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Murdoch considers splitting News Corp divisions


Investor pressure is growing for Rupert Murdoch to spin off the troubled publishing arm

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Rupert Murdoch’s News Corporation, owner of embattled News International in the UK, is considering splitting its publishing and entertainment businesses, the News Corp-owned newspaper the Wall Street Journal reported on Tuesday.

Investor pressure has been mounting on News Corp's board for a spin off of the troubled publishing business after the phone hacking scandal - involving the now defunct tabloid News of the World - was uncovered. The scandal sent shockwaves through the group and forced News Corp to pull its bid to buy the rest of the pay-TV group BSkyB.

Last month an influential committee of MPs said in a report that Murdoch was "not a fit person" to exercise stewardship of a major international company, and should take responsibility for a culture of illegal phone hacking.

In April James Murdoch resigned as chairman of BSkyB, part of the Murdoch empire, to avoid the paid TV broadcaster being embroiled in the phone-hacking scandal, which has plagued James Murdoch since last summer.

A final decision on the split has not been made, the WSJ reported, and the Murdoch family is not expected to lose its effective control of any of the businesses involved if the plan goes ahead.

News Corp's chief operating officer Chase Carey said in May that the management and board had discussed spinning off its publishing business following investor pressure but that they did not have any plans to push ahead with it at the time.

Murdoch had earlier opposed the move and as recently as May released a statement saying the group was not considering spinning off its British newspapers to protect the rest of the empire. But the WSJ reported that he has recently warmed to the idea, citing one person familiar with the situation.

The publishing division includes the HarperCollins book publisher, the education arm and newspapers including The Wall Street Journal, the Times of London, the Sun, the New York Post and The Australian.

The remaining film and television businesses would include 20th Century Fox film studio, Fox broadcast network and Fox News channel. The entertainment business would dwarf the publishing unit, with assets in the entertainment division generating revenues of $23.5 billion (£15.0 billion) in the year to June 2011, compared with $8.8 billion for the publishing business.

Analysts believe investors and some management will feel emboldened by the hacking scandal to push for a change at the company, where the 81-year-old Murdoch has long been seen as the main block to a spin-off of the newspapers.

The Australian-born tycoon made his name by buying newspapers in Australia and then the News of the World, the Sun and the Times newspapers in Britain and talks often about his love for newspapers and the publishing industry.

photo credit: Reuters

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Murdoch considers splitting News Corp divisions
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