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Belo to split into two companies

Belo logoBREAKING NEWS: Belo has announced plans this morning to break the company into two parts, spinning off the newspaper division into its own publicly traded company called “A. H. Belo.” The company called Belo will continue to trade publicly as a television company. LostRemote is posting details as we get them, so check back soon for more updates.

Letter to employees

Dear Fellow Employee:

Today we announced a significant and exciting milestone in our Company’s
165-year history. The Board of Directors has approved a plan to create
separate television and newspaper companies by spinning off Belo’s newspaper businesses into a separate, publicly-traded company. Our press release is
attached.

The spin-off should be completed in the first quarter of 2008. At that
point, there will be two Belo’s:

Ø A. H. Belo Corporation (“A. H. Belo”) will own and operate all of our
newspaper assets including The Dallas Morning News, The Providence Journal
and The Press-Enterprise — and their related Web sites, niche products, and
direct mail and commercial printing businesses. A. H. Belo’s combined
newspaper and related online businesses reach a total audience of more than
3.7 million people in markets with attractive long-term demographics.

Ø Belo Corp. (“Belo”) will be the largest publicly-traded pure-play
television company in the nation by the time the transaction closes. It
will own and operate 20 premier television stations in 15 U.S. markets
(including our ABC, CBS, NBC, FOX, CW and MyNetwork TV affiliates) and their
related Web sites. Belo will also own interests in six cable news channels.

Both companies will be headquartered in Dallas and both stocks will trade on
the New York Stock Exchange. I will be chairman, president and Chief
Executive Officer of A. H. Belo and non-executive chairman of Belo. Dunia
Shive will be president and Chief Executive Officer of Belo. Both companies
will be led by substantially the same management and employee teams, and the
current corporate management and Board of Directors will be divided between
the two companies.

This decision follows an extensive analysis of our businesses, growth
strategies, regulatory obstacles and current market forces. There are
profound yet distinct changes occurring in these industries and each sector
appeals to discrete investor groups. Fortunately, we will have a superior
collection of assets in both A.H. Belo and Belo, and each will have a game
plan to flourish. By creating two strong companies, we will be more focused
and nimble. Each entity will have greater strategic and financial
flexibility to form partnerships and alliances unencumbered by
considerations of the potential impact on the other company’s business.
Both companies will be better positioned to pursue and realize their full
potential.

This decision also acknowledges that arcane regulatory obstacles to media
cross-ownership remain in place. We have been firm believers in media
convergence for a long time, and continue to believe convergence is very
important to the long-term interests of all U.S. newspapers and television
stations. Relaxation of media ownership rules is long overdue. That
notwithstanding, our experience with virtual cross-ownership in numerous
markets suggests that some synergies across print, broadcast and online
media can be effectively achieved through alliances and partnerships.

Dunia and I believe fervently in the future of the newspaper and television
businesses. I will continue to be involved with Belo as non-executive
chairman, but my decision to lead A. H. Belo is based on three convictions:
First, Belo’s newspapers are a family heritage and I feel a sense of duty to
our newspapers’ many constituencies. Second, in today’s environment, it is
important that I personally help steer our newspapers through these tough
times. And third, Dunia will do a superb job as CEO of the television
business, where she has been deeply engaged for many years. Belo Corp. will
do exceedingly well in her capable hands.

While there will be changes at corporate headquarters to accommodate and
serve the needs of two separate publicly-traded companies, the spin-off
should not meaningfully affect our operating company employees, nor will it
impact the important and durable relationships we have built with
advertisers, customers and the local communities we serve.

Over the next three to four months, we will be working on the corporate
structure of each company. We will do our best to match as many of our
corporate employees as possible with similar or new positions at either A.
H. Belo or Belo Corp.

I ask that you help us operate Belo’s businesses as usual and stay focused
on meeting Belo’s commitments to readers, viewers, online audiences,
advertisers and local communities. Dunia and I will do our best to keep you
informed as we move forward toward the spin-off.

Meetings will be scheduled to explain more about the process and answer your
questions. This transaction will be complex to accomplish, but it’s one
that I know will deliver value to all of us. Dunia and I thank you for your
dedication and continued efforts, which have helped create the potential for
two great companies.

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