Rupert Murdoch's News Corp says its board has approved a plan to split into two companies, one containing struggling newspaper and book publishing businesses and the other comprising faster-growing entertainment operations.
Mr Murdoch will serve as chairman of both new companies and CEO of the entertainment company.
The Murdoch family, which controls nearly 40 per cent of the voting shares in News Corp, is expected to maintain control of both companies.
Mr Murdoch said in a conference call with investors that a split would result in two strong companies that have more operational flexibility and be poised for greater growth.
"We've come a long way in our journey that began nearly 60 years ago with a single newspaper operating out of Adelaide," he said, referring to the single newspaper he inherited from his father and which became the foundation for News Corp.
News Corp's board unanimously approved the split in principle. It will take a more formal look at the details in coming months. The separation is also subject to regulatory approval and is expected to take about a year.
The split of News Corp is a symbolic turning point for Murdoch, the company's 81-year-old CEO. Through the years, Mr Murdoch maintained a fondness for newspapers even as he purchased entertainment companies and built a media conglomerate with a market value of $US53 billion.
In hearings last year before British MPs, he conceded he regularly called his newspaper editors with the greeting: "What's doing?"
Investors have already applauded the change. Since news of the split broke early Tuesday, News Corp shares are up nine per cent. They slipped 32 cents, or 1.4 per cent, to $US21.99 on Wall Street on Thursday.
Mr Murdoch is hoping the television and movie company will be more highly valued by shareholders who had been unwilling to accept the dour growth prospects of the newspaper and book business.
But he now faces the challenge of making the publishing division attractive enough for new investors. Taken as a whole, News Corp's entertainment businesses are much more promising.
Companies that once spent money for newspaper advertisements have been flocking to the internet in search of cheaper ad space. Print newspaper subscriptions continue to fall. Meanwhile, newspapers' digital subscriptions and ads have been slow to make up for the decline.
Investors have long pestered News Corp to get rid of the struggling newspaper business.
Mr Murdoch acknowledged on Thursday the idea has been discussed internally for more than three years.
Still, he said he rejects "naysayers" who doubt the long-term future of the printed word.
To address the concerns of future shareholders, he promised that the publishing division will be split off with "a robust net cash position" to be used for potential acquisitions.
Mr Murdoch denied the timing of the split was due to a UK probe into alleged phone hacking and bribery by News Corp's British newspapers.Some investors were unhappy with the announcement that all of the company's Australian assets, including the planned acquisition of Consolidated Media Holdings, would be housed on the publishing side.
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