Murdoch’s tough call: Split News Corp. to survive

3:00 PM Murdochs, split, survive, tough No Comments

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Rupert Murdoch has reportedly been against splitting up his News Corp. media empire.

Rupert Murdoch’s driving ambition may have finally met its match.

On Tuesday, his News Corp. media empire confirmed reports that it is thinking of restructuring into two separate, distinct, publicly traded companies -- a move that would effectively bring to an end Murdoch’s decades-long drive to pull together the disparate strands of his empire into one coherent company.

Harder still for Murdoch would be the fact that a division of the media giant would almost certainly mean cordoning off the newspaper business that once was the core of his company, which he has grown from a single Australian newspaper he inherited in the 1950s.

“This is a sign of the times,” Barton Crockett, an analyst with Lazard Capital Management, told CNBC.

“A lot of us were surprised that they're actually taking this step, because Rupert’s ties to newspapers are so strong and so historical, I was doubtful they’d go there as long as he was calling the shots. But they are, and I think that’s showing he’s evolving with the times, and the company is,” he added.

The restructuring of News Corp. would, according to a report in The New York Times, likely cleave its more profitable entertainment unit -- driven by News Corp.’s movie studio and powerful television networks -- from the smaller, less profitable, publishing business that includes The Wall Street Journal, The Times of London, The New York Post and the HarperCollins book business.

Rob Enderle, an analyst with Enderle Group, said the main motivation for dividing News Corp. in two is likely the protection of the Fox movie studio and television networks that are now the most profitable parts of the media empire.

Murdoch is likely to want to insulate this part of the business from the fallout from the phone hacking scandal that has led to the closure of the News of the World tabloid in the U.K., halted Murdoch’s BSkyB takeover bid and prompted the arrest of several key figures, he said.

“There has been a lot of concern about how broad the company’s holdings have become, and that if something were to happen to any one part of it, it could bring down the whole of it,” said Enderle.

The split is also likely driven by shareholder unrest over the direction of the company.

Less concerned about journalistic ethics and more worried about the company’s bottom line, News Corp. shareholders have become more vocal since the hacking scandal broke, and they are more likely to want the company to focus on its more productive entertainment assets, which generated $23.48 billion in revenue in the year ended June 2011, nearly three times the $8.83 billion in revenue generated by the publishing business.

There were also concerns that the size of the company could raise antitrust concerns if it wanted to engage in corporate acquisitions, Enderle added. A split would realign the company and enable it to focus it on each core operation, he said.

“This split is clearly along functional lines,” Enderle said. “The resulting companies should be easier to manage and focus, because it really did look as if News Corp. was losing track of each unit’s focus.”

News of the potential plan to split the media empire in two has certainly won the approval of the market, with shares of News Corp. rising more than 8 percent in trading Tuesday.

Media conglomerate Viacom took a similar path in 2005 when it split into two companies, leaving the television company CBS as a standalone company. Both companies have thrived since the move.

Murdoch has reportedly been against splitting up News Corp., but may have been swayed by the views of his second in command, Chase Carey, who is said to regard the publishing industry as mature and unlikely to yield substantial profits. Earlier this year, Carey made it clear that the company’s management team has considered a split.

“For Murdoch it has been all about empire building, about maximizing power and control, but the only thing that leaves you with is something unmanageable,” Enderle said, adding that it’s rare to see someone like Murdoch, who is clearly oriented toward status and power, step in and break up a company.

“The board is subordinate to Murdoch, so it probably really took a real and present threat to the overall entity for him to step back and realize there’s a need to restructure,” he added.

The outlook for Murdoch’s beloved newspaper business remains gloomy, Enderle added.

“By providing more focus for the unit they might be able to turn it into something more profitable, or find a buyer that will do something else with it, but the trend right now is away from publishing,” he said.

Crockett noted that the phone hacking scandal presented an opportunity for News Corp. to rethink its operations and improve the situation for shareholders. A division of the business will lead to a stronger company, he said.

