Brokers see value in News Corp split

The Rupert Murdoch-controlled News Corp is likely to split into two separate public companies, with brokers suggesting the company sees better value in its assets than is being reflected in the current share price.

The announcement could be made today that the company would split its entertainment businesses - including 20th Century Fox film studio, Fox broadcast network and Fox News channel from its newspapers, book publishing asserts and education businesses.

The publishing assets include Dow Jones & Co which publishes The Wall Street Journal, The Times of London, The Australian newspaper and book publisher HarperCollins.

Craigs Investment Partners broker Chris Timms said the split was expected to occur as a spin-off, with shareholders in News Corp getting shares in the new publishing company at a ratio commensurate with the existing stake.

The family of Mr Murdoch, the chairman, has a 40% voting stake and was expected to maintain effective control of the new companies.

News Corp had taken a lot of flak recently because of phone-hacking scandals in the United Kingdom and that had been reflected in a falling share price.

Splitting the businesses would allow investors to see the value of the different operating arms, Mr Timms said.

Following the closure of the News of the World, and the resulting investigations leading to the withdrawal of the BSkyB bid, News Corp had moved to embrace several shareholder-friendly initiatives.

"To this end, News Corp management provided a strong assurance that the $US5 billion [$NZ6.34 billion] share buyback would be aggressively completed - potentially by the third quarter of 2012."

The split could also be used to quarantine the UK phone-hacking scandal and any down-side that was attached in the public fall-out, Mr Timms said.

In addition, management indicated there were no major deals on the horizon, which suggested buybacks would continue for several years and could even be increased at some point, especially if shares weakened further.

The company had made it clear there was no current plan for any changes to the executive management or the board or to dispose of the problematic UK newspaper group, he said.


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