News Corporation (NWS) Will Split Into Two Companies Next Month

Rupert Murdoch's News Corporation (NWS) recently announced that the company was splitting into two companies. News Corp will split its publishing business, which will retain the company's name, from its entertainment business, which will be renamed 21st Century Fox. This move didn't come as much of a surprise to analysts, since its rival Time Warner (TWX) recently announced its intentions to split its magazine publishing division, Time Inc., from its primary media business, which includes Turner Broadcasting (CNN), Warner Bros., and HBO.

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In addition to streamlining the profitability at both segments, the split is intended to appease some major shareholders, who had voiced concern regarding the damage dealt to the publishing division from the U.K. phone-hacking scandal in 2011. The scandal, which revealed that journalists hacked into voicemail accounts, allegedly bribed members of the U.K. police force, and disrupted criminal investigations, resulted in the closure of the 168-year old newspaper, News of the World. "Today's announcement is a significant step in creating two independent companies with the world's leading portfolios of publishing and media and entertainment assets," Mr. Murdoch stated. "We continue to believe that the separation will unlock the true value of both companies and their distinct assets, enabling investors to benefit from the separate strategic opportunities resulting from more focused management of each division." The newly formed News Corp will retain $2.6 billion in cash when the separation concludes next month, and retain its major publications, such as the Wall Street Journal and the Times newspapers in the U.K. That new division is expected to face the same tough challenges as other print media giants, such as The New York Times (NYT) and The Washington Post (WPO). Both The New York Times and The Washington Post have reported heavy declines in the print business slightly offset by growth in their digital editions. Meanwhile, 21st Century Fox, the parent company of Fox News, 20th Century Fox film, and Sky TV is expected to generate more investor interest, since similar media companies, such as Walt Disney (DIS), Comcast (CMCSA), CBS Corp (CBS), Viacom (VIA) and Time Warner have all recently reported strong top and bottom line growth. Current News Corp investors will be give one new News Corp share for every four of their original shares, but they will not be given any new shares of 21st Century Fox. In addition, 21st Century Fox will retain no ownership interest in News Corp. Along with the announcement, News Corp also authorized a $500 million stock repurchase program for new News Corp shares. While Mr. Murdoch will stay on as 21st Century Fox's CEO, his friend Robert Thomson will take over as the new News Corp's CEO. Other News About NWS News Corp to Split in Two News Corp splits with its media division, 21st Century Fox. News Corp. OKs Poison Pill, Buyback Before Split News Corp implements some measures to avoid being taken over by activist investors. Other Stocks in the News Are Sunny Days Ahead for This Solar Play? Is SolarCity a growth or bubble stock? Why This Gaming Console Is Destined to Fail Why is Nvidia releasing its handheld console, the Shield? Copyright 2013 by, Inc. InvestorGuide has no control over the sites we link to, is not affiliated with these sites, and cannot take responsibility for their quality or suitability. The news, analysis, commentary and profile information is not meant to be comprehensive, and the data provided is not guaranteed to be accurate. WebFinance Inc., the publisher of this newsletter, is not a registered investment advisor or a broker/dealer. This is not a stock recommendation newsletter but rather a source for investment ideas, and we encourage you to fully research any company before considering investing. The opinions expressed herein are those of the author and do not necessarily represent the views of nor are they endorsed by WebFinance Inc. No employee of WebFinance has owned or currently owns any shares in the company described above. The above is neither an offer nor solicitation to buy or sell any securities. The trading of securities may not be suitable for all potential readers of this newsletter, and the purchase of stocks mentioned in this newsletter may result in the loss of some or all of any investment made. We recommend that you consult a stockbroker or financial advisor before buying or selling securities or making investment decisions. We are not responsible for claims made by advertisers and sponsors. Anyone who makes decisions based on what they read here does so at their own risk and cannot hold WebFinance Inc. (DBA, Inc.) or its employees responsible.

Published on May 30, 2013
By Leo Sun
Leo Sun
Leo Sun is a freelance finance writer and position trader. He focuses on a combination of value and momentum investing, with a strong interest in the trading philosophies of Warren Buffett and Peter Lynch. Leo also has experience writing articles to help small business owners acquire loans and manage their finances. He regularly contributes to the Stock of the Day analysis.

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