Murdoch’s bold new plan: News Corp announces split of Entertainment and Publishing

July 2nd, 2012
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News Corp announced on Thursday that their board unanimously agreed on a plan to split its company’s entertainment division (which includes Fox News, 20th Century Fox, and Fox Networks) from the publishing division (which includes The Wall Street Journal, Harper Collins publishing, and The New York Post), reports The Economist. This comes as music to the ears of News Corp’s investors, who for years blamed the publishing arm for weighing down the entertainment division. (The entertainment division is responsible for 75 percent of the company’s profits.) Splitting the company in two is the “ultimate dream” of investors, says Michael Nathanson of Nomura, a stockbroker. News of the split sent News Corp’s stock up 10 percent.

This announcement and Rupert Murdoch’s “never say die” commitment to his beleaguered publishing arm come as little surprise to those of us who have followed the News Corp over the years. In a Thursday morning memo announcing the split to the News Corps employees, Murdoch made it very clear Family Guyto everyone that his long love affair with publishing is far from over, and even spoke optimistically about his portfolio of newspapers and publishing companies. “Our publishing businesses are greatly undervalued by the skeptics. Through this transformation we will unleash their real potential, and be able to better articulate the true value they hold for shareholders,” stated Murdoch.   

You have to admire the bold vision Murdoch unleashed for his new publishing entity, especially in the wake of the News of the World hacking scandal in the UK, and at a time when two of his newspapers – The New York Post and The London Times – are losing money, comments PaidContent.org. Even though newspapers may be on life support, they are still emitting a slight pulse. In The Economist article linked to earlier in this blog post, Jeff Logsdon of BMO Capital Markets added, “The newspaper business may not be growing, but it generates enough cash flow to sustain itself.”

Murdoch points to new global markets and platforms as major reasons for this publishing arms rejuvenation, with plans to accelerate growth into Australia and Latin America and citing the fact there are over 75 million tablets worldwide ready to receive information. “Our publishing company will deliver on the promise of a well-informed society as we aggressively grow our business across borders and new global platforms,” Murdoch is quoted as saying in this Wall Street Journal article.

While many remain a bit skeptical when it comes to publishing, especially newspapers, my colleague Johna Burke confirms in a recent Fresh Ideas post, Mobile Aids Growth of Traditional Media. She writes, “[…]unless you are seeing your coverage from ALL types of media, you won’t have an accurate representation of how your messages are playing out and influencing ALL of your audiences. […] a digital focus alone, that doesn’t include traditional media, is blindingly misleading and can be equated to looking at the Grand Canyon through a straw. Sure, it’s pretty, but you miss more than you see!” 

So, in 2012 one thing remains clear: content remains king and nobody knows that better than Mr. Murdoch.

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