Following numerous reports that News Corp is thinking of spinning off its publishing operations, the company issued a short statement that it is “considering a restructuring to separate its business into two distinct public companies.”
Financial markets are cheering the plan as News Corp stock leapt nearly eight percent on the Nasdaq exchange this morning. The shares are at their highest price since the company acquired Dow Jones in 2007.
As we explained earlier, a split would allow News Corp to focus on the cable, film and television assets that make up the vast majority of its revenue. Putting the publishing assets — including the Wall Street Journal, the Times of London and Harper Collins — would also allow Rupert Murdoch to keep control of the newspapers that are his passion while freeing News Corp of the ongoing distraction brought about by the ongoing hacking scandals.
“Isolating the toxic element and separating it into a vehicle for investors who specialize in these things is a good idea,” a Lazard Capital Markets analyst told Bloomberg.
“It’s credible and it makes sense, given that the newspaper part has been the scandal-hit element of the business,” Ian Whittaker of Liberum Capital in London told Reuters. “It also suggests that they may even have another tilt at Sky in the medium term. I imagine it would be seen as positive by the shareholders outside of the family.”