News Corp confirms plans to split

28 Jun 2012, 10:32 pm   -   Source: AAP

Rupert Murdoch has issued a statement on the News Corp split and says he will serve as chairman of both boards.

Rupert Murdoch's News Corp has confirmed plans to split into two separate companies, one holding its newspaper business and another its entertainment operations.

Under the proposal, the global media conglomerate will be divided into two publicly traded companies.

One entity will operate as a newspaper and book publishing group.

The other will be an entertainment company that includes the 20th Century Fox movie studio, the Fox broadcast TV network and the Fox News channel.

The publishing side is expected to be much smaller, with some analysts valuing it at about $US5 billion ($A4.98 billion) compared with the current market value for News Corp as a whole of about $US54 billion.

"There is much work to be done, but our board and I believe that this new corporate structure we are pursuing would accelerate News Corporation's businesses to grow to new heights, and enable each company and its divisions to recognise their full potential - and unlock even greater long-term shareholder value," Murdoch said in a statement on Thursday.

Industry analysts say the faster-growing pay-TV segment would be valued more highly by new investors not willing to buy shares in a company burdened by a newspaper industry in decline.

Under the current proposal, News Corp shareholders will receive one share of common stock in the new company for each share of News Corp that they currently hold. Each company would maintain two classes of stock.

Murdoch will serve as chairman of both companies and CEO of the media and entertainment company. The company said it plans to put together management teams and boards for both businesses over the next few months.

The split remains subject to final board and regulatory approvals. News Corp said it expects it to be completed in about a year.

A question remains, however, about which entity would bear the financial risks of the ongoing UK probe into phone hacking and bribery.

Besides legal costs, News Corp also faces potential fines in the US under the Foreign Corrupt Practices Act, which punishes companies that have bribed officials abroad.

British authorities have been probing allegations that News Corp journalists at its now-shuttered News of the World and other papers hacked into phones and bribed public officials to gain exclusive information.

The splitting of News Corp would be a symbolic turning point for its 81-year-old CEO. Murdoch's media empire was built on the foundation of a single Australian newspaper he inherited from his father.

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