Shares rise as Murdoch prepares to split News Corp
RUPERT Murdoch's News Corp said it was considering splitting into two companies covering publishing and entertainment.
The news sent News Corp shares up by nearly 7pc on the Nasdaq.
Shareholders have been pushing for some time for a spin-off of the slower-growth publishing division after the phone hacking scandal hit the company's British newspapers. The scandal sent shockwaves through the group and forced News Corp to drop its biggest-ever acquisition of the pay-TV group BSkyB.
According to one source, a move to split the lucrative entertainment business from the publishing business is being championed by News Corp chief operating officer Chase Carey, who sees it as way to boost shareholder value.
The matter has been under discussion for a "considerable period of time" and no final decision has been made, a second source said. No plan has yet been proposed to the board, the source said.
News Corp is controlled by Rupert Murdoch and his family.
The 'Wall Street Journal', which is owned by News Corp, reported yesterday that the Murdoch family was not expected to lose its effective control of any of the businesses involved if a split goes through.
Mr Carey said in May that management and the board had discussed spinning-off the publishing business following investor pressure but didn't have any plans to push ahead at that time.
Mr Murdoch had earlier opposed such a move and as recently as May said the group was not considering spinning-off its British newspapers to protect the rest of the empire.
But the 'Journal', quoting one person familiar with the situation, reported that he has recently warmed to the idea.
The publishing division includes the HarperCollins book publisher, the education arm and newspapers including 'The Wall Street Journal', 'The Times' of London, 'The Sun', the 'New York Post' and 'The Australian'.
The film and television businesses include 20th Century Fox film studio, Fox broadcasting network and Fox News channel. The entertainment business would dwarf the publishing unit, with assets in the entertainment division generating revenues of $23.5bn (€18.8bn) in the year to June 2011, compared with $8.8bn (€7bn) for the publishing business.
Analysts believe investors and some management will feel emboldened by the hacking scandal to push for a change at the company, where the 81-year-old Murdoch has long been seen as the main roadblock to a spin-off of the newspapers. (Reuters)