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.