Rupert Murdoch ready to break up his scandal-hit media empire

Tycoon may cede day-to-day control of newspapers to focus on entertainment brands

New York

Rupert Murdoch, bloodied by the phone-hacking scandal and under pressure over his stewardship of his media empire, is close to giving his blessing to a radical restructuring of News Corp that could see him relinquish day-to-day control of his newspapers.

The company is considering separating Mr Murdoch's beloved newspaper publishing division into a separate stand-alone company in a move that would inoculate the rest of the business from the hacking scandal and make it easier to resume its courtship of BSkyB, but which is likely to raise pressure for big cost-cuts across the UK titles. The split opens up the possibility that Mr Murdoch will no longer hold any executive role in the newspapers. Under the plan as conceived, he will remain chief executive of News Corp, while the leadership of the publishing company is to be decided. News Corp's board is to discuss the plan today, and an announcement could come as early as tomorrow.

The newspaper division – which includes the Sun, The Times and The Sunday Times in the UK, with the Wall Street Journal and New York Post in the US and more than 100 papers in Australia – will be bundled with book publisher, HarperCollins, and floated off as a stand-alone company.

At least initially, News Corp proper and the new publishing company will have the same shareholders, and both will be controlled by Mr Murdoch and his family. Outside shareholders have demanded the sale, closure or spin-off of News Corp's publishing interests for many years but have always been blocked by Mr Murdoch, whose love for the newspaper business has trumped stock market maths. Publishing is a much less profitable business than television and film-making, which makes up three-quarters of News Corp's revenues and almost 90 per cent of its profits. The company's broadcasting interests include Fox, which makes The Simpsons and American Idol, and Fox News in the US, and Star TV in Asia, and it also owns Twentieth Century Fox, the movie studio behind Avatar.

Chase Carey, Mr Murdoch's right-hand man, is believed to have been keen to rid News Corp of its publishing arm, and James Murdoch staked his claim to take over the company from his father on a similar promise to reduce News Corp's interest in newspapers. "Television is vastly more profitable and a big opportunity," James Murdoch said in a 2009 speech that marked a break from his father. Since then, James Murdoch has been appointed to, and then resigned, the chairmanship of News International, holding company for the British papers, with disastrous consequences for his prospects of rising to the top of News Corp.

His father, meanwhile, has had to bend, if not bow, to pressure to take outside shareholders' concerns more seriously, now newspapers have caused so much legal trouble for the group. The Wall Street Journal flew a kite for the separation yesterday, reporting that Mr Murdoch has "warmed to the idea". The story was confirmed by the company later in the day, and investors took no time to signal their approval: News Corp shares rose more than 6 per cent.

"This is a move shareholders have been hoping for for years, especially after the phone-hacking scandal," said Michael Corty, analyst at Morningstar. "News Corp has a great collection of entertainment assets, including its movie and TV studio, the Fox broadcast network, domestic and foreign cable networks, and its 39 per cent stake in BSkyB. We think less of the publishing assets, given the headwinds facing the newspaper operation in the US, the UK and Australia."

As a stand-alone company, the publishing division would face much more intense scrutiny of its financial results than it does inside News Corp.

Q&A: What now for News Corp?

Q. If News Corp were to separate itself in this way, would Rupert Murdoch then look to sell its loss-making newspapers?

A. The Times will have to be prised out of Rupert Murdoch's cold, dead hands. The beauty for him of the split is that he will still control the destiny of the publishing arm. Irritating News Corporation investors who have been telling the company to get out of the publishing business and concentrate on television can simply sell their shares in the new publishing company.

Q. But will there be pressure to cut costs?

A. You bet. If not a rounding error exactly, the results of the newspaper and book-publishing interests have not been hugely significant to News Corporation overall. As a standalone company, the shares are likely to underperform badly unless Mr Murdoch cracks the secret of making money in the digital era – or cuts costs to keep up with declines in advertising and circulation.

Q. So could the 'good' News Corp now buy BSkyB?

A. Mr Murdoch will still control News Corporation and will be no more or less "fit and proper" than he is now, before the split. The floating-off of the newspaper business, though, will put some distance between the hacking scandal and the rest of the company into which BSkyB would be folded, which could bring forward the date when a new bid is politically feasible.

