News Corp announced Friday that its board of
directors has approved the separation of the media conglomerate into
two distinct publicly traded companies.
The move was seen as a formality ahead of the break up of Rupert Murdoch's empire, scheduled to take place June 28.
The board said the publishing division would have a balance of 2.6 billion dollars on its books and no debt. After the breakup, it will have 500 million dollars available to repurchase stock.
Investors will get one share in the newspaper unit for every four News Corp shares they own, the company said.
"We continue to believe that the separation will unlock the true value of both companies and their distinct assets," Murdoch said.
It will enable investors to benefit from the opportunities that the company predicts will result from more focused management of each division.
The publishing division, which includes The Wall Street Journal, the New York Post and the British newspapers the Times and the Sun, will keep the News Corp name after the breakup.
Its film and television division will be renamed 21st Century Fox, and Murdoch, 82, will be chairman and chief executive of the division. He will be executive chairman of the new News Corp, while his children, James and Lachlan, will be on both boards.
Murdoch announced plans last year to split News Corp's entertainment and publishing assets. The move is a bid to better reflect the value of the entertainment division, which includes Twentieth Century Fox, the FOX News Channel, Fox Sports Network and Sky broadcasting.
While the film and television division is growing, the publishing unit is struggling. Its earnings dropped 35 per cent last quarter compared with a year earlier.
The split follows a reputation-damaging phone and computer hacking scandal that resulted in the arrests of dozens of British journalists and former journalists. The scandal over the illegal practices peaked in 2011 with the closure of the News of the World newspaper.
The separation is subject to a number of conditions. The company said it expected all of them would be met.
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