“We’ve gone from lemons to lemonade,” said Crockett. “I think it’s something that will make News Corp. a stronger business and a better stock.”

How would investors be impacted if News Corp. split?

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News Corp investors to vote against Murdochs

9:23 PM against, investors, Murdochs No Comments

LONDON (Reuters) - Rupert Murdoch's multi-million dollar campaign to win back the hearts and minds of News Corporation's independent investors suffered a new blow on Friday after another key shareholder group called for his eviction from its board.

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Hermes Equity Ownership Services (HEOS), the shareholder advisory service affiliated to Britain's largest pension fund, issued a rallying cry to investors to vote against all Murdoch family re-elections to the board of the embattled media group at next week's annual general meeting on October 21.

"The time is right for the company to appoint an independent chairman to rebuild trust, help correct the governance discount, and ensure that the interests of all investors are properly represented," Jennifer Walmsley, Director of Hermes Equity Ownership Services, said.

"We have a battle on our hands to demonstrate the strength of shareholder opposition because so many shares are held by the family or by people affiliated with the family," she told Reuters.

The organization, which votes on behalf of the BT Pension Fund and more than 20 other institutional clients running $140 billion of assets, has also called for an independent investigation into the phone hacking scandal that led to the closure of top-selling British tabloid The News of the World.

Besides seeking the removal of Murdoch and sons James and Lachlan, HEOS -- whose members hold 0.5 percent of News Corp's shares -- Hermes is also withholding support for the re-election of directors Arthur Siskind and Andrew Knight, citing concerns for their independence.

The statement from HEOS is the latest in a flurry of anti-Murdoch lobbying from corporate governance watchdogs and proxy voting companies all over the world.

Earlier this week, Institutional Shareholder Services Inc. (ISS) said Murdoch and 10 other News Corp directors should be ousted from board in the wake of the phone hacking scandal, which it said "laid bare a striking lack of stewardship and independence."

The ISS statement prompted News Corp, which has bought back more than $1 billion of its stock since August, to step up its appeal for shareholder support with a letter that reiterated its strong financial performance in the face of the flagging global economy.

But Walmsley said investors were growing impatient for fundamental change that would see the infamous 'Murdoch discount' gone for good.

News Corp shares typically trade below rival media groups because the market applies a discount to reflect Murdoch's tight control of the company and a tendency to make decisions that shareholders may not support.

"There's an enormous groundswell of opposition and I think there are a lot of investors out there who feel ... the governance structures in place are clearly not sufficient to safeguard the interests of minority investors," Walmsley said.

"There is a huge problem with shareholder democracy at News Corp -- it breaches what we see as a fundamental shareholder right of 'one share, one vote'," she said.

The war of words between News Corp and its shareholders over the need for a sweeping purge of its board is likely to revive a debate over whether James Murdoch should be forced to give up his role as chairman of British Sky Broadcasting.

Investors in BSkyB -- News Corp's erstwhile bid target -- will vote on the make-up of their board next month.

(Editing by Chris Vellacott and Hans-Juergen Peters)

Copyright 2011 Thomson Reuters.

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Murdoch's son job as to keep BSkyB of Chairman

3:14 PM BSkyB, Chairman, Murdochs No Comments

Two sources informs the Board meeting in LONDON, Jul - James Murdoch unanimously was confirmed as Chairman of the BSkyB Board, winning a reprieve from a phone hacking scandal, which draw him on several studies which threatens told of Reuters.

Thursday at the meeting of the Board of BSkyB was his first forced, because the crisis News Corp close the news of the world newspaper, drop a $ 12 billion bid for BSkyB and to offer, James and his father Rupert answer questions in the British Parliament.

He had several shareholders step down to avoid conflicts of interest, for fear of contamination by the scandal, which acquired new dimensions earlier this month, when it was revealed that a murdered schoolgirl had hacked her phone, required.

One of the sources, said: "The role of Chairman was full, discussed" and added that the Board external developments would be monitoring the Presidency ongoing for Murdoch's relevant could be.

