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Rupert Murdoch has confirmed reports that his News Corp. media empire will be divided into two separate companies.
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.
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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.
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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."
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