Investors and analysts cheered Belo's decision to spin off its newspaper assets and create a pure-play TV company.

Approaching noon EDT Tuesday, Belo shares (NYSE:BLC) soared 16.7 percent, or $2.90 to $20.26 after briefly jumping 25 percent soon after the opening. It has traded in a 52-week of $15.61 to $22.94.

Analyst hailed Belo's move to separate its slumping newspaper group, led by The Dallas Morning News, from its healthier TV business. The new public newspaper business will be known as A.H. Belo, spun out in a tax-free share distribution.

Goldman Sachs analyst Peter Appert said Monday that the action will increase shareholder value.

He added that he expects "the two entities to command a higher combined valuation than the current diversified enterprise."

Victor Miller, Bears Stearns analyst, upgraded Belo. In recent months he questioned why the newspaper business was not spun out, saying it was holding down trading multiples of the entire corporation, according to Editor & Publisher.