Breaking up News Corp
Murdoch does the splits
Investors like the idea of hiving off the group's newspaper arm
SHAKESPEARE mused that It is beyond the power of man to bring love and wisdom to an union.
News Corporation's shareholders have long agreed, arguing that Rupert Murdoch's love for newsprint has clouded his judgment and tainted his media empire.
The sluggish growth and the legal cases besetting News Corp's publishing arm set it in sharp contrast to the group's robust film and television assets, which account for three-quarters of revenues and almost all operating profit.
After months of hinting that it may heed investors and separate the two parts, News Corp's board met on June 27th to approve a split, and was set to confirm its decision as The Economist went to press.
News that a split was under consideration sent News Corp's share price up by around 10%.
At over $22, it is now at its highest since 2007.
This bolstered the view that dividing the group will boost both companies and reward shareholders.
After the phone-hacking scandal at News Corp's British newspaper arm—which is still being investigated by Lord Justice Leveson, a senior judge—the group had to drop its bid for full ownership of BSkyB, a profitable satellite broadcaster; it already owns 39%.
Separating the publishing division and giving it a new boss may not be enough to overcome regulatory obstacles to News Corp taking full ownership of BSkyB.
But it should help protect the entertainment businesses from the scandal's rising legal costs, and at least ward off pressure for News Corp to sell its existing stake.
Besides closing the News of the World in the wake of the hacking scandal, News Corp has recently rid itself of another sour asset, MySpace, and initiated a $10 billion share buy-back.
Such moves have supported the group's share price and pleased shareholders.
But splitting the company in two is the ultimate dream of investors, says Michael Nathanson of Nomura, a stockbroker.
Analysts worry that News Corp is still juggling too many minority stakes in smaller companies, such as Hulu and Tata Sky.
Todd Juenger of Sanford C. Bernstein, an investment bank, also worries about the $11 billion of idle cash on News Corp's balance-sheet.
However, Chase Carey, the group's chief operating officer, has been busy trying to sort out its tangle of holdings, selling some of its minority stakes at a profit and buying full control of other holdings.
Investors seem prepared to cut Mr Carey some slack while he does so.
Any reorganisation of the top table will probably keep him just below Rupert Murdoch, leaving his son James Murdoch,
who gave up the chairmanship of News Corp's British newspaper arm after the scandal, out of the spotlight for now.
The fastest-growing parts of the company are its television and cable businesses.
News Corp was shrewd in understanding the market for conservative political TV in America:
the core audience of Fox News creates a stable cashflow.
The company has also made wise investments in sports broadcasting, which viewers still prefer to watch live.
BSkyB owns the lion's share of Britain's football rights, Fox has American football, and its cable network hosts NASCAR races.
The company is expanding its holdings in Australia and Latin America, and is considering a new national sports network in America to rival ESPN.
The portfolio of newspapers in News Corp's publishing arm encompasses loss-makers like the London Times and the New York Post,
as well as the Wall Street Journal, which Mr Murdoch paid too much for but which at least is in profit,
and the Sun, a populist cash-cow.
The newspaper business may not be growing, but it generates enough cashflow to sustain itself, says Jeff Logsdon of BMO Capital Markets.
It is unlikely that the company will try to offload its British papers while Mr Murdoch is still alive, in part because the phone-hacking trials could go on for years.
The ideal outcome for investors may be a repeat of what happened when Viacom, a film and cable giant, spun off its broadcast arm, CBS, in 2005.
Sumner Redstone remained chairman of both sides but Leslie Moonves, given the job of running the supposedly sluggish CBS part,
showed that it could be revived—since when the shares of both businesses have risen.
由哥伦比亚广播公司专营无线电视业务。Sumner Redstone仍然兼任两家公司的主席。Leslie Moonves负责运营当时不被看好的哥伦比亚广播公司，通过妥善的管理使哥伦比亚广播公司重整旗鼓—自此以后，两家公司的股价都有所攀升。
Well you can split it with another credit card.
The date on which each shareholder acquired his shares.
The once robust economy now lies in ruins.
I'll take that into consideration, captain.
You want me to investigate her?