On Monday, News Corporation (NASDAQ:NWSA) released some details about the long-awaited separation of its publishing and entertainment businesses. Rupert Murdoch’s media empire will be split into a publishing entity that will retain the name News Corporation, while the media and entertainment company will be named Fox Group.
The short answer is: pressure. Murdoch was attacked by media and regulators over the criminal investigations of his company’s involvement in a phone-hacking scandal in the U.K. that caused the News of the World tabloid to be shut down last year. According to CNN, a report from the British Parliament following the investigation said that Murdoch was not a “fit person to exercise the stewardship of a major international company.”
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Many shareholders also favor the decision, perhaps siding with U.K. authorities about Murdoch’s leadership or seeing a greater competitive advantage in two more focused, streamlined companies. Shares are up over 22 percent since June when the split was first announced, outperforming both the S&P 500 and competitors like CBS Corp. (NYSE:CBS) and Walt Disney Co. (NYSE:DIS).
CHEAT SHEET Analysis: Is There Enough “A-Level Management” to Go Around?
News Corporation’s release is packed with information detailing the wide-sweeping changes in leadership that will take place with the separation. One of the core components of our CHEAT SHEET investing framework asks us to investigate whether A-Level managers are jockeying the horse. No matter how thoroughbred a horse, the jockey is critical to success…