Summary:

Newspapers built the foundation that became News Corp. but the bulk of the money comes from the entertainment assets Rupert Murdoch bought or launched. If Murdoch gives in on splitting the company, what would a 21st Century Fox look like?

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Not that long ago, newspapers brought in the money that helped Rupert Murdoch build a media conglomerate with a $54 billion-plus market cap. Today, the publishing division still brings in 24 percent of the revenue — but only 11 percent of the operating profit. The rest comes from the entertainment assets Murdoch bought or launched over the last 25 years and collected under the News Corp. umbrella. For years, people inside and out have argued it was time to move publishing outside the umbrella but the chairman and CEO was intractable.

Now, faced with low profit margins and revenues shrinking for many of the publishing properties on an accelerated pace — and in a glaring spotlight thanks to the hacking scandal in the UK — it looks like Murdoch has budged. News Corp.’s Wall Street Journal reported late Wednesday that the board has agreed in principle to a split. An announcement could come before the market opens.

The likely result, which could take a year to make it through the process, will be a publishing company that should have a few profitable years left while it retools for the future (my colleague Mathew Ingram has some ideas), — and an entertainment company that no longer will be able to blame publishing for lowering its value. The news publishing spinoff also should take the company’s name with it because what will be left isn’t News Corp.

For now, think of it instead as 21st Century Fox, a global blend of television; cable programming; satellite programming and distribution; a major movie studio with other nimble film brands; and a significant web presence and various digital properties. In the first nine months of News Corp.’s fiscal 2012, which ends June 30, those assets accounted for roughly $4.1 billion operating profit on $18.6 billion in revenue.

The News Corp. board met Wednesday in New York to resolve the restructuring. Murdoch’s scheduled an interview with Neil Cavuto on Fox Business News at 10 a.m. Thursday Eastern, a tradition whenever he has a message to get across. Cavuto promises “big news there that could shake your idea of what media companies in the future look like, and a good bellweather for the economy,”according to TVNewser.

But, unless Murdoch is going to try something Barry Diller-ish and spin multiple companies, here’s the outline of 21st Century Fox with Rupert Murdoch still at the head and current News Corp. COO Chase Carey, the former CEO of DirecTV, still leading operations and strategy:

Cable: Even though there’s been a little slowdown in the U.S. cable industry lately, cable brings in the most money now and remains the biggest opportunity, especially when it comes to international. With revenue from license fees as well as advertising, the Fox Cable Networks, including Fox News, FX, the Fox sports regional networks, National Geographic (U.S. and worldwide), accounted for $2.5 billion in operating profit on $6.6 billion in revenue the first nine months of fiscal 2011. While cord cutting is an issue, the biggest drain is something that can’t be avoided in this environment — rights to live sports events. The future here relies on reigning in costs; finding efficient ways to sell advertising across platforms; developing programming that draws viewers and users across platforms; making money from non-linear viewing; and expanding internationally. (News Corp. recently announced an agreement to buy out equal partner ESPN’s 50 percent stake in ESPN STAR Sports (ESS), giving it a stronger hold in Asia.) Cable faces the same challenge to remain relevant to distributors but is even more at risk because of its reliance on the license fees that provide steady income even when advertising is iffy.

Television: The Fox broadcast network and the company’s 27 owned-and-operated television stations are responsible for $3.6 billion in revenue so far this year, with $493 million in operating profit. Revenue is cyclical on the network and local levels, and more at the whim of the economy than cable with its multiple revenue streams. Retrans fees are a relatively new source of income and could be at risk in a TV Everywhere world. That’s one reason Fox is trying an eight-day window for steaming its shows.

Local can ebb and flow with the network’s success with programming. . To move ahead, the local outlets will have to continue to consolidate and do more with less, while serving as an invaluable local resource across platforms and growing digital revenues. Very tricky.

Filmed entertainment: Done right, movie studio 20th Century Fox and the TV studios produce the gifts that keep on giving, providing content that moves from screen to screen and can be sold or syndicated in a variety of ways. For example, a $24 million increase in revenue in the third quarter was attributed not only to successful movies but to increased revenue from licensing TV shows for streaming along with traditional syndication deals for hit shows. The division made $1.7 billion on $5.5 billion in revenue over the first nine months. The group has been careful in some respects with digital but also willing to experiment with bundling digital downloads with DVDs, cloud-based options and other efforts to increase ways to make money from shows or movies while protecting it as IP. Those efforts will need to move up the scale in terms of payout.

Direct Broadcast Satellite Television: The entertainment group also likely would include Sky Italia, the Italian satellite subscription service. It’s shown a slight improvement in revenue but is also at the mercy of Italy’s tough economy. Its revenues have barely budged year over year but profits are up despite losing subscribers. With only $165 million in profit from nearly $2.8 billion in revenue, it’s hard to see where this will fit. But News Corp. is looking for other opportunities in pay TV, especially since the hacking scandal stymied efforts to acquire the rest of BSkyB. It recently made a buyout offer to acquire of Australia’s Consolidated Media Holdings, which would double its stake in Australian pay-tv provider Foxtel.

News Corp. still owns 39.1 percent of BSkyB and other international entertainment investments, in addition to its stake as a founding joint equity party in Hulu. It’s hard to see a scenario where they wouldn’t stay with the entertainment assets but it’s always possible Murdoch and company have something surprising in mind.

Could this new version deliver on the newspaper-less high expectations? It would have all the right pieces but a lot of those pieces are traditional media facing traditional challenges. Being 21st Century Fox will take making the most of the traditional income and finding a faster path to a more digital future than News Corp. did with newspapers.

Post-decision update: When the plan to start the spin-off process was announced Thursday, the only key difference between the two companies as I described them above was a surprise twist regarding Foxtel. Turns out all the Australian assets will stay together, with the Foxtel and Fox Sports investments going to publishing along with the papers and digital properties. The pay TV properties staying with the media and entertainment company are Sky Italia and Sky Deutschland.

News Corp. is stressing “media and entertainment” to cover the broadcast and digital outlets that stay with the larger company.

If the spinoff comes through, Rupert Murdoch will be chairman of both companies and CEO of the larger one Carey as president and COO. A CEO for publishing hasn’t been decided, Murdoch told interviewers during his media tour Thursday. Two clues: son Lachlan joining the company in that role is “extremely unlikely” and the most likely candidates are already at News Corp.

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