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Murdoch to keep control as News Corporation prepares to split activities

News Corporation's board of directors has approved plans to separate out its publishing and entertainment activities in to two distinct companies, with a poisoned pill strategy in place to protect the new companies from a hostile takeover.

News Corporation's board of directors has approved plans to separate out its publishing and entertainment activities in to two distinct companies, with a poisoned pill strategy in place to protect the new companies from a hostile takeover.

The publishing division will retain the name News Corporation, while the broadcasting and entertainment business will be named 21st Century Fox – an updated name for Twentieth Century Fox, the film company Murdoch bought in 1985. The split, which will be completed by 28 June, was first tabled a year ago.

Rupert Murdoch will serve as chairman and chief executive of 21st Century Fox, and as chairman of News Corporation. 

A $500 million (€386.6 million) share repurchase programme will be implemented to shore up the share value of the new companies, and a stockholder rights agreement – otherwise known as a poisoned pill – will allow Murdoch to keep control of them. 

The agreement will make it very expensive for an investor to buy more than 15% of the voting shares in either company for a year following the separation. 

If an investor does manage to buy a stake of 15%, existing shareholders will be given the opportunity to buy any newly issued shares at half the price of that of a new shareholder – allowing Murdoch to maintain his 40% share of the voting stock in both companies at the lower rate. 

Following the separation, a number of new appointments have been made to beef up the board of directors for both new companies, including several from other high-profile family businesses. Delphine Arnault, scion of the dynasty behind LVMH and deputy general manager at Christian Dior, will join the board of 21st Century Fox, while John Elkann, sixth-gen chief executive of the Agnelli family's Exor, will join the board of News Corporation.

Last week, News Corporation also said it would write-down the value of its Australian and US publishing assets by up to $1.4 billion. In an SEC filing, it described the write-down as a goodwill impairment charge, mainly attributable to its Australian newspapers, which it said faced a reduction in expected future cash flows. The write-down will be accounted for in the quarter ending 30 June.

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