News Corporation’s intention to separate its entertainment and publishing operations into two distinct companies has nothing to do with the phone-hacking scandal gripping the media company, chairman and CEO Rupert Murdoch said on Thursday.
“It’s got nothing to do with it at all. At all. This is not any reaction,” Murdoch told Fox News’ Neil Cavuto. “This is looking forward to what’s best for our companies, and what’s best for our shareholders.”
It’s also a coincidence, Murdoch said, that the company formally announced its plan on the day the Supreme Court ruled on President Obama’s health care reform law.
The Wall Street Journal — a News Corp. property — reported late Monday night that the company would separate its entertainment assets, including 20th Century Fox, Fox broadcast network and Fox News, from its publishing operations, including the New York Post, Wall Street Journal, Times of London and HarperCollins book publishing. The entertainment businesses account for three-quarters of the company’s $25.34 billion in revenue for the first nine months of the year, according to the Journal.
In a statement Thursday, Murdoch admitted that News Corp’s assets “have become increasingly complex.” But the growth of the company provides an “opportunity to separate News Corporation into two global leaders in their own right — we will wow the world as two, as opposed to merely one,” he added in a memo to staff.
Murdoch will serve as chairman of both companies, and CEO of the entertainment businesses. A CEO for the publishing side has yet to be named. Murdoch watchers have predicted for some time that the company would eventually spin off the newspapers, describing them in light of the hacking scandal as increasingly “toxic.” But Murdoch is said to be a media man with ink in his veins. Shareholders, meanwhile, have welcomed the news, and the company’s shares have climbed about 10 percent since plans of the split were reported.
It could take about a year to split the company up, Murdoch told his cable news channel Thursday. By that time, he said, the company hopes to be mostly beyond the phone hacking affair. Given the scandal’s unrelenting moment, though, that might be a bit optimistic.
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