Belo Split to Start a Trend?

I suppose it'll be something like a nursing home for newspapers -- a place to send spent fish wrappers as they continue to dwindle and perhaps move toward the conclusion of their long, useful lives. At least, that may be the trend Belo Corp. (NYSE: BLC  ) is setting.

Last week, the company announced that it plans to spin off its daily newspapers into a separate, publicly traded company to be called A.H. Belo Corp. The new company will operate Belo's four dailies, along with direct mail and commercial printing businesses. Belo Corp. will keep its 20 owned and managed TV stations and a handful of cable news channels, with many of its stations located in fast-growing markets.

Last quarter, total revenues at the company decreased 3.2%. Although the television side recorded a 2.5% increase, the newspaper business offset the increase with an 8.5% drop in revenue. At least one side (arguably, both sides, actually) of the company was struggling with the previous arrangement under one roof. This spinoff will allow both companies to focus on their business needs separately, especially since both industries are changing dramatically. By keeping the $1.2 billion of debt with Belo Corp., the fresh newspaper company will have financial flexibility to compete in the challenging environment. One way A.H. Belo plans to invigorate revenues is through its newspaper partnership with Yahoo! (Nasdaq: YHOO  ) .

While newspapers have been consolidating in recent years, Belo's approach to separate its business units is noteworthy. In fact, I'm betting that Belo's approach could be mimicked by the likes of Gannett (NYSE: GCI  ) , Media General (NYSE: MEG  ) , EW Scripps (NYSE: SSP  ) , and even Tribune (NYSE: TRB  ) , since all of these companies publish papers and operate broadcast units.

The broadcasters have themselves historically experienced bouncy revenue patterns, based largely on the biannual presence of national elections and the Olympics. But the group's prospects do appear to be brightening. For instance, after six decades of coexistence with the cable operators, during just the past year they've been able to negotiate -- or force -- contracts with the cable MSOs that yield retransmission fees for the multistation broadcasters.  With that in mind, it's even more difficult to understand why any of the publisher-broadcasters would continue to permit their ailing newspapers to further drag down their TV groups.

So watch for other broadcasting and publishing companies to fall in behind Belo. It'll be interesting to watch, but keep in mind that none of those companies is worthy of your Foolish investment shekels just yet.

For related Foolishness:

Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 538205, ~/Articles/ArticleHandler.aspx, 10/22/2016 8:20:54 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 11 hours ago Sponsored by:
DOW 18,145.71 -16.64 -0.09%
S&P 500 2,141.16 -0.18 -0.01%
NASD 5,257.40 15.57 0.30%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

12/31/1969 7:00 PM
BLC.DL $0.00 Down +0.00 +0.00%
Belo CAPS Rating: ****
GCI $10.43 Up +0.07 +0.68%
Gannett CAPS Rating: *****
MEG $17.40 Down -0.05 -0.29%
Media General CAPS Rating: *
SSP $13.96 Down -0.03 -0.21%
The E.W. Scripps C… CAPS Rating: *
YHOO $42.17 Down -0.21 -0.50%
Yahoo CAPS Rating: **