NEW YORK: News Corp’s board yesterday approved the break-up of the conglomerate into two independent companies, separating the high-flying entertainment assets from the struggling newspaper operations.
The decision, which sets a date for the split for June 28, all but assures the implementation of a plan proposed last year by News Corp chief Rupert Murdoch.
It must also be approved next month by shareholders, but the Murdoch family holds a majority of the voting shares.
“Today’s announcement is a significant step in creating two independent companies with the world’s leading portfolios of publishing and media and entertainment assets,” said Murdoch, who will be chairman and chief executive of 21st Century Fox, and executive chairman of the new News Corporation.
“We continue to believe that the separation will unlock the true value of both companies and their distinct assets, enabling investors to benefit from the separate strategic opportunities resulting from more focused management of each division.”
One company will focus on news and publishing, to retain the News Corp name, and another on television and film, to be called 21st Century Fox.
The split spins off the publishing operations, which have been hit by the slump in the newspaper industry, from the more profitable entertainment assets.
The company announced the restructuring last June, a move partly seen as a nod to shareholders angered by the reputational damage and costs inflicted by a phone hacking scandal in Britain, and partly because of troubles within the group’s publishing arm.
The new News Corporation will include newspapers in Britain, Australia and the United States, including The Wall Street Journal and The Times of London. It also includes digital real estate services, book publishing, digital education and sports programming and pay-TV distribution in Australia.
Doug Mitchelson at Deutsche Bank said the new News Corp faces “structural challenges” but added that “investors may be surprised how little of its value the ‘troubled assets’ represent,” and maintained that “management is working diligently to revitalise them.”
The 21st Century Fox unit includes the Fox studios in Hollywood and a global array of cable and broadcasting networks and properties, including Fox broadcasting and cable operations, National Geographic Channels, Fox Pan American Sports, MundoFox, STAR, and 28 local television stations. It has pay-TV services in Europe and Asia, including Sky Deutschland, Sky Italia and stakes in BSkyB and Tata Sky. AFP
