By: E&P Staff Investors and analysts cheered Belo Corp.'s decision Monday to spin off its newspaper business and create a pure-play television company.
Approaching noon EDT, Belo shares (NYSE:BLC) were up 16.7%, or $2.90 to $20.26 after briefly jumping 25% soon after the opening bell. Belo has traded in a 52-week of $15.61 to $22.94.
Analyst hailed the move, which separates Belo's slumping newspaper group, led by The Dallas Morning News, from its healthier TV business. The new publicly traded newspaper business will be known as A.H. Belo, and will be spun out in a tax-free
share distribution.
Goldman Sachs analyst Peter Appert wrote Monday that the action will improve shareholder value.
While broadcast faces many of the same secular forces that are chipping away at the newspaper business model, Appert said he expects "the two entities to command a higher combined valuation than the current diversified enterprise."
Bears Stearns analyst Victor Miller upgraded Belo to outperform from peer perform. He had questioned in recent months why the newspaper business wasn't spun out, saying it was holding down trading multiples of the entire corporation.
The announcement took analysts by surprise. As recently as the company's second-quarter conference call with analysts Belo Chairman and CEO Robert Decherd had damped down speculation about spinning off or selling the newspaper group.
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