- Share this article on Facebook
- Share this article on Twitter
- Share this article on Email
- Show additional share options
- Share this article on Print
- Share this article on Comment
- Share this article on Whatsapp
- Share this article on Linkedin
- Share this article on Reddit
- Share this article on Pinit
- Share this article on Tumblr
News Corp. shareholders on Tuesday formally approved the planned split of the conglomerate into an entertainment company and a publishing company.
The decision was announced during a special shareholder meeting in New York presided over by chairman and CEO Rupert Murdoch. He said the split proposal was approved by the holders of an overwhelming majority of outstanding shares.
The Murdoch family controls 39 percent of the company’s Class B voting stock, which was widely seen as ensuring passage of the proposal. Many investors have also supported the split plan, which will create two more-focused corporate entities.
Murdoch told the Tuesday meeting, which was webcast and lasted only 20 minutes, that the “size and complexity [of the conglomerate] have made it difficult for investors to comprehend the true value of the company” and that the split would unlock this value.
He also said that the standalone publishing company, the new News Corp., would be “uniquely positioned” to move forward in the digital age. Wall Street analysts have said that the entertainment company, 21st Century Fox, will be the growth company, which should see more upside to its stock after the separation.
Investors at the meeting Tuesday voted on three split-related proposals. Detailed voting results are expected to be released later. The split will become effective after the market close on June 28, with the two separate stocks set to start trading on Monday, July 1.
At the meeting, News Corp. group general counsel Gerson Zweifach responded to a question about a Guardian column that suggested the company was finalizing a settlement with the Department of Justice on Foreign Corrupt Practices Act claims. Observers have suggested the company could be liable due to charges that journalists at News Corp.’s U.K. newspaper unit paid public officials for information. Under the Foreign Corrupt Practices Act, U.S. companies are barred from making undisclosed payments to government officials in foreign countries to gain favorable treatment.
Zweifach said the company has had “an ongoing cooperative relationship” with the Justice Department and “there is no settlement, no discussion of amounts or fines.”
He reiterated previous company disclosures that if there were any fines arising from violations of the Foreign Corrupt Practices Act, which the company thinks should not be the case, those would be covered by 21st Century Fox. Meanwhile, any criminal U.K. liability, though the company believes there should be none, would be borne by the new News Corp, he said.
Asked if News Corp shouldn’t have an independent chairman instead of Murdoch, Zweifach said that such a setup was not seen by the board — and many shareholders — as adding to shareholder value.
Sign up for THR news straight to your inbox every day