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News Corporation is a diversified entertainment company with operations in eight industry segments, including Filmed Entertainment, Television, Cable Network Programming, Direct Broadcast Satellite Television, Magazines and Inserts, Newspapers and Information Services, Book Publishing.
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News Corp confirms corporate splitJune 28 2012, 3:39pm
News Corp (NASDAQ:NWSA) has confirmed plans to split into two separate companies - one holding its newspaper business, and the other its entertainment operations.
The idea of splitting the publishing business has been considered for many years but Murdoch had opposed such a plan. Now, it appears to be going ahead.
Shareholders have become increasingly unhappy with the company's publishing assets, which have lower margins than the entertainment assets as well as a phone-hacking scandal.
By separating, the publishing company will be free to pursue acquisitions and other investments, people familiar with the situation have said.
Investors have given their blessing to the split, pushing shares of the company up 10 per cent since the news of the plan broke early Tuesday.
The split remains subject to final board and regulatory approvals and News Corp said it also plans to hold a meeting of its shareholders sometime in 2013. It expects it to be completed in about a year.
Analysts say the faster-growing pay TV segment would be valued more highly by new investors who may not be willing to buy shares in a company being dragged down by a newspaper industry in decline.
Still, analysts had questions about which entity would bear the financial risks of the ongoing U.K. probe into phone hacking and bribery.
Besides legal costs, News Corp. also faces potential fines in the US under the Foreign Corrupt Practices Act, which punishes companies that have bribed officials abroad.
Breaking off the newspaper and book publishing assets into a separate company makes them more "bite size" and ripe for being taken private by a third party, one analyst said.
Under the proposal, the global media giant will be divided into two publicly traded companies - one will operate as a newspaper and book publishing firm - holding the Harper Collins publishing house and The Times newspaper group.
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.