[caption id="attachment_209806" align="alignleft" width="300" caption="Rupert Murdoch of News Corp."][/caption]
By Yinka Adegoke (Reuters) - News Corp said on Thursday its board approved a plan to split the company into two publicly traded entities, with Rupert Murdoch remaining as chief executive of a new, separate entertainment company.
The company will split the $60 billion media conglomerate into publicly traded publishing and entertainment companies, with Murdoch as chairman of both, and his family retaining control. It didn't name an executive to lead the new publishing business.
On a conference call with analysts, Murdoch said the company is in "no hurry" to name a CEO for the unit that will house its struggling newspapers.
News Corp Chief Operating Officer Chase Carey will remain in that role in the new entertainment business.
News Corp's board, overseen by the 81-year-old Murdoch, met on Wednesday and authorized management to move ahead with the separation, the company said.
Murdoch said in an interview with Reuters that his mind had been made up for some time on the decision to break up his 60-year-old company.
"It's a very big move and very big decision for me," he said on the call.
The transaction is expected to take about 12 months to complete. News Corp shareholders will receive one share of common stock in each new company for each of the same class of News Corp share currently held.
Both of the new companies will maintain the current dual class share structure that gives the Murdoch family the largest block of voting shares.
The entertainment company will include News Corp's Fox broadcasting and cable networks, 20th Century Fox movie studios and pay-TV businesses in Europe and India.
The publishing company will include newspapers like the Wall Street Journal and Britain's The Sun, book publisher Harper Collins, an integrated marketing business as well as its fledgling digital education division.
Analysts and investors have been skeptical about whether the struggling publishing business would be able to prosper as a standalone. Murdoch addressed the concerns in a memo Thursday to his staff, which was obtained by Reuters.
"Our publishing businesses are greatly undervalued by the skeptics. Through this transformation we will unleash their real potential," said Murdoch.
There has been mounting pressure on News Corp to get rid of its newspaper business after a phone-hacking scandal tainted its British papers and forced the company to drop its proposed acquisition of pay-TV group BSkyB.
Since the collapse of the BSkyB deal, News Corp has implemented a share buyback program totaling $10 billion.
Chief Financial Officer Dave Devoe said the program will not be affected by the separation. Shares have risen more than 43 percent since the program was implemented last July.
News Corp shares were down 1.4 percent to $22 on Nasdaq.
"This is very shareholder friendly, News Corp is very complex stock," said Larry Haverty, portfolio manager at Gabelli Multimedia Funds, which owns News Corp stock.
He said the stock will benefit from a reduction in the so-called ‘Murdoch discount," which referred to Murdoch's reluctance to take any notice of shareholders desires.
Murdoch insisted the decision to separate the business had nothing to do with the UK scandal.
"We're not doing this any way as a reaction to anything in Britain," Murdoch said.
In addition to the scandal, newspapers in particular, and publishing in general, has been badly hurt by the availability of free content on the Internet -- leading to a drop in advertising revenue and circulation sales.
Murdoch has argued that consumers will pay for digital news particularly on devices like tablets and phones if it is not given away for free.
(Reporting by Yinka Adegoke; additional reporting by Nicola Leske; editing by Bernadette Baum and Jeffrey Benkoe)
(This story has been refiled to add dropped word "been" in the sixth paragraph)