stock price would trade today. It should increase the value not necessarily just for the television stations today, but when you look at the two separately."

Mr. Decherd and Ms. Shive said they intend for A.H. Belo to pay an annual dividend of 20 cents a share and for Belo to pay 30 cents, giving investors the same 50 cents that the current Belo Corp. pays.

Mr. Decherd expressed unhappiness that the Federal Communications Commission has not changed its policy restricting cross-ownership of multiple media properties in the same market. That policy has prevented Belo from buying more than one television station or other property in some markets.

"We are fervent believers that deregulation is long overdue in the television industry. ... The cross-ownership rule itself is arcane. It's completely out of date. But the reality is that we can't do anything to change the timing of that regulatory process," he said.

The two companies will continue to put together partnerships and working relationships after the television and newspaper activities are divided, much like The News and WFAA cooperate on news coverage and other activities.

In a news release, Belo said the two companies will have corporate staff and expenses "appropriate for their size and purpose," but said the separate corporate expenses at the two should be less than that of the single company today. The company said that it expects corporate expenses to go down over time, particularly at the newspaper company.

In a letter distributed this morning to employees, Mr. Decherd said that the two companies will spend the next three to four months working on their new structure.

"We will do our best to match as many of our corporate employees as possible with similar or new positions at either A.H. Belo or Belo Corp.," he said in his letter.

In his interview, Mr. Decherd - who chose to stay more deeply involved in the newspaper side after the spinoff - said many reporters and editors in the industry have been overly pessimistic about the prospects for newspapers.

"The reason I'm going to be the CEO of A.H. Belo Corp. is that I believe in newspapers," Mr. Decherd said. "I've spent my entire life in and around the business. I feel a sense of duty to the many constituencies that look to newspapers for leadership as well as news and information."

He also expressed pleasure that Belo Corp. and its television properties are going to be in the hands of Ms. Shive. She first joined Belo in 1993 as corporate controller, then was named vice president and controller. She served as vice president of finance and as senior vice president of corporate operations. In June of 1998, she was named senior vice president and chief financial officer and joined Belo's management committee.

In 2004, Ms. Shive served as Belo's executive vice president of media operations. In 2005 she became Belo's executive vice president. In February of 2006, she was promoted to president of Belo's media operations. She serves as chair of Belo's strategy council.

"She's been in this business a long time. She's demonstrated already her ability to lead our company as chief operating officer. This year our television group is outperforming every peer company in the industry and will continue I think to do so through the end of this year," Mr. Decherd said.

With a deep pool of management at both companies, "we will leave the blocks with a really outstanding board and leadership team in place for each company," he said.

"As to the newspaper business, we need to be more cheerful. This business is important to our democracy... Journalism as we practice it today is changing at a very rapid rate," Mr. Decherd said. "But there will always be a need for great journalism, and there will always been a need for the role that newspapers like The Dallas Morning News, The Providence Journal and The Press-Enterprise have played historically."