News Corp. to Separate Entertainment, Publishing Businesses28 Jun, 2012 By: Erik Gruenwedel
News Corp. June 28 announced it is splitting the company’s entertainment and publishing businesses into two separate publicly traded units — both chaired by founder Rupert Murdoch.
The Australian media giant, which owns film studio 20th Century Fox, including 20th Century Fox Home Entertainment, made the announcement at 8:30 a.m. (EST). The separation is expected to be completed in 12 months.
Murdoch remains CEO of the media and entertainment company, with Chase Carey maintaining president and COO duties. It wasn’t immediately clear who would become CEO of the publishing unit. News Corp. said it would assemble management teams and boards of directors for both businesses during the next several months.
The separation had been expected after News Corp.’s board agreed to the split late on June 27, according to its flagship newspaper The Wall Street Journal, which cited sources familiar with the situation.
The split underscored ongoing fallout from the phone-hacking scandal affecting News Corp.'s British tabloids, in addition to changes in the dissemination of news and entertainment in the evolving digital era.
"Each [business] entity will be better managed and more easily managed," Murdoch said in a June 28 morning call with analysts, adding the separation had been under review for the past three years. "Now is the right time to proceed. The benefits of separation lead to greater opportunities."
Murdoch dismissed notions the separation indicated internal concern about the long-term future for the publishing industry.
"That could not be further from the truth," Murdoch said. "We expect the publishing company to operate as a strong standalone company."
When asked why he considers there to be a strong future for publishing, Murdoch said one word, "digital."
"People are buying newspapers printed on crushed wood but equally so on digital," he said. "People will pay for news. We will push them a lot harder."
Speaking to Fox Business Network, Murdoch said it was "highly" unlikely his son, Lachlan, would take over control of the publishing business. He said his son is happy running his own business interests in Australia.
“We don’t know yet," Murdoch said. "We have great division heads, some of them very new. In fact, they are all new in the last six months in those positions. We have great management across the whole company. Maybe we will steal someone from Fox News.”
Meanwhile, Murdoch said the separation was not a fait accompli. He said the separation involves myriad tax clearances, lawyers and related challenges.
"Every corner of the place has to be audited," he joked.
COO Carey said the two new business units would "mirror" today's News Corp, with each company pursuing separate strategies.
"At the end of the day they will be looking for opportunities ... to do things together...admittedly at arms length," Carey said.