Murdoch: Split of News Corp. into two companies unrelated to phone-hacking scandal
Rupert Murdoch told Neil Cavuto in an interview on Fox Business on Thursday morning that after years of advice, he finally came around to the idea that his companies would be better managed — and shareholders would benefit — if News Corp. separated its entertainment and publishing businesses, which it announced Thursday morning.
He also said News Corp. no longer has any interest in acquiring the remainder of British Sky Broadcasting, which it put on hold after the phone-hacking scandal exploded. "I think we've moved on in our own thinking from that," he said.
Referring to the billions of dollars that News Corp. was willing to invest, Murdoch said, "If Britain doesn't want them, we'll invest them here. I'm much more bullish about America than I am about England."
Murdoch didn't elaborate on the thinking behind the split, offering only that he had been getting advice from both sides for about three years. After building a single company for 58 years, "I realized the logic of it and how all the companies would be better managed and would be a lot better in every way. ... Net-net-net, the shareholders who are here today will be a lot better off."
When Cavuto asked if the decision was made to insulate the company from damage related to the phone-hacking scandal in the U.K., Murdoch said, "Nothing to do with it at all. At all. This is looking forward for what's best for our company and for our shareholders."
Murdoch conceded that the publishing company "will certainly, in the present thinking of the markets .... carry a lower P/E [price to earnings] ratio," but he believes the entertainment company's will be higher.
News Corp. hasn't said who will run the publishing company. Murdoch said it's "highly unlikely" that his son Lachlan will take it over.
When Cavuto asked if sons James and Lachlan would take on expanded roles, Murdoch responded, "Well, they have to earn it, and they have to want it. ... Lachlan is very happy running his own business in Australia, and he loves living there."
In February, James Murdoch stepped down as head of News International, the U.K. publishing arm that includes the tabloid involved in the phone-hacking scandal. He stepped down as chairman of British Sky Broadcasting in April.
When Cavuto referred to a U.K. parliamentary committee's statement that Murdoch is unfit to run a major company, he interrupted to say, "No regulator said that at all. ... A number of people on a parliamentary committee thew that in; when asked if they had any evidence, they said no."
It will take about a year to split the two companies, Murdoch said. By then, he expects the "vast bulk" of the fallout from the scandal to be over.
When Cavuto asked whether Murdoch is optimistic about media overall, he responded, "In this country? Yes, I think so." Online search advertising has hurt Sunday papers with monopolies in their markets, "but television is holding on very, very well."