Scripps Split Soothes Wall Street

Updated from 11:02 a.m. EDT

In opting to split the company in two, E.W. Scripps (SSP Quote) reached a compromise between its controlling investors, steeped in a family tradition of newspaper publishing, and public shareholders spooked by what the company's CEO calls "the toughest 24 months in the history of the newspaper industry."

Those public investors sent shares of Scripps climbing $3.37, or 8%, to $45.65 Tuesday after the company announced plans to divide itself between its national brands and its local media franchises.

The split resolves a conflict that had been brewing between Wall Street and the Scripps family, which owns 44% of the company through a trust and controls the votes that elect a majority of the board's directors.

With the stock price stagnating, investors had been calling on Scripps to completely sell the newspaper business, which dates back to 1878 and served as the foundation for the company's empire. But that rich history may have led family members to balk at a sale, and legal restrictions included in the family trust agreement make it difficult for its members to sell some parts of the company.

By splitting up the media conglomerate, the family is able to maintain control, while other shareholders are provided with an opportunity to sell the newspapers and retain ownership in the company's fast-growing cable networks and Web operations.

Scripps CEO Ken Lowe said on a conference call Tuesday that the split was partly a way of being "responsive to shareholders" who would prefer to focus their investments on the company's growth portfolio, while also catering to those who want to stick with the "dependable cash flows" of the newspapers and local broadcast stations.