News Corp. Split: Rupert Murdoch Defends Publishing Business Plans from 'Naysayers'
News Corp. chairman says selecting a CEO for new publishing company will take many months, but that the company will start out in a strong position.
Speaking to investors at a conference call following the announcement that News Corp. intends to pursue a split, chairman Rupert Murdoch defended the future of the publishing business.
"No doubt there will be some naysayers who see the announcement as some sort of indication about the future of the publishing business," he said. For those who doubt the viability of the new separate publishing business, he added, "Nothing could be further from the truth."
Murdoch cited the new company's potential strengths, including being well capitalized and having a proven, robust cash flow.
He gave no indication about who would be the CEO of the new publishing company, which will be comprised of News Corporation’s newspapers and information businesses in the U.S., U.K., and Australia, as well as its book publishing brands, its integrated marketing services company, its digital education group, and other assets in Australia.Ab
Some observers have been speculating about the return of Rupert's son, Lachlan, but no names were mentioned to investment analysts on Thursday.
"As for CEO, we have wonderful group of managers in the whole of the company to choose from," said Murdoch, who will serve as chairman of the publishing company as well as chairman and CEO of the media and entertainment company. "It will take many months to complete and we are in no hurry to make a decision on that."
Murdoch stressed that the split isn't a "fait accompli," that the process is expected to take at least a year to complete as the split seeks both board and shareholder approval, plus jumps through regulatory hurdles, tax clearances, and more. "Every corner of this place has to be audited," said Murdoch, pointing to the splits of McGraw-Hill and Kraft as precedent.
News Corp. has already hired a team of lawyers to handle the process of splitting up. The attorneys advising the company include several partners at Skadden Arps, including Howard Ellin, Brandon Van Dyke, Lou Kling, and Steven Matays.
One of the issues of attention for News Corp. leaders is how the two companies will co-exist going forward.
Chase Carey, who is said to have championed the split and will be the president and COO of the entertainment company, acknowledges that the companies will compete on one level, but also try to work their "historical relationship."
"Just because the companies are separate doesn't mean they can't pursue a relationship at arm's length," he said.
Most of the call with investment analysts was taken up by questions on whether the publishing business really has a future.
"The answer is one word: digital," said Murdoch. "People will pay for news. It's still the most valuable commodity."