The
Wall Street Journal has revealed that News Corporation (NASDAQ:NWS) is considering dividing
itself into two companies.
- The first one will focus on entertainment business, such as 20th Century Fox films, Fox News and broadcast network.
- The second company, which will be smaller of the two, will handle all the publishing assets such as book publishing including HarperCollins and newspaper publishing such as Wall Street Journal and Times of London.
Rupert
Murdoch, the chairman of News Corp, has given his approval to the idea but a
final decision has not yet been made. The Murdoch family enjoys 40% of the
voting rights in the company and that is not going to change after the
division.
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The
company has earned $25.34 billion in revenues from the first nine-months of the
current fiscal year; almost 75% of it came from the entertainment business. The
company recorded an operating profit of $4.2 billion, out of which just about
11% ($458mn) was accorded to the publishing business. Naturally, the outside
investors of the company had wanted it to focus more on its entertainment
business. The current division, if it happens, will be welcomed by them.
The
now gigantic News Corporation originally started by Mr. Murdoch with a small
Australian newspaper which he had inherited. He has always been more interested
in the newspaper publishing than anything else as that is where the roots of
the company lie. The company entered into the entertainment business with the
purchase of 20th Century Fox in 1980s. Almost three decades later,
it earns about 90% of its profits from entertainment business.
The
company is still recovering from the disgraceful phone hacking scandal, which
led to the closure of its London based tabloid ‘News of the World’ while the
company was forced to cancel its $12 billion deal for purchase of BSkyB’s (LON:BSY) remaining stocks.
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