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News Corp.’s Publishing Unit Gets $500 Million Buyback Fund

Updated on

May 24 (Bloomberg) -- News Corp., set to split in two this June, announced a new slate of board members for each company as well as a $500 million stock repurchasing fund for the publishing business.

The board authorized News Corp.’s split into two companies, with investors getting one share in the newspaper unit for every four News Corp. shares they own, according to a statement today. After the split on June 28, the publishing company will retain the News Corp. name, while the TV and film assets become 21st Century Fox.

The buyback fund provides an option for the debt-free newspaper company as it determines how to use the $2.6 billion cash balance it will have following the split. Chief Executive Officer Rupert Murdoch agreed last year to chip off the declining publishing unit from the entertainment business.

“Both Fox and the new News Corp. have some attractive qualities,” Michael Morris, a media analyst with Davenport & Co., said in an interview. “With the new News Corp., investors will focus on whether there are opportunities to improve the economics of the publishing business.”

The publishing group will benefit from the growth of Australian businesses in television and real-estate listings, Morris said. Earnings dropped 35 percent last quarter from a year earlier in the unit, which also prints the Wall Street Journal and the Sun newspaper.

There was no information on what kind of dividends the publishing company will pay out once it becomes public.

News Corp. climbed less than 1 percent to $33.09 at the close in New York. The shares have climbed 30 percent this year.

New Faces

Murdoch will be chairman and CEO of 21st Century Fox and executive chairman of the new News Corp. His children, James and Lachlan, will be on both boards. New members of 21st Century Fox’s board include Delphine Arnault, deputy general manager at Christian Dior Couture; Jacques Nasser, former CEO of Ford Motor Co. and now an adviser at One Equity Partners LLP; and Robert Silberman, executive chairman of Strayer Education Inc.

On the publishing company’s board, the new faces are John Elkann, chairman of automaker Fiat SpA; Ana Paula Pessoa, a partner at public-relations firm Brunswick Group; Masroor Siddiqui, managing partner of investment firm Naya Management LLP; and Robert Thomson, CEO of the new News Corp.

Takeover Provision

News Corp.’s board also added a provision meant to allow shareholders to ward off a hostile takeover during the time around the split. Each share of the publishing company will include a right to purchase $180 worth of stock for $90, triggered when any investor acquires 15 percent or more of the voting shares from today forward. For the entertainment division, the price is $300 worth of stock for $150.

The rights will expire a year from today for 21st Century Fox and a year from the separation for the new News Corp.

Rupert Murdoch, through the Murdoch Family Trust and personal holdings, is the biggest investor in News Corp., controlling about 39 percent of voting shares while owning about 13.5 percent of total shares, according to data compiled by Bloomberg.

To contact the reporter on this story: Edmund Lee in New York at elee310@bloomberg.net

To contact the editor responsible for this story: Nick Turner at nturner7@bloomberg.net

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