News Corp. Confirms Plans for Publishing and Entertainment Split

After saying on Monday that it was considering a break [1] between its print and entertainment assets, News Corp. has made the split official. Today, the company announced that it plans to pursue the separation of its publishing arm and media and entertainment holdings into “two distinct publicly traded companies.”

The decision was finalized after a News Corp. board meeting yesterday, according to a press release from the company. If the spinoff receives final approval from the board (as well as the necessary regulatory approval), the separation should take around a year to complete. Rupert Murdoch would become chairman of both companies and CEO of the entertainment company, while current News Corp. president, deputy chairman and COO Chase Carey would act as president and COO of the entertainment company.

The publishing company will be comprised of News Corp.’s newspapers (including its U.S. holdings like The Wall Street Journal, its scandal-ridden U.K. titles, and its Australian papers), HarperCollins book publishers, and the newly-formed education division. News Corp.’s highly profitable film and TV assets, including numerous Fox properties and pay TV companies, will form the new media and entertainment company.

Although News Corp. claims that the split would increase the value of both its publishing and entertainment divisions, critics say that removing the money-losing newspapers might only benefit the media side. Between 2008 and 2011, entertainment profits grew 13 percent (all of which can be attributed to the success of News Corp.’s cable channels, namely Fox News and Fox Business), while the publishing side saw its operating profit fell 26 percent, according to the Wall Street Journal [2]. Without the success of the entertainment arm to carry those far less profitable newspapers, the publishing branch could face serious financial difficulties.

At the same time, the split could have a negative effect [3] on the entertainment side, albeit a less pronounced one: It has been long rumored within the media industry that News Corp.’s newspapers are used to promote the company’s TV shows and movies. Without ties severed between the two branches, the entertainment business may lose that free press.