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News Corp Updates Split Plan

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In a recent filing, News Corporation (NWSA) revealed that its new publishing company will start operations with $2.6 billion in cash and no debt once its planned spin-off is completed.

News Corporation is on the verge of splitting its operations into 2 separate publicly traded publishing and entertainment entities.

The Publishing Company (to be known as News Corporation) will comprise publishing businesses, education unit and the integrated marketing services business, with brands like The Wall Street Journal, HarperCollins and Amplify.

On the other hand, the Entertainment Company (to be named as Fox group) will encompass cable and television assets, filmed entertainment, and direct satellite broadcasting businesses including Fox broadcasting, cable network, Fox News Channel, the 20th Century Fox movie studio, BSkyB, Sky Italia, Sky Deutschland, and pay-TV operations in Europe and India.

News Corporation named Robert Thomson, Editor-in-Chief of Dow Jones and managing Editor of The Wall Street Journal, as the new CEO of its publishing company. Alongside, Michael Florin has been appointment as the Senior Vice President and Head of Investor Relations for the new publishing company.

We believe that the split will augur well for News Corporation, which has been in troubled waters since the revelation of the phone hacking scandal that eventually led to the closure of the publication of ‘The News of the World’. Moreover, the company was held back from acquiring the remaining 61% stake in the British Sky Broadcasting Group.

Further with adequate cash, the new News Corp. will be well positioned than its peers, The New York Times Company (NYT), Gannett Co., Inc. (GCI) and The McClatchy Company (MNI) to look for strategic acquisitions and expand its business.

Currently, shares of News Corp retain a Zacks Rank #3 (Hold).

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