By Melodie Warner and Nathalie Tadena News Corp. (NWS, NWSA) said it will separate its publishing and media and entertainment businesses into two distinct publicly traded companies to increase the operations' flexibility. Shares have jumped 11% since Tuesday when the media company confirmed it was contemplating splitting in two. The stock was inactive premarket. The Wall Street Journal reported late Wednesday that News Corp.'s board unanimously approved a plan to split the media conglomerate in two pieces, separating its lucrative entertainment operations from its publishing business. The entire process is expected to take about a year, and formal approval from the board will be needed before the transaction is effected. In Thursday's release, the company said the publishing company will be comprised of News Corp.'s U.S., U.K., and Australia newspapers and information businesses, which include The Wall Street Journal and the Times of London, book publishing brands like HarperCollins, its marketing services company, and its digital-education group, as well as its other assets in Australia. The media and entertainment company will encompass News Corp.'s broadcast and cable networks, film and television production studios, television stations--like 20th Century Fox, Fox broadcast network and Fox News Channel--and pay-TV businesses in Europe and India. News Corp. owns Dow Jones & Co., the publisher of this newswire and The Wall Street Journal. "There is much work to be done, but our board and I believe that this new corporate structure we are pursuing would accelerate News Corp.'s businesses to grow to new heights, and enable each company and its divisions to recognize their full potential--and unlock even greater long-term shareholder value," said Chairman and Chief Executive Rupert Murdoch. Mr. Murdoch will be chairman of both companies and CEO of the media and entertainment company, while Chase Carey will be president and chief operating officer, roles he currently holds at News Corp. After receiving final board approval, News Corp. expects to convene a special shareholder meeting in the first half of 2013. News Corp. shareholders will receive one share in the new company for each same class share currently held. Both companies will maintain two classes of stock. The family of Chairman Rupert Murdoch, which now effectively controls News Corp. with a roughly 40% voting stake, is expected to maintain effective control of the two companies. For years, investors have called on News Corp. to divest the publishing unit, which they see as a drag on the company's entertainment units. The calls for divestiture intensified over the past year as a phone-hacking scandal at News Corp.'s U.K. publishing unit led the company to abandon its bid for the remainder of British Sky Broadcasting (BSYBY, BSY.LN). News Corp.'s entertainment assets make up by far the bulk of the company, contributing three-quarters of the $25.34 billion in revenue for the first nine months of the fiscal year, and have benefited recently from the company's growing cable businesses. By contrast, the publishing division has been slower to grow due in part to changing media consumption habits for books and newspapers, and more recently, because of costs tied to the U.K. scandal. Write to Melodie Warner at melodie.warner@dowjones.com
