Media conglomerate News Corp. on Friday does the spin-off many investors sought, creating the nation's largest purely print media stock.
The print unit will retain the News Corp name (minus the period after Corp) when it starts trading Monday. The company's holdings include The Wall Street Journal , New York Post, the Times of London, tabloids in the U.K., and Australia, and book publisher Harper Collins.
The print company will have only a fraction of the market value of the remaining media conglomerate that will now be known as 21st Century Fox. It will include the Fox broadcast network, Fox News, the soon-to-be-launched Fox Sports 1 cable sports channel and the Fox movie studio. News Corp will keep the NWS ticker for the shares with enhanced voting rights and NWSA for the more commonly held shares, while 21st Century Fox will have the FOX and FOXA symbols.
Trading in the companies this week on a when-issued basis suggest the new News Corp will have a market value of about $9 billion, while 21st Century Fox will have a $67.3 billion market value.
By most measures -- market value, annual revenue of about $8 billion and a workforce of 24,000 -- News Corp will be by far the largest U.S. print media company, larger than USA Today publisher Gannett Co. (GCI) and New York Times Co. (NYT) put together.
And it could get larger. Published reports say primary shareholder Rupert Murdoch, who will serve as the chairman of both companies, is interested in buying The Los Angeles Times from Tribune Co., which has been weighing the sale of some or all of its newspapers since emerging from bankruptcy last year.
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Current News Corp. shareholders will get one share in the new print company for every four shares they now own after the close of business Friday. The split was announced a year ago in the wake of the phone hacking scandal that forced the company to shut down News of the World, a tabloid that had one of the largest circulations in Britain.
"There have been shareholders asking for this for some time," said Michael Corty, media analyst for Morningstar. "The investor base really owned News Corp. for the entertainment assets. It was the News of the World scandal that seemed to finally precipitate the move."
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Traditional print media has been under siege from the growth of new media, which have been cutting deeply into both their subscriber and advertising revenue.
But while investors and analysts long argued Murdoch's love of traditional print media was dragging down News Corp.'s (NWSA) stock, print shares have actually been performing well this year. Gannett, New York Times and Washington Post Co. (WPO) are all up more than 25%, easily outpacing the broader market's gains.
"I think this is as good a time as any to spin it off," said Corty. "This seems to be way the media industry is going," he added, pointing to plans by Time Warner (TWX) to spin off its magazine unit Time Inc. Time Warner is parent of CNNMoney.
While Murdoch will retain the CEO title at 21st Century Fox, he will give over the CEO duties at the print company to Robert Thomson, the managing editor of the Journal.
