MUMBAI: Rupert Murdoch-controlled News Corporation has decided to split its business into two entities separating its film & television business from the publishing business.

While most shareholders see the UK newspaper assets as a liability, Murdoch wants them.

Investors had every reason to cheer as the film and television vertical contributes about 75 per cent of the company?s revenue overall while the publishing business was a drag on the conglomerates bottom line. News Corp?s film and television business includes Fox News Channel and Fox Business Network, Star Television, Fox Broadcasting Company, BSkyB and 20th Century Fox.

Publishing, including The Wall Street Journal, the Times of London, New York Post and Australian newspaper, accounts for about 18 per cent of News Corp?s operating income.

?News Corporation confirmed today that it is considering a restructuring to separate its business into two distinct publicly traded companies,? the company said in a brief statement without specifying any details.

The announcement was hailed by investors with the company?s stock rising up 8.3 percent, to close at $21.76 Tuesday. During the day, the stock reached $21.89, its best performance in more than four and a half years.

Business fundamentals apart, the Rupert Murdoch owned media and entertainment conglomerate was also concerned about the wider implications of the phone hacking scandal at the UK publishing subsidiary.

The scandal had already led to the closure of News of the World besides, forcing News Corp to abort its takeover of profitable pay TV business BSkyB, where it holds 39 per cent ownership.

British communications regulator Ofcom is in final stages of its review of whether News Corp deputy COO is "fit and proper" to hold a broadcast license.

MUMBAI: Rupert Murdoch-owned News Corporation plans to split the business into two verticals separating film & television from its publishing business.

Although the final decision has not been taken, it is believed that News Corp chairman Rupert Murdoch, who in the past resisted calls for split in the business, has warmed up to the idea.

The move comes in the background of phone hacking scandal at the company?s UK publishing business which led to the closure of News of the World tabloid and reorganisation of the top level with James Murdoch stepping down from the News International board. 

The scandal, which is being probed by local authorities, prompted News Corp. to abandon plans to increase its shareholding in UK?s BSkyB, in which it holds 39 per cent stake.

UK?s media watchdog Ofcom is also investigating whether James Murdoch, who had to resign from BSkyB board in April, is ?fit and proper? person to hold broadcasting license.

News Corp?s film and entertainment business includes Fox News Channel and Fox Business Network, Star Television, Fox Broadcasting Company, BSkyB and 20th Century Fox. 

The group?s publishing assets include The Wall Street Journal, the Times of London and the Australian newspaper, as well as HarperCollins, the book publishing company which has a joint venture with India Today Group for the Indian market.

The move, if fructifies, will not change Murdoch family?s control of the two businesses. The family exercises effective control over the company through 40 per cent voting stake.

The conglomerate?s outside investors are believed to be in favour of a split more so since television and film assets contribute three-quarters of the $25.34 billion in revenue for the first nine months of the fiscal year.

News Corp.?s chief operating officer Chase Carey, who is believed to be a key proponent of spinning off publishing biz, had in May said that the management and the board had discussed the idea but didn?t have plans to pursue it. 

MUMBAI: British public prosecutor has charged former News International chief executive Rebekah Brooks and five others including her husband Charles Brooks for perverting the course of justice in the phone hacking scandal that rocked Rupert Murdoch owned company in July last year.

Those charged include Cheryl Carter, Brooks? personal assistant; Mark Hanna, Head of Security at News International; Paul Edwards, Brooks? chauffeur who was employed by News International; Daryl Jorsling and a seventh suspect - both of whom provided security for Brooks supplied by News International.

The prosecutor has charged the accused with criminal offence for concealing material from officers of the Metropolitan Police Service and conspiring to remove seven boxes of material from the archive of News International.

Brooks and her husband criticised the decision saying it was "weak and unjust". Charles is a former racehorse trainer and school friend of Prime Minister David Cameron.

Senior prosecutor Alison Levitt concluded that in relation to all suspects, there is sufficient evidence for there to be a realistic prospect of conviction.

"I have concluded that a prosecution is required in the public interest in relation to each of the other six,? Levitt said in a statement.

The six accused are due to appear before London Court on a date to be determined.

Both Charles and Rebekah Brooks were arrested in March for engaging in phone hacking, police bribery, and exercising improper influence in the pursuit of publishing stories at the now defunct News of the World news paper.
She had resigned as head of News International in July in the wake of her arrest for the phone hacking scandal.

Earlier, the Culture, Media and Sport Committee of the British Parliament, which was probing the phone hacking scandal at News International, had ruled that the News Corp chief Rupert Murdoch is ?unfit? to lead the company.

MUMBAI: US media behemoth News Corporation has gained from its stake sale in Hathway Cable & Datacom while contributions from Star in India were essentially in line with the prior year, as higher revenues were offset by increased programming costs, including those from new channel launches.

