News Corp’s decision to finally split the company in two is said to be due to Ruport Murdoch bowing to pressure and shareholder demands. Ruport and his family own 40% of NewsCorp and his company has been tainted with several scandals including the much derided “News of the World” tabloid in Britain that led to over 50 people being arrested for violations of British law. And even though Ruport and his son were in charge of the “News of the World” … neither he nor his sons have been put in jail for their part in this.
#1 – This is all about money in one way or another. Both for shareholders and Mr. Murdoch.
#2 – “Fox News” move to the entertainment division is a mere formality and is no surprise to the vast majority of Americans
The Atlantic explains the division HERE:
The Wall Street Journal, a News Corp. property joining the publishing side, reports the split will be formally announced on Thursday morning. The Journal, The Times of London, and HarperCollins will all fall under the publishing side, while 20th Century Fox, Fox News Channel, and the Fox broadcasting network will all fall under entertainment.
Politico points out that the entertainment division makes most of the profits HERE:
While the move would signal a major sea change for the Murdoch family and his business, it would mostly be a financial maneuver meant to win over shareholders who are no longer interested in the struggling business of publishing. Murdoch would maintain control of both companies and would likely continue to invest heavily in his beloved newspaper industry, while outside investors could concentrate on the more profitable entertainment arm. In the last nine months, News Corp had an operating profit of $4.2 billion, but only about $450 million of that came from the publishing division.
Reuters adds HERE:
Wednesday’s board meeting lasted about an hour and a half and many details, such as who will run the publishing business, have yet to be resolved, the Wall Street Journal said.
A spokesman for News Corp’s Australian arm was not immediately available to comment on whether the split had been approved.
The board, long criticized for being dominated by the Murdochs or beholden to them, had been expected to approve the split. It was not immediately clear if it will be put to a shareholder vote. Even if it is, Murdoch controls just under 40 percent of the vote and would likely have no problem getting the extra 10 percent needed.
Given that, Wall Street and others saw Wednesday’s meeting as little more than a formality.
The NY Times says this could help Murdoch buy more media companies HERE:
For News Corporation, forming a separate entertainment company could help with future acquisitions that require government approval. Last week, News Corporation said it agreed to pay roughly $2.2 billion to acquire Australia’s Consolidated Media Holdings, an investment company in the pay TV business.
Talk of a divided company comes as the British regulatory agency Ofcom investigates whether News Corporation is “fit and proper” to control 39 percent of the satellite broadcaster British Sky Broadcasting. The investigation is a result of the hacking scandal that has in the last year touched on an array of figures, including Prime Minister David Cameron of Britain (who has been accused of being too close to the Murdochs) and James Murdoch, who led the company’s British newspaper operations.
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