Murdoch operations do not monitor the news of the world at the time the hacking occurred, but large contributions to victim approve, after he free News Corp British newspaper operations recorded.

He was Chief Executive of BSkyB before he moved to News Corp and is regarded widely as have done a good job.

On Thursday, a children's charity said the mother of an other murdered student, which was championed by the news of the world the "Sarah's law" anti-pedophile campaign had said that their own phone may have targeted.

The Phoenix Foundation, a children charity, Sara Payne after her daughter Sarah by a pedophile 11 years ago was killed, founded said that the police employs the tabloid had found their information on a list of the investigator.

The anti-pedophile campaign was a pet project of then editor Rebekah Brooks, who was arrested earlier this month.

The phone hacking scandal is now the subject of three separate investigations in the UK: a study of the judicial police, a parliamentary probe and an inquest, which opened on Thursday.

Murdoch's testimony given in Parliament last week has already been in question by two ex-news of the world Manager called, who say that he was aware, showed that the hacking on a few "rogue" was limited to people.

Which today no longer existing tabloid newspaper of the last editor and his Chief lawyer said that Murdoch was been confused, as he Parliament, he said an email with proof unaware of hacking, when it approves a large payment to the victim had been.

Murdoch said that he, the Chairman of the Parliamentary Committee of the survey of Murdoch's has by his statement, State while, that he will seek further clarification.

Richard Levick, President and CEO of Levick strategic communications, who advised countries and companies on issues such as the U.S. prison camp in Guantanamo Bay and the recent Wall Street crash, says the crisis is far from over.

"If you look at the arc of crisis, are their worst days behind them is not." It is parallel in many ways to Watergate. Watergate took 18 months to develop. It seems that this is one of the elongated crises is, "he told Reuters."

The Murdoch's are further questions by a judge-led inquiry ordered after Prime Minister David Cameron in response on the public outcry.

Cameron's image has by its support for his ex-speaker Andy Coulson, a retired news of the world editor tarnished been, who was arrested earlier this month.

Judge Brian Leveson, who followed in the 1990s, serial killer Rosemary West leads the investigation into the phone hacking allegations, media ethics and the relationship between media organizations, police and politicians.

On Thursday, calls for all parties to consider the public interest, not only their own. He has to call the authority is a party to give evidence under oath on the request, the planned about a year.

"It perhaps tempting for a number of people to close ranks and suggest that the problem is or local to a small group of journalists, which was then on the news of the world," he told a news conference in London.

"I urge all to take a larger view of the public good and help me hook with the length, width and depth of the problem."

News Corp shareholders have called for a review of corporate governance as the crisis of spreads.

A spokesman for the co-operative asset management, retail in News Corp and BSkyB, said Thursday: "we believe radical reform is necessary to both companies, but to News Corp in particular and in fact in the newspaper industry in the United Kingdom, to weed out the kind of illegal or grossly invasive practices, which are reportedly."

BSkyB Board meeting in London Thursday announcement took place on the eve of the company's quarterly results. The results are likely to continue to hope a strong achievement for the company and investors that a special dividend also is announced.

The Board had said for the last year, not to consider that while such a measure it was a takeover target and many brokers are now stoking hopes for a payout.

Analyst Ian Whittaker liberum capital however warned that at the moment can be too politically sensitive.

"In view of fast-moving events of the past two weeks, management can feel now is not the right time, a special dividend, in particular in view of the potential complications of 39 per cent of shareholders News Corp., a significant level of the cash back to known to give", he said.

"Historically, BSkyB management stressed investment on a return of cash-back."

Copyright 2011 Thomson Reuters.

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Murdoch's News Corp. dropping bid for BSkyB

7:38 PM BSkyB, dropping, Murdochs No Comments

Rupert Murdoch's News Corp moved Wednesday its offer to British Sky Broadcasting PLC apply in the midst of growing political pressure from a hacker scandal engulfing the media phone giant.

Murdoch was forced, step back accept of the biggest fight of his career on a lucrative prize that he acceptance of the takeover could not win Government, as political party of Great Britain, however, had United.

