Now that news of the News Corp. is officially moving ahead with splitting its vast global media empire, founder and chairman Rupert Murdoch warned analysts and reporters on a conference call this morning that the plan to divide into two companies “is not a fait accompli. There are a lot of steps to take.”
He also said the impetus, hailed by the markets as a smart business move that will unshackle its challenged newspapers from its more profitable entertainment brands, is “not a reaction to anything in Britain” such as ongoing investigations into his newspapers’ phone hacking and bribery scandals. COO Chase Carey, who will become CEO of the newspaper and publishing assets that Murdoch has built from his days as a scrappy Australian news magnate, added there were “no changes” in the corporate plan to buy the rest of BSkyB it doesn't currently control.
Murdoch, with his inimitable Aussie turn of phrase, discredited rumors that the publishing unit was the weak ‘orphan’ and emphasized the pending split is not a lack of faith in that business.
“That could not be further from the truth [although] people are buying fewer papers on crushed wood.” In fact, he argued, the company's newspapers are "viable" and "undervalued," which may allay employee fears that his newspapers will be consolidated in the next 12 months.
“We expect the publishing company to enter the world as a standalone entity with a very strong balance sheet," Murdoch stated, echoing this morning's press release. The plan is to ramp up digital, he added, because paywalls will pay off and “people will pay for news.”
As for the impact on cross-brand synergies, Carey stated: “Just because they’re separate doesn’t mean the companies can’t work together on an arm's length basis. There will be opportunities for the companies to do things together.”
“This is a sign of the times,” commented Barton Crockett, an analyst with Lazard Capital Management. “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.”
Asked what potential hurdles face his company in the pending transaction, Sir Rupert replied, "Lawyers — there's a short answer — and governments."