Star exited from Hathway, selling its 17.3 per cent stake for Rs 3.58 billion. The News Corp. company had earlier held 26 per cent stake in Hathway.

The company reported third quarter revenue of $8.40 billion, a two per cent increase over the $8.26 billion of revenue reported a year ago.

The revenue increase is led by double-digit growth at the company?s cable network programming and filmed entertainment segments.

The company reported third quarter net income of $937 million compared to net income of $639 million in the year-before quarter, representing a 47 per cent change. This year?s third quarter results include a $111 million pre-tax gain from the company?s participation in British Sky Broadcasting?s share repurchase programme, which is reflected in equity earnings of affiliates, as well as $27 million of pre-tax other income, principally reflecting a gain on the sale of the company?s stake in Hathway Cable & Datacom.

Total segment operating income for the quarter jumped 23 per cent to $1.31 billion compared to $1.06 billion reported a year ago. This improvement was led by a $111 million or 15 per cent increase at the cable network programming segment.

The current quarter results include a $63 million charge related to the costs of the ongoing investigations initiated upon the closure of The News of the World. The prior year results include a $125 million charge at the company?s integrated marketing services business related to the settlement of litigation.

Excluding these charges from both years respectively, this year?s third quarter adjusted total segment operating income of $1.38 billion increased $187 million or 16 per cent from $1.19 billion in the prior year.

News Corp Chairman and CEO Rupert Murdoch said, ?We continue to pursue our share buyback programme, repurchasing nearly $4 billion worth of stock over the last nine months and have just increased the authorisation for future buyback purchases by $5 billion. In addition, we continue to opportunistically address non-core assets, as demonstrated by the announced sales of our ownership stakes in Hathway Cable and NDS in the quarter."

Cable Network Programming

Cable Network Programming reported third quarter segment operating income of $846 million, a $111 million or 15 per cent increase over the third quarter a year ago, driven by a 16 per cent increase in revenue, partially offset by a 17 per cent increase in expenses. Operating income contributions from the domestic channels increased 17 per cent, underpinned by double-digit growth at the regional sports networks, FX network and Fox News.

The company?s international cable channels grew earnings 9 per cent, led by a double-digit increase at the Fox International Channels resulting from strong growth in Latin America and Asia.

Contributions from Star in India were essentially in line with the prior year, as higher revenues were offset by increased programming costs, including those from new channel launches.

Affiliate revenue growth of 15 per cent at the domestic cable channels for the third quarter primarily reflects higher rates at all domestic networks, led by growth at the RSNs and Fox News. International cable channels? affiliate revenues increased 31 per cent over the year-ago quarter. Approximately half of this international increase was driven by organic growth at the Fox International Channels in Latin America and Asia, with the remaining portion of the international affiliate revenue growth attributable to the consolidation of the Fox Pan American Sports network.

Advertising revenue at the domestic cable channels grew 10 per cent in the third quarter of fiscal 2012 over the prior year period, reflecting growth at nearly all domestic networks led by double-digit growth at Fox News and the National Geographic Channels. The international cable channels? advertising revenue grew 7 per cent over the prior year, primarily due to improving advertising markets and viewership trends, led by particular strength at the Fox International Channels in Latin America and Asia.

Expenses at Cable Network Programming grew 17 per cent in the third quarter of fiscal 2012 over the prior year period, due to increased programming costs reflecting the timing of games resulting from the NBA lockout and rights fees for the launch of the Ultimate Fighting Championship, as well as increased expenses associated with the consolidation of the Fox Pan American Sports network and the launch of the new sports network in Brazil.

Filmed Entertainment

Filmed Entertainment reported third quarter segment operating income of $272 million, a $24 million increase over the $248 million reported in the same period a year ago. This year?s third quarter results included the worldwide theatrical and domestic home entertainment performances of Alvin and the Chipmunks: Chipwrecked and The Descendants, the worldwide home entertainment performance of Rise of the Planet of the Apes and the pay television performance of Rio.

Prior year third quarter film results included the worldwide home entertainment releases of The A-Team, Knight and Day and Unstoppable. The third quarter also benefitted from increased operating profit at the television production studios, reflecting higher digital distribution revenues, an increase in license fees for How I Met Your Mother and an increase in syndication revenue for Family Guy.

Television

Television reported third quarter segment operating income of $171 million, a decrease of $21 million versus the same period a year ago. The decline principally reflects the absence of advertising revenues and operating profit generated from the broadcast of the National Football League Super Bowl XLV in the prior year quarter. This decline was partially offset by a doubling of retransmission consent revenues. Excluding the absence of the Super Bowl, advertising revenues at the television stations and broadcast network were essentially in line with amounts reported in the prior year as higher national advertising pricing was offset by lower ratings, driven by declines at American Idol, now in its eleventh season.

