Rupert Murdoch's News Corp has said it plans to split into two companies, one holding its newspaper and publishing business, and another its entertainment operations.
Under the proposal, the global media conglomerate will be divided into two publicly traded companies.
The entertainment company will include the 20th Century Fox movie studio, the Fox broadcast TV network and the Fox News channel - collectively three times larger than the news and publishing company.
The Murdoch family, which controls nearly 40 per cent of the voting shares in News Corp, is expected to maintain control of both companies.
Murdoch will serve as chairman of both companies and chief executive of the media and entertainment company.
"There is much work to be done, but our board and I believe that this new corporate structure we are pursuing would accelerate News Corporation's businesses to grow to new heights, and enable each company and its divisions to recognize their full potential and unlock even greater long-term shareholder value," Murdoch said in a statement.
The splitting of News Corp would be a symbolic turning point for its 81-year-old chief executive. Murdoch's media empire was built on the foundation of a single Australian newspaper he inherited from his father.
Through the years, he maintained a fondness for newspapers, even as he purchased entertainment companies and assembled a company with a market value of $52bn.
In hearings last summer before UK politicians, he conceded that he regularly called newspaper editors under his employ with the greeting: "What's doing?"
Investors have already given their blessing to the split, having pushed shares of the company's Class B stock up 10 per cent since the news of the plan broke early on Tuesday.
The split remains subject to final board and regulatory approvals.
News Corp said it plans to hold a meeting of its shareholders sometime in 2013 and expects the process to be completed in about a year.
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.
Breaking off the newspaper and book publishing assets into a separate company makes them more "bite size" and ripe for being taken private by a third party, according to Needham & Co. analyst Laura Martin.
Under the current proposal, shareholders will receive one share of common stock in the new company for each share of News Corp they currently hold.
Each company would maintain two classes of stock.
'Fit and proper'
A question remains about which entity would bear the financial risks of the ongoing UK phone hacking and bribery investigation.
Indeed, there is speculation as to whether the split would have happened had last year's scandal not been publicly aired.
British authorities have been probing allegations that News Corp journalists at its now-closed News of the World and other papers hacked into phones and bribed public officials to gain exclusive information.
Besides legal costs, News Corp also faces potential fines in the US under the Foreign Corrupt Practices Act, which punishes companies that have bribed officials abroad.
It is also unclear if the split will appease Ofcom, the British telecommunications regulator, which is reviewing whether British Sky Broadcasting, of which News Corp holds a 39 per cent stake, is "fit and proper" to hold a broadcasting license.
Ofcom is expected to wrap up its review later this summer.