News Corp Approves $500 Million Stock Repurchase Program
News Corp. (NASDAQ:NWSA) announced that it will split its publishing and entertainment businesses, both of which will be headed by current chairman and Chief Executive Officer Rupert Murdoch, on June 28.
The publishing division keep the News Corp. name while the entertainment section will be renamed 21st Century Fox. Murdoch will remain chairman of both companies and CEO of 21st Century Fox. He named The Wall Street Journal editor Robert Thomson as CEO of the new News Corp.
It was announced that the branches would split last year after the 2011 scandal involving News Corp. journalists who gained illegal access to private phone messages and attempted to bribe U.K. police. The incident lead to the closing of the News of the World newspaper.
The new News Corp. will keep ownership of its newspaper titles, which include The Wall Street Journal and the Times newspapers in the U.K. The more lucrative entertainment division will include the TV channel Fox News and the 20th Century Fox film studio.
The board of the News Corp. publishing business approved a $500 million stock repurchase program. The stock repurchase is welcome news to investors and analysts curious about how the new News Corp. will use the $2.6 billion in cash it will have when the split is complete. Current News Corp. stakeholders will receive one share in the new News Corp. for every four shares previously owned.
The repurchase will include a “poison pill provision,” also called a shareholder rights plan, to prevent a hostile takeover. The provision will be triggered if someone acquires more than 15 percent of either company. News Corp. has experienced potential takeovers in the past, including a 2004 incident in which Liberty Media Corp.’s (NASDAQ:LMCA) John Malone purchased 20 percent voting stake in the company.
Murdoch seems to be feeling good about the split, saying in a statement, “We continue to believe that the separation will unlock the true value of both companies and their distinct assets, enabling investors to benefit from the separate strategic opportunities resulting from more focused management of each division.”
Shareholders will formally approve the split on June 11.