News Corp. Splitting Off Its Publishing Business Not Expected to Change NBCO Calculus

News Corp.’s decision to pursue a separation of its publishing businesses probably won’t change the way companies and public interest groups are advocating for and against the newspaper-broadcast cross-ownership (NBCO) ban, industry and public interest officials we interviewed said. News Corp. announced Thursday that its board had approved a plan to pursue a separation of its publishing businesses from its entertainment assets. Public interest advocates who want the commission to retain the ban said the move represents further evidence that combining broadcast and newspaper assets doesn’t work for businesses.

News Corp. decided the time was right to pursue the split after seeing the success industry peers have had with similar moves, Chairman Rupert Murdoch told analysts during a teleconference Thursday. “I've looked around and seen other companies that have split up and certainly done very well for themselves,” he said. He said the decision to pursue the split was not a reaction to “anything in Britain,” after he was asked whether the attention News Corp.’s U.K. papers have received from regulators factored into the decision.

During the same teleconference Chase Carey, News Corp.’s president and chief operating officer, dismissed the notion that the split marks an acknowledgement that newspapers and TV news operations can’t share the same underlying intellectual property and profit. “I wouldn’t agree with the general premise,” Carey said when an analyst asked him about it. “We've not been fairly valued … for the businesses we own,” he said. As separate companies, “we'll be much better positioned for the businesses to reach their full potential and for that value to be recognized for shareholders and everyone else."

But the split won’t affect the advocacy around the cross-ownership ban, or the way News Corp. is affected by it, industry and public interest officials we spoke to said. “It doesn’t change anything for us,” said Paul Boyle, senior vice president of public policy for the Newspaper Association of America, which has long advocated for getting rid of the ban. “We're still going to advocate at the commission that this rule doesn’t make sense."

And because of the FCC’s attribution rules, it’s likely that the TV stations News Corp. owns in New York City, where the it currently owns the New York Post, would still be affected by the ban regardless of the split. “If Rupert Murdoch himself has an attributable interest in News Corp., which he clearly does, and he also has one in this new company, then the interest of the newspaper as well as the broadcast stations are still going to be attributed to him,” said Angela Campbell, director of the Institute for Public Representation, which is representing groups that have asked the FCC to deny the company’s license renewal applications in New York.

Moreover, media companies are increasingly separating newspaper and broadcast assets, Free Press Senior Policy Counsel Corie Wright said. “Media companies are recognizing in fact that cross-ownership of TV stations and newspapers is not necessarily the best for their bottom line,” she said. “Why should we bother to allow increased cross-ownership when it is not really good for anyone?” she said.

News Corp. would probably be glad to exit from the cross-ownership debate should it be able to go through a clean break of the newspaper and broadcast assets, said Paul Gallant, an analyst with Guggenheim Partners. “But even if the two companies were still considered commonly-owned, the media ownership debate isn’t what it was 10 years go,” he said. “A lot of that energy is now focused on things like [the Stop Online Piracy Act and PROTECT IP Act] and net neutrality,” he said.