Murdoch: New innings
New York, March 10: Rupert Murdoch’s new publishing group will start life with no debt and $2.6 billion in cash to invest in new ventures and weather the changes taking place in the newspaper industry.
News Corporation, the parent company of The Times, published further details of the proposed split between its publishing and entertainment assets on Friday. It also outlined potential risks to future shareholders in these businesses, including the possibility of criminal action arising from the phone-hacking scandal.
The new News Corp will include Dow Jones, The Wall Street Journal and the British newspapers, which include The Times, The Sunday Times and The Sun.
The entertainment assets, which include the 20th Century Fox movie studio and Fox television network, will be spun off into a separate company called Fox Group.
The publishing division will receive a $1.82 billion dowry from its parent company, giving it $2.6 billion in cash reserves when it starts trading as a separate entity in June.
These financial reserves have prompted speculation that Murdoch may be preparing to acquire further newspaper titles, including the Chicago Tribune and Los Angeles Times.
“Our strong balance sheet provides us with the financial flexibility to continue our development of premium content and make investments across our businesses to maintain our leadership position amidst the continuing digital evolution,” the company said.
News Corp cited as an example of these investments the deal struck by its British newspapers to show clips of Premier League football matches on their digital platforms.
In the six months to the end of December, new News Corp had pro forma revenues of $4.6 billion (£3.05 billion) and profits of $85 million.
The division reported a $1.9 billion pro forma loss in the full year ended last June after it took a $2.6 billion writedown on the value of its Australian newspapers.
The company said that future risks to the business included potential criminal charges relating to phone-hacking and alleged payments to officials by the News of the World and The Sun.
The costs relating to civil settlements would be borne by the parent group, News Corp said.
News Corp’s share price closed up 62 cents, or more than 2 per cent, at $30.57 in New York on Friday. Its stock has risen 17 per cent since the start of the year.