They say no news is good news, but the new News Corp. is making headlines. In mid-2013 media mogul Rupert Murdoch split his print media and broadcast media holdings into separate companies. News Corp. now consists of newspapers (The Wall Street Journal, New York Post, Australia's Herald Sun, and The Sun and The Times in the UK), information services ( Dow Jones and Factiva), and book publishing ( HarperCollins). It also owns FOX SPORTS Australia, a 60% stake in Australian real estate web portal REA Group, and a 50% share of Australian pay-TV provider FOXTEL. Murdoch’s US-based TV and film holdings were organized into Twenty-First Century Fox, which took over the airwaves with such stations as FOX and FOX News.
News Corp. divides its operations into five segments –- news and information services, book publishing, cable network programming, digital real estate services, and other. (Its 50% stake in FOXTEL is treated as an equity investment.) The print and digital media publications (news and information services, book publishing) account for the majority of revenues.
The news and information services segment also includes News America Marketing Group (NAMG), a publisher and distributor of coupons in newspapers and on the SmartSource.com website. NAMG’s customers include many of the largest consumer packaged-goods advertisers in the US and Canada. It reaches 74 million households for its freestanding coupon inserts and about 50,000 retail outlets for its in-store advertising.
During the split Murdoch moved the Australian TV operations to News Corp. in order to allow the US TV operations to grow as a stand-alone division. Its “other” division consists of digital education business Amplify.
The company’s subsidiaries are located in Australia, the UK, and the US. In addition, book publisher HarperCollins has a warehouse in Scotland and Dow Jones runs an office in Hong Kong. North America accounts for more than 40% of sales, while Australia makes up 35% and the UK racks up a quarter of sales.
The unspoken impetus for the split came about as damage control over the phone-hacking and payments to public officials scandal at UK-based newspaper The News of the World. News Corp. shut down The News of the World in July 2011, but shareholders still expressed concern over how the scandal and subsequent fallout would affect all of the company’s other media holdings.
Splitting the business into separate publishing and entertainment companies allows each company to pursue uninhibited industry-specific opportunities, benefit from greater financial and operational flexibility, and provide investors with a more targeted investment opportunity.
Overall revenues fell 5% in 2012 to $8.6 billion primarily due to reduced revenues in the UK’s newspaper business News International following the 2011 closure of The News of the World. Lower advertising and circulation revenues at its Australian newspapers also affected the top line. In addition, the company recorded a net loss for 2012 due to expenses associated with the corporate split.
Mergers and Acquisitions
In September 2013 News Corp. exited the small-town local newspaper business when it sold its Dow Jones Local Media Group, with 33 publications, to an affiliate of Fortress Investment Group to be managed by GateHouse Media. The Dow Jones Local Media Group daily newspapers included the Cape Cod Times (Hyannis, Massachusetts) and The Record (Stockton, California). In addition to daily and weekly newspapers, it also operated the papers' websites as well as news and advertising niche publications.
Chairman Rupert Murdoch, with an estimated net worth of $11 billion, owns almost 40% of the company's voting stock.