Rupert Murdoch's News Corp said on Thursday it would pursue splitting the $60 billion media conglomerate into separate publicly traded publishing and entertainment companies.
Murdoch will be chairman of both companies and will be chief executive of the entertainment business. The company did not name a chief executive for the new publishing company. The company said it plans to put together management teams and boards for both businesses over the next several months.
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.
The publishing side is expected to be much smaller, with some analysts valuing it at about $5 billion, compared with the current market value for News Corp. as a whole of about $54 billion.
"There is much work to be done, but our board and I believe that this new corporate structure we are pursuing would accelerate News Corporation's businesses to grow to new heights, and enable each company and its divisions to recognize their full potential — and unlock even greater long-term shareholder value," Murdoch said in a statement.
Industry analysts say the faster growing pay-TV segment would be valued more highly by new investors not willing to buy shares in a company burdened by a newspaper industry in decline.
Under the current proposal, News Corp. shareholders will receive one share of common stock in the new company for each share of News Corp. that they currently hold. Each company would maintain two classes of stock.
A question remains about which entity would bear the financial risks of the ongoing U.K. probe into phone hacking and bribery. Besides legal costs, News Corp. also faces potential fines in the U.S. under the Foreign Corrupt Practices Act, which punishes companies that have bribed officials abroad.
British authorities have been probing allegations that News Corp. journalists at its now-shuttered News of the World and other papers hacked into phones and bribed public officials to gain exclusive information.
The splitting of News Corp. would be a symbolic turning point for its 81-year-old CEO. Murdoch's media empire was built on the foundation of a single Australian newspaper he inherited from his father.
Below, Murdoch tells CBNC's David Faber in an exclusive interview that he'll be an active Chairman in the new companies. He also says it remains to be seen if his children will want to fully take the reins of the businesses after he steps down.
Related story: Murdoch's tough call - split News Corp. to survive.
Reuters and The Associated Press contributed to this report.