News Corp to be split in two, Rupert Murdoch confirms
In this handout composite photograph provided by News International, Rupert Murdoch, Chairman and CEO of News Corporation, reviews the first edition of ‘The Sun On Sunday’ as it comes off the presses on February 25, 2012 in Broxbourne, England (R) and Rupert Murdoch reviews the first edition of ‘The Sun’ as it comes off the presses in 1969, United Kingdom (L).
News Corp. has confirmed that it plans to divide its publishing and entertainment assets into two separate companies.
The board gave its approval yesterday for management to pursue the move, according to the firm's statement.
More from Globalpost: News Corp. to be split up?
The announcement confirms recent reports in the Wall Street Journal – a News Corp. publication – that News Corp. planned to create a large film and television business comprising the 20th Century Fox film studio, Fox broadcast network and Fox News channel, and a much smaller publishing business made up of its British, US and Australian newspapers, Dow Jones Newswires, the HarperCollins book publisher and education assets.
The new structure is designed to "simplify operations and greater align strategic priorities," News Corp. founder, chairman and chief executive Rupert Murdoch said today.
He intends to act as chairman of both new companies.
More from GlobalPost: Rupert Murdoch goes on the offensive
Murdoch wouldn't be chief executive of the publishing firm, however, which the BBC put down to "pressure from shareholders and UK politicians" following the phone-hacking scandal at News Corp.'s British newspaper division, and subsequent ethics inquiry.
Investors have also hailed the financial advantages of a spin-off. Newspapers, the original heart of Murdoch's business, now represent just a fraction of its total profits, the majority of which are generated by its film and TV assets.
Those lucrative entertainment assets will be able to achieve a "more realistic valuation," analysts told the Australian Associated Press. The agency reported that News Corp. shares have already gained around 7.6 percent since reports of the break-up first appeared.
Murdoch insists that the new publishing company, too, will stand alone and prosper. In an email to staff seen by Reuters, he said News Corp.'s publishing operations were "greatly undervalued by the sceptics," but the spin-off would "unleash their real potential."
More from GlobalPost: The New York Times goes Chinese