Belo (NYSE: BLC) Corp. is splitting its television broadcast and newspaper publishing businesses into two separate companies. The plan is for existing Belo shareholders to receive a tax-free distribution of shares in the newly formed A.H. Belo, which will own the company’s newspapers (led by flagship Dallas Morning News) and their websites. The remaining Belo Corp. will be a pure-play investment in traditional broadcast TV. Belo’s current chairman and CEO Robert W. Decherd will be chairman, CEO and president of the new A.H. Belo and non-executive chairman of Belo Corp. Current president and COO Dunia A. Shive will become CEO of Belo Corp.

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Splitting up is very much the kind of move designed to make Wall St. analysts and large investors happy, although the company provided a number of reasons for doing it, including lower overall operating costs, a healthier balance sheet (at A.H. Belo) and the opportunity for better focus on the hefty challenges facing both industries. A.H. Belo, which will be debt-free after the spin-off, will focus more on online opportunities such as its partnership with Yahoo (NSDQ: YHOO). Also, in the release, Decherd took a swipe at current media ownership limitations, saying that they stood as an impediment to media convergence, suggesting that this may have contributed to the decision. The move is expected to be completed in the first quarter of 2008. Release.

Update: The Street liked what it heard, at least on Day 1. Belo closed at $20.61, up nearly 19 percent. Belo also nwas one of the top gainers Monday in the new ContentNext Media Index.