News Corp. confirms it's considering split in 2

Jun 26, 2012

(AP) — Under pressure to limit contagion from the British phone hacking scandal, Rupert Murdoch's News Corp. confirmed Tuesday that it is considering splitting into two publicly traded companies.

The media conglomerate did not specify Tuesday which businesses each company would contain.

The Wall Street Journal, .'s flagship newspaper, reported late Monday that the company is considering the separation of the newspaper and book publishing businesses from the entertainment arm, which includes Fox News Channel, broadcast TV network and 20th Century Fox movie studio.

British investigators have been probing allegations that News Corp.'s U.K. newspaper journalists hacked into phones and bribed public officials in the hunt for scoops. The probe has caused the company to abandon its bid for full control of satellite TV firm British Sky Broadcasting and put its broadcast license under regulatory scrutiny.

Bernstein analyst Todd Juenger said in a research note the split would allow the company to invest more in the growing entertainment field "without the baggage of publishing."

Markets welcomed the news. News Corp. shares rose $1.26, or 6.3 percent, to $21.34 in morning trading, touching a new 52-week high.

A former News Corp. executive familiar with internal company deliberations says such a split has been talked about for years, although discussions gained new momentum in the wake of the phone hacking scandal which erupted last July.

The split would allow Murdoch to keep control of his prized publishing operations through his voting shares while pleasing investors who have viewed the newspapers as a drag on the more profitable TV businesses. The Murdoch family controls about 40 percent of News Corp.'s voting shares.

The former executive, who spoke on condition of anonymity in order to speak candidly about internal deliberations, said no final decision has been made.

News Corp.'s entertainment businesses accounted for about 75 percent of the company's revenue and nearly all of the operating profit in the first nine months of the fiscal year.

Evercore Partners analyst Alan Gould said the publishing assets could be worth about $5 billion. Without them, he estimated revenue growth of the bigger TV and movie entity would nearly double to about 7 percent a year.

Explore further: New iPhones deliver big profits for Apple (Update)

not rated yet
add to favorites email to friend print save as pdf

Related Stories

News Corp. net profit dips on British charges

Nov 02, 2011

Rupert Murdoch's News Corp. posted a slight decline in quarterly net profit on Wednesday, partly due to one-time charges stemming from the phone-hacking scandal in Britain.

A News Corp. without newspapers?

Jul 13, 2011

Rupert Murdoch built his vast fortune selling newspapers, expanding a single daily in his native Australia into a media and entertainment empire that spans the globe.

BSkyB declares itself 'fit and proper'

May 02, 2012

(AP) -- British Sky Broadcasting PLC on Wednesday defended itself as a "fit and proper" company, a day after Rupert Murdoch, the chief executive of the satellite broadcaster's biggest shareholder, was branded ...

Recommended for you

Facebook sues law firms, claims fraud

2 hours ago

Facebook is suing several law firms that represented a man who claimed he owned half of the social network and was entitled to billions of dollars from the company and its CEO Mark Zuckerberg.

IBM 3Q disappoints as it sheds 'empty calories'

2 hours ago

IBM disappointed investors Monday, reporting weak revenue growth again and a big charge to shed its costly chipmaking division as the tech giant tries to steer its business toward cloud computing and social-mobile ...

MasterCard, Zwipe announce fingerprint-sensor card

Oct 18, 2014

On Friday, MasterCard and Oslo, Norway-based Zwipe announced the launch of a contactless payment card featuring an integrated fingerprint sensor. Say goodbye to PINs. This card, they said, is the world's ...

User comments : 0