Rupert Murdoch Reveals Plan To Split Conglomerate
Rupert Murdoch's News Corp. is still reeling from the phone-hacking scandal that forced the closure of one of the company's U.K. tabloids and has mired it in government and police investigations. One side will include the newspapers and publishing house while the other will contain its profitable television properties and movie studios.
DAVID GREENE, HOST:
News Corp chairman and CEO Rupert Murdoch, yesterday, revealed the details of his plan to split his media and entertainment conglomerate. One side will include the newspapers and publishing house. The other will contain its profitable television properties and movie studios. As NPR's David Folkenflik reports, Murdoch is trying to appease shareholders, and at the same time, save the newspapers that propelled his initial fortune.
DAVID FOLKENFLIK, BYLINE: We now know - among other specifics - the names of the two companies. The smaller publishing side will continue with the historic title of News Corp. The newer one, with such successful properties as Fox News, Fox TV, FX, Fox Sports and Fox Studios, will understandably be known as Fox Group. Back in October, Murdoch explained his thinking at a shareholder meeting.
RUPERT MURDOCH: As we do, it will also mean unlocking more value for our shareholders. And as we head into this future, the company you know will be replaced by two dynamic new ones with separate names and different missions.
FOLKENFLIK: Unlocking value meaning that the price of Fox Group's shares would spike up. News Corps stocks have always experienced what's called the Murdoch discount - a bit depressed by the drag in profits from the lagging newspaper division. Indeed, Murdoch did announce yesterday that he would shutter The Daily - a digital tablet-only news outlet that was less than two years old. Though he called it a bold experiment, Murdoch said it wasn't making enough money to continue.
GREENE: As Murdoch acknowledged, the split also occurs against the backdrop of the phone hacking and corruption scandal that engulfed the company's British papers with a cost of hundreds of millions of dollars, and rising.
MURDOCH: We've acknowledged the serious wrongdoing that occurred at some of our publications in the United Kingdoms. As a result, we have had to work hard to make amends - very hard. But just as important, we've seized the moment as an opportunity.
FOLKENFLIK: And that leads to a second important rationale for Murdoch's decision, according to tech consultant and former newspaper executive, Alan Mutter.
ALAN MUTTER: The newspaper side of the business is not nearly as beloved by many of the people at News Corp as they are by Murdoch. So one of the things he's trying to do is, sort of like superman's father, is put the newspapers in an escape pod to get them away from planet Krypton.
(SOUNDBITE OF MOVIE, "SUPERMAN")
MARLON BRANDO: (As Jor-el) You'll travel far, my little Kal-el.
FOLKENFLIK: That, of course, was Marlon Brando as Superman's dad Jor-el. Back to consultant, Alan Mutter, on Murdoch.
MUTTER: Someday he may not be there to save them from corporate officers who want to reduce publication or shut down titles.
FOLKENFLIK: But for now there's more bounce in Murdoch's step, and privately, his aides have shown some interest in acquiring the Los Angeles Times. In the meantime, The Daily's top editor, Jesse Angelo, will become publisher of the New York Post, the company's pugilistic, conservative money-losing tabloid.
The Wall Street Journal's top editor Robert Thomson will become the CEO of the new News Corp. He'll be replaced by his deputy, Gerry Baker. Baker is a Brit and a former conservative columnist for Murdoch's Times of London. As former Journal senior editor Bill Grueskin said, staffers had feared what would ensue when Murdoch bought the paper five years ago.
BILL GRUESKIN: Well, I think some of the initial concerns about the values of the Journal in that it would turn into a business version of the New York post have proven to be unfounded.
FOLKENFLIK: The Journal has broadened into more straight national and international news, at the expense, Grueskin and some other former Journal staffers say, of the paper's deeper dives on corporate and financial affairs. Murdoch will remain chairman of the publishing company and chairman and CEO of the new Fox Group. Amid much change, that stays the same.
David Folkenflik, NPR News, New York. Transcript provided by NPR, Copyright NPR.