Murdoch Confirms News Corp Will Be Split; Offers No Details
Rupert Murdoch confirmed today (Thursday) that the News Corp board has approved his plan to split the company into two separate businesses -- one devoted to newspapers and other publishing, the other devoted to entertainment. His 150-word statement concluded, "We determined that creating this new structure would simplify operations and greater align strategic priorities, enabling each company to better deliver on our commitments to consumers across the globe. I am 100 percent committed to the future of both the publishing and media and entertainment businesses and, if the board ultimately approves a separation, I would serve as chairman of both companies." Reports also indicated that he would also remain CEO of the new entertainment business. There was no indication regarding who would be assigned that position at the newspaper business, nor was there any mention of what the two businesses would be named. The split recalled Sumner Redstone's controversial break-up of Viacom in 2005 into one company embracing its movie and cable units (Viacom) and another, its billboard and broadcasting units (CBS Corp.). Murdoch's move would seem to quarantine his scandal-plagued newspaper business, which has struggled to remain profitable as it faces the challenge of a digital world. His London newspapers continue to face lawsuits -- some say they could number in the hundreds -- for hacking into the voicemail of celebrities and politicians. But in a message to his staff, Murdoch said, "Our publishing businesses are greatly undervalued by the skeptics. Through this transformation we will unleash their real potential, and be able to better articulate the true value they hold for shareholders." But some analysts see the move inevitably leading to a collapse of Murdoch's news business. Wrote Financial Times columnist John Gapper "Investors put up with the losses at papers such as the New York Post while growing divisions such as Fox News compensated for them. They will be less sanguine when the financial duds are part of a smaller, weaker company with revenues falling in double digits."