News
Susan Sarandon described David Bowie as
peopleSusan Sarandon reveals more on her David Bowie romance
Sport
Arsenal supporters gather for a recent ‘fan party’ in New Jersey
football
Sport
sportDidier Drogba returns to Chelsea on one-year deal
Arts and Entertainment
The Secret Cinema performance of Back to the Future has been cancelled again
film
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Life and Style
Balmain's autumn/winter 2014 campaign, shot by Mario Sorrenti and featuring Binx Walton, Cara Delevingne, Jourdan Dunn, Ysaunny Brito, Issa Lish and Kayla Scott
fashionHow Olivier Rousteing is revitalising the house of Balmain
News
people
Arts and Entertainment
Christian Grey cradles Ana in the Fifty Shades of Grey film
filmFifty Shades of Grey trailer provokes moral outrage in US
News
BBC broadcaster and presenter Evan Davis, who will be taking over from Jeremy Paxman on Newsnight
peopleForget Paxman - what will Evan Davis be like on Newsnight?
Life and Style
fashionCustomer complained about the visibly protruding ribs
Voices
The new dawn heralded by George Osborne has yet to rise
voicesJames Moore: As the Tories rub their hands together, the average voter will be asking why they're not getting a piece of the action
Sport
Dejan Lovren celebrates scoring for Southampton although the goal was later credited to Adam Lallana
sport
News
newsComedy club forced to apologise as maggots eating a dead pigeon fall out of air-conditioning
Arts and Entertainment
Jo Brand says she's mellowed a lot
tvJo Brand says shows encourage people to laugh at the vulnerable
Life and Style
People may feel that they're procrastinating by watching TV in the evening
life
Independent
Travel Shop
the manor
Up to 70% off luxury travel
on city breaks Find out more
santorini
Up to 70% off luxury travel
on chic beach resorts Find out more
sardina foodie
Up to 70% off luxury travel
on country retreats Find out more
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Media

Data Scientist

competitive: Progressive Recruitment: A data analytics are currently looking t...

Web / Digital Analyst - SiteCatalyst or Google Analytics

competitive: Progressive Recruitment: My client who are a leading publisher in...

Campaign Manager

competitive: Progressive Recruitment: A leading marketing agency is currently ...

BI Analyst

competitive: Progressive Recruitment: A leading marketing agency in Central Lo...

Day In a Page

Evan Davis: The BBC’s wolf in sheep’s clothing to take over at Newsnight

The BBC’s wolf in sheep’s clothing

What will Evan Davis be like on Newsnight?
Finding the names for America’s shame: What happens to the immigrants crossing the US-Mexico border without documents who never make it past the Arizona desert?

Finding the names for America’s shame

The immigrants crossing the US-Mexico border without documents who never make it past the Arizona desert
Inside a church for Born Again Christians: Speaking to God in a Manchester multiplex

Inside a church for Born Again Christians

As Britain's Anglican church struggles to establish its modern identity, one branch of Christianity is booming
Rihanna, Kim Kardashian and me: How Olivier Rousteing is revitalising the house of Balmain

Olivier Rousteing is revitalising the house of Balmain

Parisian couturier Pierre Balmain made his name dressing the mid-century jet set. Today, Olivier Rousteing – heir to the house Pierre built – is celebrating their 21st-century equivalents. The result? Nothing short of Balmania
Cancer, cardiac arrest, HIV and homelessness - and he's only 39

Incredible survival story of David Tovey

Tovey went from cooking for the Queen to rifling through bins for his supper. His is a startling story of endurance against the odds – and of a social safety net failing at every turn
Backhanders, bribery and abuses of power have soared in China as economy surges

Bribery and abuses of power soar in China

The bribery is fuelled by the surge in China's economy but the rules of corruption are subtle and unspoken, finds Evan Osnos, as he learns the dark arts from a master
Commonwealth Games 2014: Highland terriers stole the show at the opening ceremony

Highland terriers steal the show at opening ceremony

Gillian Orr explores why a dog loved by film stars and presidents is finally having its day
German art world rocked as artists use renowned fat sculpture to distil schnapps

Brewing the fat from artwork angers widow of sculptor

Part of Joseph Beuys' 1982 sculpture 'Fettecke' used to distil schnapps
BBC's The Secret History of Our Streets reveals a fascinating window into Britain's past

BBC takes viewers back down memory lane

The Secret History of Our Streets, which returns with three films looking at Scottish streets, is the inverse of Benefits Street - delivering warmth instead of cynicism
Joe, film review: Nicolas Cage delivers an astonishing performance in low budget drama

Nicolas Cage shines in low-budget drama Joe

Cage plays an ex-con in David Gordon Green's independent drama, which has been adapted from a novel by Larry Brown
How to make your own gourmet ice lollies, granitas, slushy cocktails and frozen yoghurt

Make your own ice lollies and frozen yoghurt

Think outside the cool box for this summer's tempting frozen treats
Ford Fiesta is UK's most popular car of all-time, with sales topping 4.1 million since 1976

Fiesta is UK's most popular car of all-time

Sales have topped 4.1 million since 1976. To celebrate this milestone, four Independent writers recall their Fiestas with pride
10 best reed diffusers

Heaven scent: 10 best reed diffusers

Keep your rooms smelling summery and fresh with one of these subtle but distinctive home fragrances that’ll last you months
Commonwealth Games 2014: Female boxers set to compete for first time

Female boxers set to compete at Commonwealth Games for first time

There’s no favourites and with no headguards anything could happen
Five things we’ve learned so far about Manchester United under Louis van Gaal

Five things we’ve learned so far about United under Van Gaal

It’s impossible to avoid the impression that the Dutch manager is playing to the gallery a little