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June 28, 2012 1:09 pm
Rupert Murdoch has confirmed plans to carve his $50bn News Corp empire into two, saying that he remained “100 per cent committed” to the future of the publishing and entertainment companies that will be created by the split.
Mr Murdoch, 81, plans to chair both companies after a process expected to take 12 months, and will serve as chief executive officer of the media and entertainment group that will house Fox News, Twentieth Century Fox Film and the Sky and Star pay-television brands.
Chase Carey, the group’s chief operating officer, will take the same role in the media and entertainment group, but News Corp gave no details on Thursday of who would lead the publishing company that will house newspapers including The Sunday Times, The Wall Street Journal and The Australian.
Amid speculation of an eventual return to the company by Lachlan Murdoch, Mr Murdoch’s older son, the group said details of both companies’ management teams would be decided “over the next several months”, adding that much work remained to be done on “structure, management, governance and other significant matters”.
News Corp confirmed that the Murdoch family would maintain its 40 per cent voting rights in both companies, with each retaining News Corp’s current dual class share structure. News Corp shareholders will receive one share of common stock in a new company for each share they currently hold in a split, which is dependent on regulatory approvals and favourable rulings from tax authorities.
After a board meeting in New York on Wednesday, chaired by Mr Murdoch, the group said each new company “would benefit from enhanced strategic alignment and increased operational flexibility with respect to an unparalleled portfolio of assets, brands and franchises.”
It is positioning its media and entertainment group as “a pure-play content producer and distributor” and said its publishing company would be “one of the best capitalized in the industry”, without giving further details of how much of News Corp’s near-$11bn of cash it would house.
News Corp’s chairman and chief executive was expected to appear on Fox Business Network, one of the group’s cable channels, at 10am New York time.
“There is much work to be done, but our board and I believe that this new corporate structure we are pursuing would accelerate News Corporation’s businesses to grow to new heights, and enable each company and its divisions to recognise their full potential – and unlock even greater long-term shareholder value,” said Mr Murdoch, who had long resisted splitting his father’s company.
“We recognise that over the years, News Corporation’s broad collection of assets has become increasingly complex. We determined that creating this new structure would simplify operations and greater align strategic priorities, enabling each company to better deliver on our commitments to consumers across the globe,” he added.
“Our publishing businesses are greatly undervalued by the sceptics,” Mr Murdoch said in an email to staff. Neither statement mentioned the UK newspaper scandal that has cost the group hundreds of millions of dollars in legal bills, but he added: “Over the years, I have become accustomed to the noise of critics and naysayers...and pretty thick-skinned! … These experiences have made me more resilient.”
In an email full of references to the importance of free speech, News Corp’s “spirit of innovation” and the opportunities created by tablets and smartphones, Mr Murdoch said: “The most valuable commodities in the world today are information, analysis and education, with infinite potential through the growth of technology and digital platforms to accelerate the improvement of world living standards.”
News Corp said the split would allow the two sides of its business to pursue “distinct strategic opportunities”, respond more quickly to rapid changes in technology and allocate resources in a way that best increased value for shareholders.
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