Direct Broadcast Satellite Television

Sky Italia reported third quarter segment operating income of $40 million, an improvement of $23 million versus the $17 million reported a year ago. Local currency revenues increased 4 per cent, primarily related to increased advertising and subscription revenues. Sky Italia?s quarter-end subscriber base declined to 4.94 million due to the net reduction of approximately 86,000 subscribers during the quarter, reflecting the continued challenging economic environment in Italy.

Publishing

Publishing reported third quarter segment operating income of $130 million, a $94 million increase compared to the $36 million reported a year ago due to the prior year?s $125 million litigation settlement charge at the integrated marketing services business.

Excluding this charge, segment operating income decreased $31 million from last year?s third quarter driven by local currency advertising revenue declines at the Australian and U.K. newspapers, as well as the absence of contributions from the closure of The News of the World in the U.K. The decline was partially offset by improved contributions from Dow Jones, HarperCollins and the integrated marketing services business.

Other Segment

The Other segment reported a third quarter operating loss of $147 million, which is an $18 million improvement over the prior year. This improvement was due primarily to the absence of results from disposed businesses, including Myspace, partially offset by the inclusion of a $63 million charge related to the costs of the ongoing investigations initiated upon the closure of The News of the World.

MUMBAI: Rupert Murdoch-controlled News Corp and The Walt Disney Company are deciding on how to end their 16-year-old sports broadcasting joint venture in India.

The stumbling block in a final settlement is that both Star and ESPN want to buy out their partner?s stake. Both realise that the JV has outlived its time and can?t serve the individual commercial interests of either Star or ESPN in a market where News Corp and Disney have made massive investments and are at different growth cycles.

Star Group has offered to buy out ESPN?s stake in the equal joint venture so that it gets independent control to expand its sports broadcasting business in India at a time when acquisition costs have climbed to astronomical heights. Star?s ability to take risks and aggressively mop up cricket rights would be higher as it can leverage the sports property with its highly popular entertainment channels in India.

"Star is very keen on buying out ESPN?s 50 per cent stake in India. The JV is under severe strain and the individual business interests of the two companies can no longer be served by it," a source familiar with the development said.

Star TV, for example, scooped up media rights to international cricket played in India from the BCCI for a whopping Rs 38.51 billion from 2012 through to 2018. The JV was not agreeable to bid so high as it has other cricketing properties where it has bet big like the ICC ($1.1 billion for eight years from 2007-15) and the Champions League Twenty20 ($975 million for 10 years) to ensure that it stays as the top sports broadcasting network in India.

"Star was ready to pay so high as it served its business interests. It wanted to deny Sony (which bid Rs 37 billion) the rights as, along with the IPL, it would have become a formidable network. The entertainment channels have already started delivering for Sony. Star could bid that amount because of its overall India strategy," the source said.

The problem is that neither Star nor Disney want to sell out. ESPN has also expressed interest to buy out Star?s stake in India, the source said.

"It could have been easier if it would have been any other multinational media company like Turner International. Disney has also made huge investments in the Indian market. It has bought out UTV Software Communications and has delisted it. It has got an aggressive person in Ronnie Screwvala to head its India operations. While having a presence in kids, niche entertainment channels and movies, it is missing in the Hindi GEC (general entertainment channel) space which is massive in India. It also wants to have full control of sports broadcasting," the source added.

For any partner to sell the India business would mean that it would be locked out of sports for a few years due to a non-compete clause.

"Neither Disney nor Star want to be out of this lucrative business for a few years as there would be a non-compete clause. Besides, there are few cricket rights available and they are all locked long term," the source said.

Cricket is the only sporting property that people watch at a mass level with passion across the country. It has got both advertising and pay revenue pull. In 2011, sports broadcasters raked in advertising revenue of Rs 20 billion, led by the IPL that took home Rs 9 billion.

Digitisation also throws open a wide pay revenue potential, unlocking leakages from the last mile of the cable networks that is controlled by local cable operators who under-report their subscriber base. The government has fixed 30 June as the deadline for cable TV digitisation in the four metros of Delhi, Mumbai, Kolkata and Chennai. India needs to make the complete switchover from analogue to digital by 31 December 2014.

The complexity of the issue is obvious as the web of the JV spreads across Asia. The talks for a split started a year back and even discussed about the possibility of News Corp letting go rest of Asia to ESPN. "FIC (Fox International Channels) runs a business worth over $1 billion in rest of Asia and does not want to let go of sports. That is not possible," the source said.

Splitting the properties that the JV holds is also not feasible. "The only way they can terminate the joint venture is by somebody selling out. This will also make the task of valuing the assets easier," the source said.

