When people hear the name Rupert Murdoch, many immediately think of Fox News, but Murdoch is at heart a newspaper man. It's where he got his start in the media business, 60 years ago.
Yet News Corp.'s
What's the news of the world today, son?
News Corp.'s holdings are very well-known, and include 20th Century Fox, Fox News, The Times of London, The Sun, publishing imprint HarperCollins, and The Wall Street Journal.
News Corp. acquired The Wall Street Journal in 2007 after a long, dogged pursuit. At the time, Murdoch saw the legendary American business newspaper as the crown jewel not just of his print holdings, but of his entire media empire. Murdoch got his start in newspapers, so that makes sense. In 1952, he took over his father's newspaper business in Australia and expanded into the U.K. in 1969, acquiring News of the World and then The Sun.
But after 42 long and successful years in the media business, acquiring famed movie studio 20th Century Fox and launching the widely successful Fox News along the way, it was his beloved newspaper business that got him into trouble.
Hacking up a royal scandal
In 2011, allegations surfaced that some reporters at Murdoch's U.K. papers had hacked into people's voice mails, including some members of the royal family, to get stories. Murdoch faced a very high-profile grilling in Parliament because of it. And consistently, just when it seemed the scandal was about to blow over, new allegations surfaced and he and his whole company got dragged through the press all over again.
First and foremost, then, splitting News Corp. into two separate companies will take some of the heat the print side of the company so persistently generates off the entertainment side, which is doing very well. The print side also has consistently lower profit margins than the entertainment side, producing an overall drag on the company as it stands pre-split.
There had previously been talk that the entertainment side would remain publicly traded while the print side would stay private, but the company has confirmed that both entities will be publicly traded. This is good news for investors of two distinct stripes.
Time for a 21st-century Fox
The coming death of all things print has been reported on so widely and for so long now that many people automatically think any business having to do with the printed word must be either dying a slow death itself or killing whatever it's attached to, whether that's actually the case or not. But now, for those investors who like top-speed entertainment companies, the new entertainment company might be much more attractive. And the print business could prove popular with those open-minded enough to see the continuing value in news and book publishing.
Because whether it's on a screen or on a page, people will always read the news as well as books. The Wall Street Journal is the best-selling newspaper in the U.S., and HarperCollins has a long and distinguished stable of authors, including Michael Crichton, Neil Gaiman, and Janet Evanovich.
Also, The Wall Street Journal is reporting that the new company will come out of the split with plenty of cash but no debt, a nice position for any new company to be in.
Murdoch will remain chairman and CEO of the entertainment side. On the print side he will also remain as chairman, but the new CEO is yet to be determined. If Murdoch is not CEO of the new print side, which seems likely given the day-to-day focus any CEO needs to maintain on a single organization, it will likely feel very strange for the newspaperman's newspaperman.
This split will unlock a wave of value for many investors and make News Corp. much less the unwieldy behemoth it had become. According to The Wall Street Journal, the idea of a split has been floating around for a few years, but Murdoch consistently opposed it. New tricks are rarely easy for old dogs, but this is one Murdoch needed to learn.