News Corp. will decide today whether to split company, spin off newspapers
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The News Corp. board will decide today whether to split the company into two parts, separating newspaper and book publishing from the broadcast, satellite and film divisions. The company will announce the decision tomorrow if it approves split, a person familiar with the situation told John Jannarone and Dana Cimilluca of the News Corp.-owned Wall Street Journal. The move, they write, would be a win-win for all News Corp.'s assets:
If a split occurs, the entertainment company is likely to attract investors who prefer faster-growing businesses and lucrative operations like cable channels.
At the same time, the publishing company is expected to come out of the split with a strong balance sheet, positioning it to make investments, such as acquisitions of newspapers or in the education sector, said people familiar with the situation.
The Murdoch family would continue to control both companies. Rupert Murdoch would remain as CEO at the entertainment company, and there is great speculation as to who would run publishing.
The publishing company could be headed by Journal and Dow Jones honcho Robert Thomson, Amy Chozick writes in The New York Times. Or...
The list of well-regarded executives who could lead the new unit could also include Lex Fenwick, the newly named chief executive of Dow Jones, or Tom Mockridge, chief executive of the British newspaper unit News International, according to another person close to the company.
Peter Kafka, writing in the News Corp.-owned All Things D, writes there was "persistent chatter" Tuesday "that Murdoch’s son Lachlan, who left the family business back in 2005, wants back in."
That chatter reached the ears of Michael Wolff, who speculates that the publishing company would be based in Rupert Murdoch's native Australia: "Lachlan would not even have to relocate because the Australian operation will become the centerpiece of this new company."
But why the split? Phone-hacking is only a distraction to investors, according to several news accounts. Writing in the Guardian, Roy Greenslade says American investors view News International, News Corp.'s British division and the spiritual home of the phone-hacking scandal, as a "backwater." The scandal's seriously endangered News Corp.'s plans to buy all of BSkyB, a satellite television company. Greenslade continues:
But the investors' long-held major concern has not been about journalistic ethics. It has always been about Murdoch's willingness to invest in properties they do regard as sufficiently profitable. ...
News Corp's investors could not see why they should suffer in order to allow Murdoch – who is both the company's chairman and chief executive – to go on playing with largely unprofitable toys in a foreign land.
Greenslade's less sanguine about the fate of the newspapers. Journalists at the British papers are demoralized, he writes. Wolff says the dead-tree businesses will "lose the upside of being part of News Corp." and "maintain what is arguably the downside: Rupert Murdoch." In The Huffington Post, Jack Mirkinson writes "The breakup of his company signals a painful rejection of the newspapers [Rupert Murdoch] has prized above anything else in his empire." (If you're really interested in how Rupert's brain works, Jack Shafer has distilled several lessons from the media titan's gray matter. If you're really interested in how the company works, Frontline has an excellent interactive graphic.)
The company met with editors and publishers yesterday in New York to discuss the new structure, Chozick reports. Two people with knowledge of the situation told Bloomberg's Serena Saitto and Edmund Lee that News Corp. has hired Goldman Sachs to help with the proposed split.