News Corp will start its new life with $2.6bn after split
- 8 March 2013
- From the section Business
Rupert Murdoch's News Corp will start its new life primarily as a publishing company with no debt and $2.6bn (£1.7bn) in cash when it is spun off.
The company, which is splitting from its TV and film interests, said in a regulatory filing that it would have assets worth $18.6bn.
These include the Wall Street Journal, Times and Sun newspapers, and book publisher HarperCollins.
Analysts expect News Corp to use some cash to expand digital operations.
News Corp's other operations, including US news channel Fox News and the 20th Century Fox film studio, will be renamed Fox Group. The split is expected to be completed in June.
Mr Murdoch will remain chairman and chief executive of the Fox Group, and will be chairman of the new News Corp.
Print media businesses are restructuring at a time of declining sales and revenues. Tribune Co is exploring the sale of its newspaper assets, which include the Los Angeles Times and Chicago Tribune. Time Warner is spinning off Time Inc, home to magazines Sports Illustrated, Fortune, People and Time magazine.
Analysts estimate that Time Inc, which is expected to become a stand-alone public company at the end of the year, will be worth about $2bn-$3bn.
Brett Harriss, media analyst at Gabelli & Co, believes News Corp might even consider a bid for Time Inc. "You can never count out Murdoch when it comes to buying companies," he said. "News Corp certainly have the fire power to buy Time Inc."
News Corporation says its publishing wing incurred a $2.1bn (£1.3bn) loss in the last financial year.
Revenues fell 5%, partly as a result of the closure of the News of the World, which it stopped publishing after the phone-hacking scandal broke in the UK.
The company detailed the losses as it formally applied to US regulator the Securities and Exchange Commission to split its business into two.
The publishing arm, which News Corp said had made a profit of $678m the year before, will be called New News Corp. It will include book publisher Harper Collins, the Times and the Sun newspapers in the UK, the Wall Street Journal, the New York Post and the Australian.
The more lucrative TV and film business will be the parent company and will be called Fox Group.
The loss made by the publishing arm included a $2.6bn impairment charge, after write-downs of $1.3bn for goodwill and $1.3bn for other intangible assets, primarily newspaper mastheads and distribution networks.
These impairment charges were largely the result of "adverse trends affecting several businesses", including a weakening economic environment in Australia and lower predicted revenues from certain businesses.
The charges also reflected the expected sale of certain assets at a value below their carrying value, News Corp said.
The company first announced its plan to split in June, after pressure from shareholders who were concerned about the damage done to the publishing business by the events at the News of the World.
Robert Thomson, who is currently the managing editor of the Wall Street Journal and previously edited the Times, will be head of the new publishing company.
He will receive an annual salary of $2m, and a performance-based annual bonus with a target of $2m.
Rupert Murdoch will carry on as chairman and chief executive of the parent company, for which his compensation totalled $30m in the last year.
His pay will increase "modestly" as he takes on the role of executive chairman of the publishing company.