Murdoch-Like Split Proves No Panacea: Chart of the Day

Rupert Murdoch’s proposal to divide News Corp.’s publishing and entertainment units into separate, publicly traded companies is in keeping with past breakups in the media industry.

Belo Corp. split its newspaper and broadcast units in February 2008. The Dallas Morning News and the company’s other print units became A.H. Belo Corp., which was the corporate name until the initials were dropped in 2001. Belo kept television stations and cable-news channels.

Four months later, E.W. Scripps Co. followed Belo’s lead. The company spun off Scripps Network Interactive Inc., which owns the HGTV and Food Network cable channels as well as the Travel Channel. E.W. Scripps kept papers and TV stations.

As the CHART OF THE DAY shows, the separations haven’t always worked out well for stockholders. The chart compares the share performance of the stand-alone companies and the Standard & Poor’s 500 Index since the breakups were completed. Each pair of stocks appears in a separate panel.

A.H. Belo’s shares plunged 75 percent from the time of the split through yesterday and Belo’s fell 52 percent. The losses in shares of the Dallas-based companies far surpassed the S&P 500’s 0.2 percent drop during the period.

Among the Scripps companies, E.W. Scripps trailed the S&P 500 by about 4.5 percentage points. Scripps Network Interactive posted a 46 percent gain, beating the stock index’s 3.8 percent advance. Both companies are based in Cincinnati.

Murdoch plans to be chairman of both companies carved out of News Corp., based in New York. He would follow the lead of Sumner Redstone, chairman of CBS Corp. and Viacom Inc. since they were split in 2005. Redstone’s New York-based companies have beaten the S&P 500 since their breakup.

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