NEWS Corp said on Thursday its board had approved a plan to split the company into two publicly traded entities, with Rupert Murdoch remaining as CEO of a new, separate entertainment company.

The company will split the $60bn media conglomerate into publicly traded publishing and entertainment companies, with Mr Murdoch as chairman of both, and his family retaining control. It did not name an executive to lead the new publishing business.

There has been mounting pressure on News Corp to get rid of its newspaper business after a phone-hacking scandal tainted its British papers and forced the company to drop its proposed acquisition of pay-TV group BSkyB.

On a conference call with analysts on Thursday, Mr Murdoch said the company was in "no hurry" to name a CEO for the unit that would house its struggling newspapers.

News Corp chief operating officer Chase Carey will remain in that role in the new entertainment business.

News Corp's board, overseen by the 81-year-old Mr Murdoch, met on Wednesday and authorised management to move ahead with the separation, the company said.

The transaction is expected to take about 12 months to complete. News Corp shareholders will receive one share of common stock in each new company for each of the same class of News Corp share currently held. Both of the new companies will maintain the current dual-class share structure that gives the Murdoch family the largest block of voting shares.

The entertainment company will include News Corp's Fox broadcasting and cable networks, 20th Century Fox movie studios and pay-TV businesses in Europe and India.

The publishing company will include newspapers such as the Wall Street Journal and Britain's The Sun, book publisher HarperCollins, an integrated marketing business and its fledgling digital education division.

Analysts and investors have been sceptical about whether the struggling publishing business will be able to prosper as a standalone. Mr Murdoch addressed the concerns in a memo on Thursday to his staff, which was obtained by Reuters.

"Our publishing businesses are greatly undervalued by the sceptics. Through this transformation we will unleash their real potential," he said.

Since the collapse of the BSkyB deal, News Corp has implemented a share buyback programme totalling $10bn. Chief financial officer Dave Devoe said the programme would not be affected by the separation. Shares have risen more than 43% since the programme was implemented last July.

News Corp shares were down 1,4% to $22 on Nasdaq on Thursday.

"This is very shareholder friendly. News Corp is very complex stock," said Larry Haverty, portfolio manager at Gabelli Multimedia Funds, which owns News Corp stock.

He said the stock would benefit from a reduction in the so-called 'Murdoch discount", which referred to Mr Murdoch's reluctance to take any notice of shareholders desires.

Mr Murdoch insisted the decision to separate the business had nothing to do with the UK scandal. "We're not doing this any way as a reaction to anything in Britain," he said.

REUTERS