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Belo splits its papers into separate company

It seems unlikely that the Belo Corporation's plan to spin its newspapers into a separate public company will have a dramatic short-time impact at the Belo-owned Providence Journal.

That said, some on Fountain Street are again wondering if the ProJo is being primed for sale. Considering the Journal's historic place as a market leader in Rhode Island, that seems like a remote prospect.  

Here are some of the salient details from Belo's flagship Dallas Morning News:

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 News, The Providence (R.I.) Journal, The Press-Enterprise of Riverside, Calif., and the Denton Record-Chronicle.

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.

. . . .

[Chairman/CEO Robert W.] 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."

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.

While the rational for the spin-off may be on-target, even the most astute executives remain challenged by the transition between different media eras.

Since Belo acquired the Journal Company and its highly lucrative television stations 10 years ago, we've seen how the demands of Wall Street have forced sharp cost-cutting at publicly owned newspaper companies. The ProJo has been spared the most severe cuts seen elsewhere, but its staff and scope have nonetheless been downsized, making for a very quick read at times.

All this makes rather ironic a radio commercial aired by the Journal in recent months; it describes how "people are talking" because of something they've read in the paper.

Yes, the ProJo continues do a lot of important reporting. But the media chieftains at Belo would do well to remember that continued cuts to a newspaper and its staff give people less of a reason to read it. 

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