By Rob Davies
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Rupert Murdoch’s News Corporation has drafted a blueprint for splitting up its publishing arm and its entertainment businesses.
The proposal, which is yet to be approved by the board, would see Murdoch’s UK and overseas newspapers, as well as publisher HarperCollins, spun off into a separate company.
The remaining TV and entertainment business would be much larger and more profitable, housing lucrative operations such as US broadcaster Fox and News Corp’s 39 per cent stake in BSkyB.
Talks of a break-up follow a dismal year for News International, the UK newspaper arm of the Murdoch empire, which has been rocked by the News of the World phone hacking scandal.
A split would help isolate crown jewel assets â€" such as the BSkyB stake â€" from the fallout that has spread after revelations about the now defunct tabloid’s conduct.
It would also strengthen BSkyB’s hand as broadcast regulator Ofcom looks into whether it is a ‘fit and proper’ owner of a broadcast licence in the light of the controversy.
City analysts said a split might also allow Murdoch to revive his attempt to buy the rest of BSkyB in the future, after a bid was abandoned as pressure mounted on the media mogul.
But investors have focused instead on the potential financial benefit, sending shares in News Corp up more than 6 per cent on Wall Street.
The entertainments division contributed 90 per cent of operating profit in the third quarter of 2012, while its revenues reached £15bn for 2011, compared to £5.6bn in the publishing division.
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