News Corp considers splitting in two
Australian stock in Rupert Murdoch’s News Corp jumped 2.41% on Tuesday after a report that the company may be divided in half, separating its publishing assets from its bigger entertainment arm.
Its Australian-listed shares closed 49c higher at Aus$20.79, having risen as high as Aus$21.00 on the Wall Street Journal report.
The Murdoch-owned newspaper said the split would carve off the film and television businesses, including 20th Century Fox movie studio, Fox broadcast network and Fox News channel from its newspapers and book publishing assets.
The company’s publishing assets include the Wall Street Journal, the Times of London and the Australian newspaper, as well as the HarperCollins book publishing house.
Citing people familiar with the situation, the report said a final decision had yet to be made but Murdoch was warming to the idea.
It said such a plan was not expected to change the Murdoch clan’s effective control of any of the businesses, exercised through the family’s roughly 40% voting stake in News Corp.
In the wake of scandal
The possible restructuring follows the phone-hacking scandal in Britain which resulted in the closure of its flagship News of the World tabloid and the resignation of several senior executives.
In March company president Chase Carey, seen as Murdoch’s likely successor, acknowledged that some shareholders had talked to the company about spinning off the newspaper arm, but said it was “not a path we are pursuing”.
“I think part of it is a general fad. Every time you have a (diversified) business, some in the investment community are looking to split it up,” he said in an interview with News Corp-owned newspaper the Australian.
“But our plan is to drive the business forward, and we have great and unique businesses and our focus is improving the profitability of those businesses.”
Murdoch personally has remained a big fan of the newspaper business, having built his global empire from Australia’s Adelaide News in the 1950s.
Taking on tycoons
Last week his Australian arm, News Limited, announced a major restructure to streamline operations, merging its print and digital businesses with significant redundancies, though it did not specify the number.
It also made a $2-billion takeover offer for rival Australian tycoon James Packer’s Consolidated Media Holdings
If successful, News would emerge with 50% of Foxtel, the country’s biggest pay TV operator, and all of Fox Sports. Telecommunications giant Telstra holds the other half of Foxtel.
News Corp last month reported a strong gain in quarterly profits, boosted by Hollywood entertainment and cable television operations in the United States, Asia and Latin America.
The conglomerate said profits in the fiscal third quarter ended March 31 leapt 47% to US$937-million, as revenues rose two percent to US$8.4-billion – AFP