Breaking up is Hard to do - Belo edition

More on the earnings front, as A. H. Belo and Belo Corp recently announced their separate earnings. Both were poor at best. As most likely know, these companies were recently one, but decided separate into a company focused on newspapers and a company focused on television.

The cost for this split was over $4M, according to the Belo statement, and $20M dollars of tax needed to be paid thanks an accounting gain. That's some pretty significant cash to do what might have been possible through a tracking stock issue and management organization. The stock for both has declined considerably since the split, which is no surprise given the general industry malaise. One of the stated reasons was the large difference in the operations of the two divisions.

So what did they get for their money?

A newspaper company without any debt, which might be quite a boon in uncertain times. However, it loses the reach and sales staffs of the TV stations. In internet transitions, that might be a big mistake.

If you believe, as I do, that news and information will migrate further onto the Internet, there's much less difference between TV and newspaper. TV can translate scripts into stories, and newspaper sites have been shooting video. Add in the myriad consumer generated experiments and there's even less difference. Both serve the community in which they reside, and both seek to sell advertisements to local businesses. If anything the culture at a TV station is far more internet-like (read: FAST) than a newspaper. A TV station can scale up to broader internet scale, while it seems clear that newspapers will need to scale back over time to survive in the future.

I do think that the debt-free AHC will have far more runway than peer newspaper companies. It is my hope that they can use this to really get new business models going forward. However, I still feel that they missed an opportunity that was right in front of them by not utilizing the TV assets as a platform for internet growth.