Belo Acquires Providence Journal Co. p. 13

By: Editorial Staff IN YET ANOTHER example of how broadcasting is driving newspaper companies, A.H. Belo leaped into the big leagues of television with the $1.5 billion cash and stock purchase of the Providence Journal Co.
By newspaper industry standards at any time, the purchase of the 182,866-circulation Providence Journal ? a paper well-regarded for its editorial content, technological advances and market position ? by the publisher of the Dallas Morning News would be a blockbuster.
In the post-Telecommunications Act era, however, the deal was more than that ? and less about newspapers than TV.
While the Journal newspaper gives Belo its name and best-known media flagship, the TV stations account for about 80% of earnings before taxes, depreciation and earnings.
With its friendly takeover of Providence Journal Co's nine network-affiliated television stations added to its own seven stations, Belo will have 15 stations reaching 12.3% of the nation's viewer ? making it the tenth-largest TV operator in terms of viewership and the eighth when measured by revenues.
(Belo will acquire KING-TV, an NBC affiliate in Seattle, and KREM-TV, a CBS-affiliate in Spokane and so it will shed its current Seattle-Tacoma station, KIRO-TV, which runs UPN network programs, to satisfy Federal Communications Commission overlapping ownership regulations.)
"This combination of broadcast assets creates one of the finest network-affiliated station groups in the country," Belo's chairman and chief executive officer, Robert W. Decherd, said in a statement.
Belo has been in broadcasting since 1984. In addition to its Seattle/Tacoma station, the company operates network-affiliated stations that are first or second in their markets in Dallas-Fort Worth; Houston; New Orleans; Sacramento; Tulsa, Okla.; and Norfolk, Va.
Broadcasting already accounts for 49% of Belo's cash flow, so with its Providence acquisition, Belo is taking the same path another big traditional newspaper publisher, Tribune Co., took earlier this summer with its $1.13 billion purchase of Renaissance Communication Corp.'s 10 television stations.
When that deal is completed, broadcasting for the first time will be the biggest business at the company begun when Joseph Medill founded the Chicago Tribune 149 years ago.
The Providence deal also gives Belo plenty of room to grow further as a broadcaster.
Under new FCC limits, a single owner can cover 35% of all households. Family-owned Belo did structure the deal to permit special treatment of the Journal newspaper, however.
The Journal newspaper will maintain its own board of directors, independent and separate from Belo, said Journal Co. chairman Stephen Hamblett.
"In this consolidating environment, the Providence Journal Co. could not find a better partner with whom to entrust its people and franchise than with Belo," Hamblett said in a statement. "The management of both companies share a commitment to journalistic excellence in television broadcasting and newspaper publishing. Combining the assets of the Providence Journal Co. with those of Belo creates a television broadcasting powerhouse and serves the long-term interest of both companies' shareholders."
Hamblett, who will remain both chairman and publisher of the paper, also told staffers at a newsroom meeting that there would be no layoffs as a result of the acquisition.
Earlier this year, the newspaper cut its staff about 9% to about 1,500 with early retirement offers.
Journal Co. employees and shareholders will get Belo stock under terms of the acquisition.
Each shareholder will get $12.33 in cash and a little more than a half-share of Belo stock for each share of Journal Co. stock they own. The company went public just this July.
Belo, which is controlled by descendants of G.B. Dealey, has been on the purchasing trail for some time. Last year, it bought two papers, the Owensboro, Ky., Messenger-Inquirer and the Bryan-College Station (Texas) Eagle.
And earlier this year, it started
the Arlington Morning News in the
Dallas suburb, a five-day-a-week paper with its own publisher, editor and
staff that is intended to compete directly with the nearby Fort Worth Star-Telegram.
?("This combination of broadcast assets creates one of the finest network-affiliated station groups in the country.") [Caption]
?( ? Robert W. Decherd, A.H. Belo chairman and chief executive officer) [Photo & Caption]