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How News Corp. Would Divide Assets

NEW YORK: The board of News Corp. has authorized management to look into separating the company’s entertainment and publishing divisions. Shares of News Corp. (NASDAQ: NWSA) jumped from around $20 to more than $22 a share since Tuesday, when The Wall Street Journal broke the news of the impending split. Marci Ryivicker of Wells Fargo outlined how the assets would be divided:

“The publishing unit would consist of U.S assets such as Dow Jones, The Wall Street Journal, Dow Jones Newswires, HarperCollins, The New York Post, and The Daily; Australian assets such as The Herald Sun, The Daily Telegraph and The Courier Mail; U.K. assets such as The Times, The Sun, The Sunday Times; News Corp.’s integrated marketing services group and its digital education group, including Wireless Generation.

“The entertainment and media company would consist of Fox Broadcasting, Twentieth Century Fox Film, Twentieth Century Fox Television, Fox Sports, Fox International Channels, Fox News Channel, Fox Business Network, FX, Star, the National Geographic Channels, Shine Group, Fox Television Stations, BSkyB, Sky Italia and Sky Deutschland.

“It looks to be a one-for-one common stock transaction.

“Rupert Murdoch would serve as chairman of both companies and CEO of the media and entertainment company. There is no mention as to who will be CEO of publishing. Chase Carey would serve as president and chief operating officer of the media and entertainment company.

“The company is looking to ‘assemble’ management teams and boards of directors for each company.

“The separation is expected to be tax-free and completed in approximately 12 months. After receiving final approval of the board of directors, News Corp. would convene a special shareholder meeting to consider the transaction. This meeting would not take place until H1 2013.

“Our preliminary thoughts: This morning’s announcement is a formality and was largely expected. We do think there could be some disappointment that Chase Carey was not named as CEO of the media and entertainment company, but overall we continue to view this transaction as value-enhancing, allowing for strategic flexibility, visibility and enhanced growth in both divisions.”