"We believed that the proposed acquisition of BSkyB would benefit from News Corp of both companies but it is clear that it too difficult, progress in this environment become," News Corp. Chief Operating Officer Chase Carey said in a statement. News Corp statement said would it remain the right to renew its offer if allowed long term shareholder of BSkyB and it reserved.

Prime Minister David Cameron the news welcomes, a spokesman said. The British Parliament was due to pass a non-binding vote on Wednesday afternoon instruct, Murdoch the planned $12 billion acquisition of 61 percent of BSkyB not already owned by News Corp fall

BSkyB shares fell in the news, while News Corp shares, under pressure, edges to have been.

News Corp has politically and financially in the past few days by the phone hacking scandal pummeled that has been dated to 2002. The scandal broke July 4 after it turned out that investigators hired by Murdoch's news of the world, Britain's biggest-selling Sunday newspaper, had accessed and then deleted messages on the phone a missing 13-year-old girl, who was later found murdered.

How much story: Murdoch Empire left shaken, reduced

Since then the newspaper 168-year-old has been locked and grown public anger over allegations that spied reporter on thousands of people, the rich and powerful to vulnerable victims of crime is.

Th scandal has can to spread that their phone hacking practices have aligned with News Corp journalists American 9/11 victims, in the United States charges.

Senator John Rockefeller said Tuesday about whether the newspaper had broken all the laws of the US parent company, that the scandal raised "serious questions".

"I am concerned that the approved phone-hacking in London by News Corp can have extended victims or other Americans on 9 / 11," he said. "If they did, the consequences severe."

The scandal in the political sphere with the arrest of Andy Coulson, former editor of the news of the world has spread in the United Kingdom, which was forced to resign earlier in this year as the camerons spokesman. Coulson faces charges of corruption and conspiracy for communication intercept.

And earlier on Monday, familiar with the situation, a source told of Reuters that Tom Crone, legal Manager at the Rupert Murdoch u.k. newspaper arm combat widespread hacking allegations, the company has left.

Crown had 26 years with news international. He still supervision for all legal matters of the Sun and the news of the world for editorial. Spokeswoman Daisy Dunlop went back to say if Crone had resigned or said leave.

Murdoch, 80, is an Australian by birth, acquired American citizenship and a news commands and media-rich, all over the world, with Fox News, Fox Entertainment, the Wall Street Journal and New York Post, the most well-known brands expanded.

"Have lost control of the situation fully." The police investigation has made to all sorts of things. ... This is solid, and it is easy not to stop, "said Steve Hewlett, media consultant on Sky News."

"Whether it ever sufficiently calms for News Corp to renew its offer-, who knows?"

Reuters and the associated press contributed to this report.

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NYT: Murdoch's business identity under the microscope taken

7:26 AM Business, identity, microscope, Murdochs, taken, under No Comments

Risk-taking and line skirting boards have only one more cost of doing business for Rupert Murdoch.

But the ever-growing hacker voice mail scandal in the British tabloid news of the world threatens the company stain's image in a way that other embarrassing incidents in far-flung media properties News Corporation - which include Fox networks and the New York Post — do not have.

In the past Mr Murdoch either has outlasted his critics or quickly acted to limit the impact. And on Wednesday was in the damage control mode again. The company moved quickly to condemn, the hacker and present their intention to cooperate with the police, but to prove the damage was difficult to contain.

There is a growing consensus within the enterprise, that Rebekah Brooks, who became Chief Executive of news international and unique Editor, the focus of much of the outrage of the hacking, be forced from her job, according to people with knowledge of the discussions within the News Corporation.

The possibility of the dismissal is one that several people was close to Mr Murdoch that he fiercely resist Mrs Brooks said, because he to her loyal and the campaign against them as a vendetta by political enemies of the company.

One who said these people, who wanted to be identified not discuss internal matters, was also one it the Andy Coulson believe within the company, also more and more stop the former news of the world editor, which was forced, as Communications Director of the British Prime Minister, under control will come.

