News Corp. splitting into two firms?

By Erin Dismeier

Media conglomerate News Corp. has announced the company will split, separating its broadcast and entertainment sectors from its publishing sector.  The Associated Press says CEO Rupert Murdoch is optimistic about the split and his family will maintain control of both companies.

News Corp. owns several successful entertainment businesses, including 20th Century Fox and Fox News, as well as prominent publishing companies like The Wall Street Journal and The Times of London. Investors "pushed the company's Class B stock up 10 percent since the news of the plan broke early Tuesday," according to WSJ, but the financial worth of each company may not be what's exciting the world.

RBC Capital Markets Analyst David Bank told The Washington Post the decline of the newspaper industry and its perceived decrease in value is to blame.  Bank said the split should be seen as more of a message on future changes that News Corp. CEO Rupert Murdoch may allow.  Murdoch has always been a supporter of the print industry and this move could seriously hurt that side of the corporation.  BTIG, a well-known trading firm, told WSJ the split is a step in the right direction, but News Corp. would be better off selling the publishing sector.

Recent phone hacking and bribery scandals involving News. Corp.'s British tabloids are also cited as key reasons for the split.  So far, the scandals have led to the closure of the "News of the World" tabloid, as well as the resignation of several senior executives.  It's speculated that distancing itself from the print sector may allow News Corp. to continue bidding for shares of the U.K. satellite, BSkyB to gain an even bigger monopoly on the media market in the U.K.

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