LOS ANGELES: Rupert Murdoch’s News Corp. is preparing to spin off its newspaper business into a separate company, an acknowledgment that the printed page that gave rise to a media empire will never again be central to its future.
Murdoch’s plan to split his company represents a break from the past. The 81-year-old billionaire built the company from a single Australian newspaper he inherited from his father. And through the years, he maintained a fondness for newspapers, even as he bought entertainment companies and assembled a global conglomerate with a market value of $52 billion.
The Wall Street Journal, News Corp.’s flagship newspaper, reported late Tuesday that News Corp.’s board of directors will consider the plan today and possibly announce its approval Thursday morning.
Under the proposal, newspapers will be shunted off into a separate publicly traded entity, which Murdoch will control along with a second company that will comprise News Corp.’s entertainment business. That portion of the company includes Fox News Channel, its broadcast TV network and the 20th Century Fox movie studio.
Investors hailed Tuesday’s announcement that News Corp. is considering a split, sending the stock up $1.68, or 8.3 percent, to close at $21.76. During the day, the stock was as high as $21.89, its highest level since hitting $21.90 on Oct. 25, 2007.
Analysts said the newspaper and book publishing division could be worth about $5 billion — what Murdoch paid the Bancroft family for Dow Jones & Co., the publisher of the Wall Street Journal, in 2007.
News Corp. investors have never liked that acquisition and over the last five years the stock price has stagnated, hurt by fears Murdoch would overpay for other newspaper assets.
By contrast, investors adore Chief Operating Officer Chase Carey, who along with Murdoch’s son James, the deputy COO, have been steering the company toward a future based on expanding profitable pay TV operations around the globe.
News Corp.’s move comes as Britain’s communications regulator, Ofcom, enters the final stages of its review of whether satellite TV firm British Sky Broadcasting is “fit and proper” to hold a broadcast license. News Corp. holds a 39 percent stake in BSkyB, but its ownership is in jeopardy because of the phone-hacking investigation.