News Corp has confirmed reports that the company will be split into separate publishing and entertainment arms, with HarperCollins c.e.o. Victoria Barnsley saying the move "could be good news" for HC.
Rupert Murdoch today (28th June) confirmed that his News Corp business—recently plagued by the News of the World phone-hacking scandal—will be broken up into two distinct trading companies, with the separating process taking around a year to complete.
The decision, which was endorsed by News Corp’s board last night, will see HarperCollins become part of a publishing company consisting of News Corporation's current publishing businesses, such as news operations the Wall Street Journal, the New York Post, the Times, the Sun and the Sunday Times, and its education and integrated marketing services divisions.
A statement from News Corp said: “The new publishing company would create a scaled publishing platform that would be one of the best capitalised in the industry. The publishing company would have the opportunity to leverage its trusted brands for innovation and value creation across all traditional and digital platforms.”
The entertainment company will consist of cable and television assets, filmed entertainment, and direct satellite broadcasting businesses, including Fox Broadcasting, Twentieth Century Fox Film, Twentieth Century Fox Television, among others.
In a memo to staff, Barnsley told HarperCollins employees: “I really don’t think there is anything to worry about for us at HarperCollins—the move is mainly about adding shareholder value for which there are many precedents in media conglomerates—for example, US media giant Viacom did something similar. If anything I would say it could be good news for us because under the new arrangements, HarperCollins becomes a bigger fish in a slightly smaller pond.”
She added: “As you see, the separation is expected to be completed within the next year —we await further details on the management teams.”
News Corp said the company break-up would enhance overall shareholder value and allow each company to focus on pursuing distinct strategic priorities and opportunities to maximise their long-term potential, respond and react quicker to rapidly-evolving technology and global market opportunities and “allocate and deploy resources in a manner consistent with its strategic objectives that best enhances value for its respective shareholder group".
In an email to all News Corporation’s staff, Rupert Murdoch, who will be chairman of both companies, said he made the announcement with “enthusiasm and personal pride”. He said: “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. Our aim is to create the most ambitious,well-capitalised and highly motivated publishing company in the world.”
He also spoke about the growing importance of smartphones and tablets on the media and education industries. “Smartphones will get far smarter and grow rapidly over the next five years, from 120 million active phones to 225 million in the US, and from 835 million to 1.7 billion in the world.
"These technologies will permeate all parts of life—including education—and it is my firm belief that these two companies will be best positioned to compete in this rapidly evolving global economy and distribute our premium content on these platforms,” he said.