Should Murdoch break up his media empire?

The head honcho of News Corp. is considering a major split that would divide the lucrative Fox News and 20th Century Fox from his struggling newspaper business.

By TheWeek.com Jun 27, 2012 5:05PM

Image: Newspapers (© Janis Christie/Getty Images)News Corp. (NWS), the media empire controlled by Rupert Murdoch, confirmed this week that it is considering a plan to split into two companies.


Reportedly, one company would comprise Murdoch's publishing business, which includes The Wall Street Journal, New York Post, Britain's The Times of London, and book publisher HarperCollins. A separate (and much bigger) company would house News Corp.'s far more lucrative entertainment units, such as the film studio 20th Century Fox, the Fox television network, and the Fox News cable channel.


The divorce would represent a significant reordering of priorities for Murdoch, who started his empire in the 1950s with a single Australian newspaper and has long thought of newspapers as the core of News Corp.


Is the break-up a good idea?


Yes. Newspapers are a drag on News Corp.: It's long been said that News Corp. is a "sports and entertainment company with a newspaper problem," says Derek Thompson at The Atlantic. Publishing accounts for only one-tenth of News Corp.'s profits. Furthermore, the newspaper industry is "flat-lining while the entertainment business takes off." News Corp.'s entertainment units "could be valued significantly higher" on the stock market without their print anchor. Newspapers are preventing Murdoch from "unlocking the value in the rest of the company." 


Yes. Murdoch's newspapers are too controversial: Murdoch's newspaper business in Britain has become a huge headache, thanks to the phone-hacking scandal, says Paul Sawers at TheNextWeb. To appease an outraged public, he had to shutter The News of the World, a profitable century-old tabloid, as well as give up his bid to acquire the satellite company BSkyB. "It has been obvious for a long time that the damage caused by one [British] newspaper would spread thoughout his empire," and a split would make it easier to insulate his more valuable entertainment properties.


But the newspaper business could wither if cast aside: The greatest risk of a split is "that the publishing arm could falter without the support of its corporate sibling's deeper pockets," says Michael J. De La Merced at The New York Times. At the moment, analysts estimate that a new entertainment-only company would be valued at $52.5 billion, which is pretty much what all of News Corp. is worth now. In other words, the stock market is currently "ascribing no value to the publishing properties" whatsoever, which is a terrible omen for a standalone publishing company.


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Tags: NWS
1Comment
Jun 27, 2012 7:43PM
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First of all, I work at JCPenney and would like to address the comment about the online shipping, it is not true that you have to pay shipping.  If item is shipped to a store, free shipping.  If the item is over 50 dollars, free shipping to your address.  Any item can be returned to any Penneys store.  There are not too many retailers that don't charge shipping.  Helo?? 

    Comparing prices at Penneys, Kohls, and Macys always finds Penneys prices lower, without having to save/find/use coupons.  Those of us that work there are ecstatic that there are no longer coupons.  What a hassle to all involved.  Kudos to Ron Johnson for that move.

    My philosophy on social issues is simple. Shut up and sing, act, sell your product.  Leave the political, social, religious issues out of the equation. 

     Penneys merchandise is not tacky, cheap; it is stylish and well priced.  Fair and square.  

As far as the ads, my gosh, if you stop shopping at a store because a t.v. ad was too loud; how silly is that?

 

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