News Corp (NASDAQ:NWSA)(NASDAQ:NWS) is reported to be considering splitting into two companies, separating its publishing and entertainment businesses. The Murdoch family, which has 40 percent of the voting shares, will retain control of both.
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Film and television brands, including 20th Century Fox and the Fox broadcasting network, will be separated out from publishing businesses such as the Wall Street Journal, the Times of London, and the Australian newspaper, as well as the HarperCollins publishing house. The publishing business will be the smaller of the two, representing around 25 percent of current News Corp revenues and 10 percent of profits.
The split will also essentially put the company’s 39 percent stake in British television BSkyB in a separate company from its scandal-hit newspapers in that country. The scandal had already led News Corp to not make a bid for shares it doesn’t already own in the U.K. satellite TV operator. The company is in the middle of government investigations for alleged phone hacking by its reporters, and has already had to shut down its News of the World tabloid.
While a split has been discussed internally for several years, the Wall Street Journal reported, chairman Rupert Murdoch has only now warmed to the idea.
The split will cheer up investors who are only interested in News Corp’s profitable television and film businesses, which made three-quarters of the $25.34 billion in revenue for the first nine months of the fiscal year and accounted for 90 percent of the operating profit. In the nine months through March, News Corp together had an operating profit of $4.2 billion, of which the publishing division contributed only $458 million.
Shares closed down 28 cents at $20.08 on Monday.