--News Corp.'s board approves splitting entertainment,
publishing businesses
--New publishing company to buy back $500 million in stock, post
split
--News Corp. to take up to $1.4 billion impairment charge in
June quarter
(Adds news of News Corp.'s impairment charge in the third
paragraph.)
By Ben Fox Rubin, Saabira Chaudhuri and Melodie Warner
News Corp.'s (NWS, NWSA, NWS.AU) board approved the company's
separation into two publicly traded entities, moving a step closer
to splitting its entertainment businesses from the publishing
division.
The media company on Friday also outlined the terms of the share
distribution, named the boards of directors for both firms, and
announced a $500 million stock-buyback program for the new News
Corp. following the separation.
In addition, late Friday, News Corp. said it would take an
impairment charge between $1.2 billion and $1.4 billion, pretax, in
the June quarter to write down assets related to its publishing
segment. In the year-ago June quarter, News Corp. took a $2.8
billion impairment charge, also primarily related to its publishing
operations, particularly those in Australia.
Last year, News Corp. decided to split itself after years of
shareholder pressure to spin off the lower-growth publishing side
of the business. The split is set for June 28 and still requires
approvals from shareholders and some regulators.
As part of the deal, the company's board approved the
distribution of all shares of the new News Corp., which will be the
publishing business, to the company's stockholders in a ratio of
one share of the new News Corp. for every four shares of News
Corp.
The separation plan involves placing The Wall Street Journal,
Dow Jones Newswires, book publisher HarperCollins and several
Australian and British publications, among other divisions, into a
company that will retain the News Corp. name. The Fox broadcast and
cable channels, 20th Century Fox movie studio and other
entertainment properties will be part of the newly titled 21st
Century Fox.
"Today's announcement is a significant step in creating two
independent companies with the world's leading portfolios of
publishing and media and entertainment assets," said Rupert
Murdoch, who will serve as chairman and chief executive of 21st
Century Fox and executive chairman of the new News Corp.
"We continue to believe that the separation will unlock the true
value of both companies and their distinct assets, enabling
investors to benefit from the separate strategic opportunities
resulting from more focused management of each division."
Among the directors named to the boards of 21st Century Fox as
well as the new News Corp. are Mr. Murdoch, who currently heads
News Corp., and sons James Murdoch and Lachlan Murdoch. The boards
of the new companies have 12 directors each; the current News Corp.
has 16 directors, including two directors emeritus.
In addition to several current News Corp. directors, the board
of the new News Corp. will include investment company EXOR SpA
(EXO.MI) CEO John Elkann; Ana Paula Pessoa, a partner at
corporate-communications firm Brunswick Group; Masroor Siddiqui,
the managing partner of Naya Management LLP; and Robert Thomson,
who will be the company's chief executive.
The 21st Century Fox directors include Delphine Arnault, deputy
general manager at Christian Dior Couture since 2008 and a director
of Christian Dior SA (CDI.FR), and Jacques Nasser, who served as
Ford Motor Co. (F) chief executive from 1998 to 2001 and a director
of British Sky Broadcasting PLC (BSY.LN, BSYBY) from 2002 to late
last year. Also included is Strayer Education Inc. (STRA) Executive
Chairman Robert Silberman.
Among other moves disclosed Friday, shareholders in 21st Century
Fox and the new News Corp. will be given the right to acquire more
stock if any individual investor acquires more than a 15% stake.
Such rights plans, commonly referred to as "poison pills," are
designed to flood the market with additional shares, making more
expensive for an investor to acquire a controlling stake.
News Corp. said it thinks there will be heavy trading of 21st
Century Fox and the new News Corp.'s stock around the time of the
separation and it sought to adopt the rights plan to prevent a
change in control. News Corp., in which the Murdoch family holds a
39.4% voting stake, said the rights agreements will expire after
one year.
The company will host an investor day Tuesday to present the new
News Corp.
Write to Ben Fox Rubin at ben.rubin@dowjones.com
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