Murdoch: News Corp. Split Not Related to Hacking Scandal
News Corp. (NASDAQ:NWSA) Chairman and Chief Executive Rupert Murdoch said in an interview on FOX Business Thursday that the decision to split his media empire into two companies had nothing to do with a recent phone hacking scandal in England.
Rather, Murdoch told FOX Business anchor Neil Cavuto, “It’s what’s best for our company and our shareholders.” A divided company, he said, will be “a lot better in every way … better managed.”
On Thursday, News Corp. officially unveiled plans to divide the company’s publishing properties such as The Wall Street Journal and HarperCollins from its media assets like FOX News Channel and Fox Broadcasting Network.
News Corp.’s board approved the plan late Wednesday.
Analysts have speculated that Murdoch may be responding to criticism from some shareholders who have complained the value of News Corp.'s stock has suffered as a result of a phone hacking scandal in England in which reporters hacked cell phones to obtain stories.
The scandal has rocked England at the highest levels of media, criminal justice and politics and prompted Murdoch to shut down London’s News of the World weekly last summer.
In the wake of the scandal, some shareholders have suggested News Corp. should shed its publishing properties altogether and focus on its much more lucrative entertainment units. That was unlikely to happen, however, as Murdoch's love of the print business is well known.
Under the proposal to split the company, Murdoch, who got his start buying newspapers in Australia, will act as chairman of both companies.
On Thursday he conceded to Cavuto that the publishing company’s stock won’t fare as well as the entertainment company’s shares. He declined to speculate who might run the day-to-day operations of the publishing company, but said his son Lachlan is an unlikely candidate.
“We’ve got great management across the company,” he said.
Chase Carey would serve as president and chief operating officer of the media and entertainment company, maintaining the role he currently serves at News Corp.
Murdoch said the separation should take about a year.
On a busy news day, Murdoch said he was surprised by the U.S. Supreme Court’s ruling earlier Thursday upholding President Obama’s health-care legislation.
“Clearly, it’s a big victory for the President,” he said. But, he added, implementation of the law is likely to add “tremendously” to the national budget.
Murdoch said he’s more bullish long-term on the U.S. than Europe, in particular England, given the ongoing debt woes across the Atlantic. “I think Europe’s in for a real tough haul,” he said.
After surging in recent days to their highest value since late 2007 as news of the proposed split was reported, News Corp.'s shares were down Thursday 31 cents, or 1.4%, to $22 in midday trading.
News Corp. is the parent company of FOX Business.