News Corp divides (but can the publishing arm afford it?)


It’s an update on the journalistic scandal everyone at this consumer PR agency realistically expected, though a year or so ago would have seemed unthinkable. After all, Rupert Murdoch is a dedicated follower of print, meaning his departure from this side of a company he has built over 60 years is a major turning point in the firm’s history, and that of the wider media.
Over the next 12 months then News Corporation will be divided into two arms. The first will include 20th Century Fox (film and TV), Fox network channels and satellite assets, along with the 39.1% stake in BSKYB. The second is focused on books and pages, with brands like HarperCollins, the Sun, the Times and Sunday Times, Dow Jones news and financial information service, and the Australian on the roster.
The founding father will retain a role as chairman to both companies, but the printed business looks set to invite a new executive to the fold, who may have his work cut out for him, whilst Murdoch is confined to the back room. In contrast the broadcasting division will still see his name next to the titles of President and chief executive, far more involved positions.
According to MediaGuardian one analyst claims this could add $5 to share prices, which is some recovery following News of the World’s closure, and the perpetually worsening findings of the Leveson inquiry into phone hacking at the paper. It’s also indicative of how much more serious the situation has become, with this move not exactly like an amputation before rot spreads via association, but somewhere close.
Looking into the future then the potential impact of this can’t be predicted. On the one hand it’s not that big a change- between the whole Murdoch family the controlling stake in both businesses is relatively unchanged, and all the brands under the News Corp banner are successful.
Yet even with daily sales of the Sun far higher than a good proportion of its rivals combined this entire industry is looking at increasingly uncertain times. Which isn’t to say we expect any major household names to close down any time soon, more to highlight that removing the most future-proofed arm of the organisation is to put a few more eggs in a fragile basket.
News Corp broadcasting interests are worth $23billion, whilst print assets alone are worth look closer to $9billion. That’s some difference by anyone’s standards, and given the fact there hasn’t been a decision made on who will foot the legal costs surrounding the hacking affair- currently at £100million and counting- the one thing we can say is that tight bookkeeping and lean times is are ahead.