|Rupert Murdoch addressed The Wall |
Street Journal staff in 2007
Many top execs in News Corp. have wanted for years to peel off the newspaper and other publishing aspects of the media empire; but, especially since the phone-hacking cluster-fuck came to light in London.
Amy Chozick and Michael J. de la Merced, The New York Times, spill details of the juicy intrigue:
At News Corp., a Plan to Sever Publishing Arm
After years of defending its financially underperforming newspapers, News Corporation is now in talks to break up the company and sever its publishing assets, like The Wall Street Journal, The Times of London and The New York Post, from its lucrative entertainment units.
The spinoff proposal will be reviewed by the News Corporation board on Wednesday and a decision to split up the company could be made as early as Thursday.
The possibility signals a sharp reversal in the thinking of Rupert Murdoch about his $53 billion media conglomerate. For years, investors and senior News Corporation executives have pressed for a spinoff of the newspapers, but Mr. Murdoch, a newspaperman at heart who built his company from a single paper in Adelaide, Australia, has consistently rejected those proposals.
But as the company’s cable channels expanded globally, its newspapers have become a financial drag and, in the case of its British tabloids, have hurt its reputation in the fallout over the phone-hacking scandal that led to the closing of the News of the World tabloid.
Top editors and publishers from the company’s newspapers were flown in from around the world and brought together on Tuesday for lunch in a corporate dining room at News Corporation’s Midtown Manhattan headquarters.
In what one employee described as an emotional meeting, Mr. Murdoch, his son James Murdoch and Chase Carey, the company’s chief operating officer, tried their best to quell anxiety and unrest among editors. They worry that the company’s newspapers will lose their economic safety net without the high-performing entertainment assets propping them up.
The senior Murdoch indicated that he was tired of shareholders and analysts regarding the newspapers as a drag on the company and that he believed his publishing business would benefit from its own dedicated management.
News of the possible spinoff was first reported by The Wall Street Journal. News Corporation’s stock climbed 8 percent on Tuesday to close at $21.96 a share, its highest close since 2007.
There are still an enormous number of details to be worked out in any spinoff, including exactly how to split up News Corporation’s assets. One thing is certain: the Murdoch family, which would have a roughly 40 percent voting stake in both new companies, would retain control.
Restive shareholders have often said they would prefer that News Corporation focus on its entertainment units including cable channels like FX and Fox News, the 20th Century Fox studio and Fox Broadcasting. Combined, those assets generated operating profit of $4.6 billion in the year that ended June 2011. The publishing unit, by contrast, contributed $864 million in operating profit in the same period.