off its newspaper and publishing business. The company aims to complete the transaction in the first half of 2013. Rupert Murdoch will remain Chairman of both companies and CEO of the media and entertainment business. Each company will continue to have two classes of stock, allowing Mr. Murdoch to retain voting control of each. No management team has yet been announced for the newspaper business.
The newspaper and publishing business, which consists of Dow Jones, British and Australian newspapers, HarperCollins, and other publishing assets, is expected to be valued at less than the $5 Billion News Corp paid for Dow Jones alone. Murdoch has said the new company will be well-capitalized and have no debt. To some extent, the split represents a generational rift between Murdoch, who continues to prize the newspaper assets, and younger executives including son James Murdoch, who believe that newspapers are in inevitable decline and the company’s focus should be on its highly profitable and fast growing media businesses.
Though the company denies it was a factor, we cannot ignore the political impact, embarrassment and time sink of the recent newspaper hacking scandal. It makes a great deal of sense that the company would want to distance its most valuable assets from this albatross.
Dow Jones and the Wall Street Journal remain strong and untarnished brands, and the newspaper and publishing company may prove a classic example of value to be found when an unloved business in an unloved industry spun off.
Disclosure: The author holds no position in any stock mentioned
- News. Corp To Split Newspapers, Entertainment Businesses(forbes.com)
- Silicon Alley Insider: Boy, Did Rupert Murdoch Take A Bath On The Wall Street Journal…(businessinsider.com)