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29 Jun 2012 13:44
Divided: Rupert Murdoch
Including its scandal-hit British newspapers and film and TV businesses into two separately listed public companies.
The restructuring, confirmed on June 26 following overnight reports in The Wall Street Journal and The New York Times, would be the biggest corporate upheaval at News Corporation since Murdoch founded the global media company more than 30 years ago.
“News Corporation confirmed today that it is considering a restructuring to separate its business into two distinct publicly traded companies,” the company said.
If Murdoch carries off the move, it would mean the creation of a global publishing business that would comprise News International’s British papers – The Times, The Sunday Times and The Sun – as well as The Wall Street Journal, New York Post, The Australian and book publisher HarperCollins.
The entertainment entity would include the Fox movie, TV studio and TV network businesses and cable channels such as Fox News that now represent News Corporation’s strongest and most profitable parts.
According to a source cited by The New York Times, the Murdoch family would be likely to retain control of the newly split companies.
Such a proposal has been aired in the past and Murdoch has always rejected it. However, the negative impact of the News of the World phone-hacking scandal in the United Kingdom has brought the argument about the diminishing importance of newspapers in News Corporation’s global business to the top of the agenda and provided a focus for shareholder discontent with the Murdoch family’s management of the company.
The Wall Street Journal, quoting “a person familiar with the situation”, said Murdoch had “recently warmed to the idea”.
News Corporation’s chief operating officer, Chase Carey, said earlier this year that the company’s management team had considered a split.
Many of the company’s investors have argued that the company should focus on its more lucrative entertainment assets, which generated $23.5-billion in revenue in the year ended in June 2011. The publishing business, by contrast, contributed $8.8-billion.
News Corporation’s shares have risen by 20% over the past 12 months, but some of that ballast has been supplied by an expensive buy-back programme. – © Guardian News & Media 2012
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