News Corp.’s board has approved a proposal to split the media conglomerate into two segments, separating its publishing business from its entertainment operations.
The process should take about a year and will require the board to approve a a final detailed plan. The split is expected to be formally announced today.
“One company will house entertainment businesses like 20th Century Fox, Fox broadcast network and Fox News Channel while another houses the publishing assets, which include The Wall Street Journal and the Times of London along with HarperCollins book publishing and News Corp.’s education business,” reports WSJ.
Publishing interests currently generate significantly less profits than News Corp.’s TV and film operations, and continues to face competition from the growing popularity of online news outlets.
“For the entertainment company, its overall profit margin will be higher without publishing,” suggests WSJ. “Its stock market valuation is expected to rise above that of News Corp.’s current valuation, analysts say, as the publishing assets are seen as a drag on the stock.”
“Moreover, without the taint of the phone-hacking scandal at News Corp.’s British newspapers, the entertainment company may have an easier time doing certain acquisitions, say people familiar with the situation.”
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