Board Approves Breaking Company In Two

The New York-based company confirmed Tuesday that it was weighing the plan. Its stock has jumped 11 percent since the news of the proposed split emerged.

Under the proposal, News Corp. will be divided into two publicly traded companies. One entity will operate as a newspaper and book publishing firm. The other will be an entertainment company that includes Fox News channel, the Fox broadcast TV network and the 20th Century Fox movie studio.

The publishing side is expected to be much smaller, with some analysts valuing it at about $5 billion, compared to the current market value for News Corp. as a whole of about $54 billion.

Industry analysts say the faster growing pay-TV segment would be valued more highly by new investors not willing to buy shares in a company burdened by a newspaper industry in decline.

A question remains, however, about which entity would bear the financial risks of the ongoing U.K. probe into phone hacking and bribery. Besides legal costs, News Corp. also faces potential fines in the U.S. under the Foreign Corrupt Practices Act, which punishes companies that have bribed officials abroad.

British authorities have been probing allegations that News Corp. journalists at its now-shuttered News of the World and other papers hacked into phones and bribed public officials to gain exclusive information.