News Corp looks at split into publishing, entertainment firms

Rupert Murdoch is considering splitting his News Corp media company into two, one focusing on publishing and the other, entertainment, according to two people familiar with the situation.

Murdoch, who is chairman and chief executive officer of News Corp, is overseeing internal discussions on whether to separate the New York-based company's businesses, say the pair, who sought anonymity because a decision is not final. The talks were at a late stage, one of them said.

News Corp shareholders have advocated a breakup to separate the larger film and television operation from newspaper publishing, which has been hurt by slow industry growth and a scandal in Britain.

Chief operating officer Chase Carey said in February that executives discussed a breakup after inquiries into hacking and bribery at the company's British newspapers, a controversy that sank its bid for satellite broadcaster British Sky Broadcasting Group.

"Those that want the higher growth of the broadcast business and have it able to chase new markets will pay a premium for that," said Peter Esho, the Sydney-based chief market analyst at City Index. "This is also a good way to quarantine the rest of the business from the recent issues in the UK, when publishing is a small part of the business."

Shares in News Corp gained 2.4 per cent to close at A$20.79 in Sydney trading.

A News Corp official declined to comment yesterday.

Wider Margins Publishing, which includes the Times in London, the New York Post and the Australian , contributed about 18 per cent of News Corp's operating income in the 2011 financial year, according to Bloomberg. Cable network programming generated 57 per cent of earnings alone.

For the nine months ended March 31, News Corp's publishing unit generated operating income of US$458 million ($578 million), or less than 8 per cent of its sales, according to the company's earnings report in May. The cable networks, film and television units accounted for a combined US$4 billion in profit, more than 25 per cent of their US$15.9 billion in revenue.

The Murdoch family would retain control of both companies, News Corp's Wall Street Journal reported.

- Bloomberg

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