Since June, shareholders have been calling for News Corp. (NASDAQ:NWS) (NASDAQ:NWSA) to make its troubled newspaper business a separate publicly-traded company, and Rupert Murdoch is answering their prayers. His company filed with the Securities and Exchange Commission on Friday to spin off its publishing arm, separating it from the company’s entertainment assets.
In the filing, seen by Reuters, News Corp. noted that its publishing business, which includes newspapers like The Wall Street Journal and publishers including HarperCollins, would have lost $2.08 billion in the last fiscal year if it was a standalone company. An impairment charge of $2.6 billion contributed to that loss, as did a 5 percent drop in revenue.
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The closure of the News of the World paper after the U.K. phone-hacking scandal in 2011, higher operating costs, and lower advertising earnings were partly responsible for the year’s falling revenue. In 2012, News Corp. reported earnings before interest, taxes, depreciation, and amortization, or EBITDA, of $782 million, down from $1.21 billion in 2011.
While the division’s financials were not surprising, BTIG analyst Richard Greenfield told Reuters that key information was missing from the filing: the two companies’ plans for debt and cash. “The amount of debt and cash to be assigned to each company is not finished yet, and that’s what investors are focused on,” he said
Robert Thomson, the managing editor of The Wall Street Journal and editor-in-chief of its publisher, Dow Jones, will lead the new company.