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Annotated article summary from this weekend's Barron's. Receive all our Barron's summaries by signing up here:

How to Fix an Old-Media Stock by Andrew Bary

Summary: TV stocks ascend as audiences grow and advertising and retransmission fees from cable/satellite companies generate profits. Belo (NYSE:BLC) has 19 highly-ranked TV stations in fast growth areas like Texas and Seattle, and four newspapers. Takeover candidates and competitors NexStar (NASDAQ:NXST) and Lin TV (TVL) have both doubled this year, but despite Belo having made half its projected annual revenues of $354 million and 70% of its $91m cash flow in Q1 already, newspaper revenues (-11%), and cash flow (-10%) took Q1 profits down to $0.15 from $0.16 in Q1'06. Analysts project $1.05/share profits for 2007, down from $1.19 in 2006. If Belo's TV and newsprint were to split, bulls see $30 shares: Belo's TV channels at an industry average of 13.4x 2007 cash denotes $20.60 shares, near its current $22. And 8x cash for its newspapers would add another $10. The controlling Decherd family doesn't want to sell, so hiking Belo's $0.50/share dividend (2.2% yield) to 5% from the $1.60/share cash flow generation would please shareholders. Belo's $2.3 billion value, with $1.3b of that debt or 3x cash flow, makes leveraged share buybacks possible too.

Related Links: Local TV to Benefit from Off-Cycle Political SpendingFour Broadcast TV Stocks to Watch -- Barron'sDeclining Print Ad Revenues Take Toll on Newspaper EarningsNewspapers To Partner Broadly With Yahoo

BLC 1-yr. chart:

BLC Investment

Source: Belo: Newspaper & TV Split Would Unlock Value - Barron's