Belo announces plans to sell three papers, stake in Mavericks

Wednesday, June 28th 2000, 12:00 am
By: News On 6

Stake in Mavericks, Dallas sports center included in sale plans

Belo Corp. will sell three of its smaller newspapers as well as its stake in the Dallas Mavericks and the American Airlines Center, the Dallas-based company said Tuesday.

The company expects "at least" $110 million, after taxes, from the sale of The Eagle in Bryan-College Station, The Messenger-Inquirer in Owensboro, Ky., and The Gleaner in Henderson, Ky., said Robert W. Decherd, Belo's chairman, president and chief executive officer.

Belo has an oral agreement to sell its share of the Mavericks and the American Airlines Center for $34.5 million to Mark Cuban, the team's majority owner. In the Arlington-D/FW area, Belo owns the Arlington Morning News, The Dallas Morning News, WFAA-TV (Channel 8) and Texas Cable News (Channel 38). Belo said the sales are intended to enhance Belo's stock price.

Plans to sell the properties were disclosed at a meeting with analysts in New York. At a similar meeting last month, Mr. Decherd said that Belo was considering selling some assets to buy back company shares and concentrate on Belo's cluster of media properties. Those clusters are in Texas, Arizona, the Northwest, Providence, R.I., and Riverside, Calif.

Currently, the company's holdings include eight daily newspapers, 18 television stations and various cable and interactive properties around the nation. Belo is "doing exactly what they promised," said Merrill Lynch analyst Keith Fawcett. "We believe geographic clustering is the correct strategy."

He said Belo shares are "tremendously undervalued." Belo might later sell or swap television stations outside its clusters for properties that are inside them, he said.

Steven Barlow, a media analyst at CS First Boston, said Belo stock is "fairly valued." The planned sale of The Eagle surprised Mr. Barlow. He noted that Bryan-College Station is the home of Texas A&M University and said that he thought the area's demographics would be especially attractive to Belo. Like Mr. Fawcett, he saw the possibility of Belo television stations outside the clusters being swapped.

Dunia Shive, Belo's senior vice president and chief financial officer, said such station swaps or sales are an option, and "we'll look at that going forward," although "there is the possibility of doing nothing." The company does not want to diminish the total audience of its television group, she said.

The Eagle will be sold because it is a smaller property that is not near Belo's larger holdings in Texas, she said.

"We are very focused on our operating strategy, the best allocation of resources as it relates to the operating strategy and the best allocation of our resources to use them to enhance clusters," she said.

Ms. Shive said there are no "identified buyers" for the three newspapers, although the company has had discussions with interested buyers. "We feel we'll be able to sell those papers before the end of the year."

Belo will sell its 12.38 percent stake in the Mavericks to Mr. Cuban, an Internet billionaire. He became the team's majority owner earlier this year in a transaction that valued the National Basketball Association franchise at $280 million. Belo's purchase price reflects the value established for the team in Mr. Cuban's deal.

The sale to Mr. Cuban includes a 6.19 percent share of the $300 million American Airlines Center, now under construction on the northwest corner of downtown. The arena is the centerpiece of the largest redevelopment project in downtown Dallas and is being paid for in part by city taxes. Belo paid $24 million for its stake in the Mavericks and the arena in July 1999. The sale will bring the company a pre-tax gain of about $10 million, Ms. Shive said.

Belo's investment was controversial.

The company said it was a passive investment and a means to be involved in sports programming. Mr. Decherd said then that the investment would not affect coverage of the team or the arena by The Dallas Morning News or other Belo media companies. One of the most vocal critics of Belo's involvement in the American Airlines Center was city council member Laura Miller, who worried that the city's daily newspaper and Channel 8 wouldn't report objectively on the arena and the massive Victory real-estate development that surrounds it.

"It's wonderful that they've pulled out," Ms. Miller said. "It shows they care about their credibility with the readers."

Belo said it is considering investments in various opportunities in its clusters, including cable news channels and Spanish-language media, although nothing is definite. Belo wants to invest perhaps $300 million to repurchase company shares.

"At current trading prices, Belo stock is far and away the most compelling investment alternative available," Mr. Decherd said. "We are currently developing a recommendation for Belo's board of directors to determine how this $300 million will be allocated to share repurchase."

Belo stock closed Tuesday on the New York Stock Exchange at $16.56, up 13 cents.

You can find more information on the Belo Corporation by visiting their web site.

Staff writer Richard Alm contributed to this report.