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News Corp. (NASDAQ:NWS) on Thursday approved the company’s plan to split into two separate publicly traded companies.
Under the planned split, NWS will separate its publishing, and media and entertainment businesses into two separate companies.
Rupert Murdoch will be the Chairman of both companies, and will serve as CEO of the media and entertainment unit. The Murdoch family is likely to maintain control of both companies.
The planned split will take about a year to complete. Investors have welcomed the planned split, with NWS stock rising sharply since news of the split first surfaced on Tuesday.
The idea behind the split is that the faster growing media and entertainment business will have a higher valuation as a standalone company. But the challenge for NWS will be to make its publishing business attractive to investors.
For the nine-month period ended March 31, 2012, NWS’s entertainment businesses saw a 9% increase in revenue and a 23% increase in operating profit. In the same period, the publishing unit saw a 4% drop in revenue and a 22% drop in operating profit.
Murdoch believes that the new structure NWS is pursuing would accelerate the company’s businesses to grow to new heights.
