Murdoch’s Brooklyn newspapers will split from News Corp. entertainment empire
By Bree Fowler
AP Business Writer
Calling it the next logical step in a near six-decade evolution, Rupert Murdoch’s News Corp. said today that it plans to split into two separate publicly traded companies.
News Corp.’s publishing assets include several commuity newspapers in Brooklyn — including The Brooklyn Paper and Courier-Life publications — and the New York Post in Manhattan.
Under the proposal, one company will operate as a newspaper and book publisher, while the other will be an entertainment company that includes the 20th Century Fox movie studio, the Fox broadcast TV network and the Fox News channel. It may take a year to work out the details.
In a statement to employees distributed on Thursday among staff at the Metrotech offices of the Community Newspaper Group, Murdoch praised the efforts of News Corp.’s publishing entities, saying that they “are greatly undervalued by the skeptics.”
“Over the years, I have become accustomed to the noise of critics and naysayers,” Murdoch said. “These experiences have made me more resilient. And they should you, as well.”
The Murdoch family, which controls nearly 40 percent of the voting shares in News Corp., is expected to maintain control of both companies.
Rupert Murdoch said in a conference call with investors that a split would result in two strong companies that are better managed and poised for growth.
“We’ve come a long way in our journey that began nearly 60 years ago with a single newspaper operating out of Adelaide,” Murdoch said, referring to the single Australian newspaper he inherited from his father that became the foundation for News Corp.
“Each of these new companies would have the potential to continue that journey and prosper as an independent entity long into the future.”
The split of News Corp. is a symbolic turning point for its 81-year-old media mogul. Through the years, Murdoch maintained a fondness for newspapers even as he purchased entertainment companies. In hearings last summer before U.K. lawmakers, he conceded that he regularly called newspaper editors under his employ with the greeting: “What’s doing?”
Investors have already given their blessing to the split, having pushed shares of the company’s Class B stock up 10 percent since the news of the plan broke early Tuesday. The shares edged down 8 cents to $22.33 in morning trading Thursday.
News Corp. said it plans to hold a meeting of its shareholders sometime in 2013 and expects the deal to be completed in about a year.
Analysts relished the prospect that the faster growing pay-TV segment would be valued more highly by new investors who weren’t willing to buy shares in a company being dragged down by a newspaper industry in decline.
The publishing company, which will include The Wall Street Journal, is expected to be the much smaller of the two, with some analysts valuing it at about $5 billion, compared with the current market value for News Corp. as a whole of about $54 billion.
Murdoch emphasized on the call that the split doesn’t mean that he’s giving up on his publishing business, noting its “very strong” balance sheet and “robust” net cash position.
“The opportunity is so big, a single-minded pursuit is the best approach,” Murdoch said. “Our aim is nothing less than this: to create the most ambitious, well-capitalized and highly motivated news and publishing company in the world.”
Business writer Ryan Nakashima in Los Angeles contributed to this report.
UPDATED Thursday 3 pm to include Murdoch statement distributed among Brooklyn staff.
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