News Corp. to Split in Two?

June 26, 2012

In this file photo taken Feb. 1, 2010, News Corp.'s headquarters is shown, in New York. News Corp. releases quarterly financial earnings Wednesday, Aug. 4, 2010, after the market close. (AP Photo/Mark Lennihan)

Murdoch would likely retain control of both arms of the business, and each would be traded separately.

The new structure would be a dramatic shift for the company, and for Murdoch, who started News Corp. by purchasing Australian newspapers in the ’60s. The mogul has long held his beloved newspapers close, even amidst the recent News of the World phone-hacking scandal.

But the possible split likely has less to do with the scandal and more to do with increasing shareholder value, according to a person close to the company who briefed The New York Times’ Dealbook blog:

Restive shareholders have often said they would prefer that the company focus on its more lucrative entertainment assets, which together generated $23.5 billion in revenue in the year ended in June 2011. The publishing business, by contrast, contributed $8.8 billion in revenue.

This echoes what three former News Corp. executives told The New York Times last February: that News Corp. today has become “a sports and entertainment company with a newspaper problem.”

Update [June 28, 2012]: News Corp. today announced it “intends to pursue the separation of its publishing and media and entertainment businesses into two distinct publicly traded companies.” In an internal memo obtained by The New York Times’ DealBook blog, Rupert Murdoch tells employees that “size and breadth has created an opportunity to separate News Corporation into two global leaders in their own right — we will wow the world as two, as opposed to merely one.”

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