By Melodie Warner and Nathalie Tadena
News Corp. (NWS, NWSA) said it will separate its publishing and
media and entertainment businesses into two distinct publicly
traded companies to increase the operations' flexibility.
Shares have jumped 11% since Tuesday when the media company
confirmed it was contemplating splitting in two. The stock was
inactive premarket.
The Wall Street Journal reported late Wednesday that News
Corp.'s board unanimously approved a plan to split the media
conglomerate in two pieces, separating its lucrative entertainment
operations from its publishing business. The entire process is
expected to take about a year, and formal approval from the board
will be needed before the transaction is effected.
In Thursday's release, the company said the publishing company
will be comprised of News Corp.'s U.S., U.K., and Australia
newspapers and information businesses, which include The Wall
Street Journal and the Times of London, book publishing brands like
HarperCollins, its marketing services company, and its
digital-education group, as well as its other assets in
Australia.
The media and entertainment company will encompass News Corp.'s
broadcast and cable networks, film and television production
studios, television stations--like 20th Century Fox, Fox broadcast
network and Fox News Channel--and pay-TV businesses in Europe and
India.
News Corp. owns Dow Jones & Co., the publisher of this
newswire and The Wall Street Journal.
"There is much work to be done, but our board and I believe that
this new corporate structure we are pursuing would accelerate News
Corp.'s businesses to grow to new heights, and enable each company
and its divisions to recognize their full potential--and unlock
even greater long-term shareholder value," said Chairman and Chief
Executive Rupert Murdoch.
Mr. Murdoch will be chairman of both companies and CEO of the
media and entertainment company, while Chase Carey will be
president and chief operating officer, roles he currently holds at
News Corp.
After receiving final board approval, News Corp. expects to
convene a special shareholder meeting in the first half of
2013.
News Corp. shareholders will receive one share in the new
company for each same class share currently held. Both companies
will maintain two classes of stock.
The family of Chairman Rupert Murdoch, which now effectively
controls News Corp. with a roughly 40% voting stake, is expected to
maintain effective control of the two companies.
For years, investors have called on News Corp. to divest the
publishing unit, which they see as a drag on the company's
entertainment units. The calls for divestiture intensified over the
past year as a phone-hacking scandal at News Corp.'s U.K.
publishing unit led the company to abandon its bid for the
remainder of British Sky Broadcasting (BSYBY, BSY.LN).
News Corp.'s entertainment assets make up by far the bulk of the
company, contributing three-quarters of the $25.34 billion in
revenue for the first nine months of the fiscal year, and have
benefited recently from the company's growing cable businesses. By
contrast, the publishing division has been slower to grow due in
part to changing media consumption habits for books and newspapers,
and more recently, because of costs tied to the U.K. scandal.
Write to Melodie Warner at melodie.warner@dowjones.com