News Corp., Rupert Murdoch's media empire, has confirmed that it will 'wow the world' by splitting its entertainment and publishing businesses into two separate publicly traded companies.
Murdoch will occupy the position of Chairman of both companies as well as Chief Executive Officer of the media and entertainment company, but, in a surprise move, will not directly operate the group's newspapers.
The group has said that both of the operations will "benefit from enhanced strategic alignment and increased operational flexibility with respect to an unparalleled portfolio of assets, brands and franchises".
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
In a statement to News Corp staff, Murdoch said: "It is with much enthusiasm and personal pride that I share with you today's news regarding our plan to drive towards the next, transformative phase of this organisation you and I have built together into one of the largest, most innovative media companies of our time.
"That very size and breadth has created 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.
"Our publishing businesses are greatly undervalued by the skeptics. Through this transformation we will unleash their real potential, and be able to better articulate the true value they hold for shareholders.
"Our aim is to create the most ambitious, well-capitalised and highly motivated publishing company in the world, consisting of the largest collection of our news and publishing brands, as well as our groundbreaking digital education group; we will also work to create the world's top media and entertainment company, encompassing our premier broadcast and cable networks, leading film and television production studios and highly successful pay-tv businesses."
Such a move is said to be popular amongst outside investors, who are more interested in the entertainment side of News Corp, given its fast-growing nature.
The entertainment business contributed to around 90% of the company's operating profit in the first nine months of the last fiscal year, and brought in three-quarters of the revenue.
Forward-thinking Murdoch emphasised that part of the reasoning behind the split was to ensure it is best place for the future.
"Today there are 30m tablets in use in the US and 75m worldwide," he said. "In five years' time, there will be at least 75m tablets in the US and 375m in the world. Smartphones will get far smarter and grow rapidly over the next 5 years, from 120m active phones to 225m in the US, and from 835m to 1.7bn in the world.
"These technologies will permeate all parts of life - including education - and it is my firm belief that these two companies will be best positioned to compete in this rapidly evolving global economy and distribute our premium content on these platforms."
The mogul also took time to put great emphasis on his gratitude towards those who work under him, gushing that he "cannot express how much I appreciate all of your hard work up to this point, and for the promise of your continued creativity as we lay the foundation stones for these two great companies."
He added that as more details on the split were decided, they would be made public.
-
Christmas at Chatsworth: review of The Cavendish Hotel at BaslowMoneyWeek Travel Matthew Partridge gets into the festive spirit at The Cavendish Hotel at Baslow and the Christmas market at Chatsworth
-
Tycoon Truong My Lan on death row over world’s biggest bank fraudProperty tycoon Truong My Lan has been found guilty of a corruption scandal that dwarfs Malaysia’s 1MDB fraud and Sam Bankman-Fried’s crypto scam