Star holds an upper hand at this stage as it has got the BCCI rights. It has sub-licensed the rights to ESPN Software India, the joint venture company which runs ESPN Star Sports? India operations. "The weight of the Rs 38.51 billion property is hanging overhead. The JV will be given the task of monetising it so long as the partnership lasts," the source said.

The BCCI property also leaves Star with another option to explore. In the worst case scenario if it decides to sell out to ESPN, it can build a sports broadcasting business with the BCCI rights as the starting pillar, much like Sony did with the Indian Premier League (IPL) or Nimbus did with BCCI (though Neo couldn?t hold on and had to forego the BCCI rights).

"Star would ideally like to buy out ESPN?s stake in the JV to get full control of India before the first series (from the BCCI rights) kicks off between India and New Zealand in August," a media observer said.

Disney may decide to first focus on consolidating its UTV investments and building the Hindi GEC vertical as well before it goes all out on sports. At least that is what Star would like Disney to do.

The cricketing rights are spread among the four broadcasting companies. The ESPN-Star JV has rights to ICC, Champions League Twenty20, England and Australia cricket boards. Ten Sports, owned by Zee Group, has rights to the five boards - Pakistan, Sri Lanka, West Indies, South Africa and Zimbabwe. It recently renewed Cricket South Africa (CSA) rights for $180 million and Zimbabwe for $20 million (both for eight years). Sony has New Zealand and IPL while Neo has Bangladesh.

India may not be the only market where News Corp will be wrestling against ESPN. Media reports indicate that News Corp will be launching a national sports network on cable television to take on ESPN in the US. News Corp has snapped up various sports rights, prominent among them being the US TV rights to Fifa World Cup in 2018 and 2022, beating ESPN in the race. It has also secured rights to the Pac-12 Conference and Big-12 Conference games and is in the running to secure an exclusive deal with Los Angeles Dodgers.

"ESPN Star Sports will telecast the New Zealand series. Star will sub-license the BCCI rights to the JV as long as the divorce does not take place," the source said.

MUMBAI: In a major setback for Rupert Murdoch, the Culture, Media and Sport Committee of the British Parliament which is probing the phone hacking scandal at News International has ruled that the News Corp chief is ?unfit? to lead the company.

The committee in its report to the Parliament accused the media tycoon of "wilful blindness" by deliberately covering up evidence of phone hacking at his UK publishing business which eventually led to the closure of 168 year old News of the World news paper.

"On the basis of the facts and evidence before the Committee, we conclude that, if at all relevant times Rupert Murdoch did not take steps to become fully informed about phone-hacking, he turned a blind eye and exhibited wilful blindness to what was going on in his companies and publications.

"This culture, we consider, permeated from the top throughout the organisation and speaks volumes about the lack of effective corporate governance at News Corporation and News International. We conclude, therefore, that Rupert Murdoch is not a fit person to exercise the stewardship of a major international company," the committe said in the conclusion of its report.

Rupert Murdoch and his son James Murdoch had last week laid the blame of phone hacking on subordinates, insisting that they were unaware of the wrong doing at the News of the World.

According to reports, the verdict has divided political parties in Britian with Labour Party panel member Tom Watson saying the decision had not been unanimous, and Conservative lawmaker Louise Mensch saying the split had been along party lines.

In a press statement, News Corp.regretted the committee?s tough language terming them as regretful and partisan.

"Hard truths have emerged from the Select Committee Report: that there was serious wrongdoing at the News of the World; that our response to the wrongdoing was too slow and too defensive; and that some of our employees misled the Select Committee in 2009," the statement read.

"News Corporation regrets, however, that the Select Committee?s analysis of the factual record was followed by some commentary that we, and indeed several members of the committee, consider unjustified and highly partisan. These remarks divided the members along party lines.

"We have already confronted and have acted on the failings documented in the Report: we have conducted internal reviews of operations at newspapers in the United Kingdom and indeed around the world, far beyond anything asked of us by the Metropolitan Police; we have volunteered any evidence of apparent wrongdoing to the authorities; and, we have instituted sweeping changes in our internal controls and our compliance programs on a world-wide basis, to help ensure that nothing like this ever happens again anywhere at News Corporation.

"As we move forward, our goal is to make certain that in every corner of the globe, our company acts in a manner of which our 50,000 employees and hundreds of thousands of shareholders can be justly proud."

Meanwhile, satellite broadcaster BSkyB, which is part owned by News Corp, has asserted that is a ?fit and proper? licence holder and was engaging with the regulator Ofcom in its assessment of BSkyB?s suitability.

Ofcom is reviewing whether Rupert and James Murdoch are ?fit and proper? to hold a broadcast licence following charges of phone hacking.