So far was the damage limited view of the company. Not yet heavy financial losses, face make the News Corporation, even if the advertiser boycott of the news of the world grows. However, was the company's shares 3.6 percent on Wednesday to $17.47, after rising for most of the year. The episode could threaten the largest business on the News Corporation plate: British approval its full acquisition by BSkyB, the satellite TV companies.

David Bank, a media analyst for RBC capital markets, said that the hackers scandal was so far a blip in the company large business conducted.

"It feels like much more noise than substance," he said newspapers, how little in the face on the net profit contributed. The news of the world is only a piece of news international large presence in the UK. The company publishes also the times of London and the Sun.

Overall, revenue from the publishing subsidiary of News Corporation accounted for only 17 percent of sales in the last nine months. During this time, cable network programming accounted for 61 per cent, and film, including 20th Century Fox Studio, was 20 percent.

Mr Murdoch was clear enough about the consequences of hacking scandal, that he convened what close described someone Valley, Idaho, to him as a "War Council" in the Sun in which he a media conference concerned visited. Mr Murdoch was on Wednesday with Wendi, his wife and his son Lachlan. Mrs Murdoch was seen by a reporter at the Conference, but Mr Murdoch was not.

Mr Murdoch, weighing in the controversy for the first time since some leaders of Britain's called for an investigation of the News Corporation news-gathering practices, the allegations of hacking "regrettable and unacceptable" called and swore requests to cooperate with police.

But with damaging revelations about the extent of hacking emerging every day - the latest was reported that the news of the world, voice-mails are accessed relatives of dead soldiers had — Mr. Murdoch's shame could go only so far expressions of disapproval.

"Depending on, where the investigation goes, how widespread it is and who what, when knew that is something that could tarnish him seriously,", said REM Rieder, editor and senior Vice President for the American Journalism Review. "This seems institutional."

The News Corporation is no stranger to scandal. Fines for indecency complaints charging anti-competitive business practices and defamation claims are a fact of life for the company, which was able, which easily absorb financial inconvenience.

In 2009, advertisers Glenn Beck Fox boycotted news program, after the host said racist was President Obama. The action in stride, said Fox move advertising dollars on other time slots. And in January the company for communication presented had accused that a 500-million dollar settlement, a subsidiary of News Corporation trying to get a monopoly on the in-store coupon business.

The most recent prominent incident with the Federal Communications Commission came last year, after the network showed an episode of "American Dad", in which a horse appeared on the a character ejaculating face. The Commission proposed fine of $ 25,000. This week, the was New York Post sued for libel by the hotel maid, Dominique Strauss-Kahn, the accused former head of the International Monetary Fund, sexual violence. The post of the maid called on prostitutes in his coverage of the case.

In the UK, advertisers started the news of the world, remove to avoid displaying the popular press. Some of these companies included Ford, Mitsubishi, the Lloyds Bank Group and Virgin Holidays. But losses, seem likely to remain contained, as long as the scandal in the United Kingdom. "I think, it is contained," said Mr Bank.

The greatest risk would be to the planned purchase of BSkyB. Corporation already has the news about 39 percent of the company and for one year, to acquire the rest tried. The acquisition of the company would tighten grip on British Broadcasting, but it has faced, control of critics who say that a company should have it not as much control of the television market.

The review of the transaction was expected, that to end on Friday and all indications have been that the News Corporation win approval.

Ofcom, the UK regulator, said in a statement on Wednesday that it wasn't responsible for the investigation of hacking "which are really in the hands of the police and the courts", but it was "Closely monitoring of the situation and in particular the investigations by the competent authorities to the alleged illegal activities."

""I think people ask themselves,"this is a problem for the BSkyB transaction be?" "Said Mr. Bank.""I can not imagine, that it does in any material way." But he said: "It is a very inconvenient time."

This story, "Under pressure, the Murdoch-style" appeared originally in the New York Times.

Tim Arango and Evelyn M. roof contributed reporting.

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