The decision, which News Corp. first flagged two days ago, marks a response to a phone-hacking and bribery scandal centered on the New York company's U.K. newspapers unit. The scandal angered investors, cost the company $125 million in settlements in its last financial year, and wrecked its near-term prospects of buying the outstanding 61% of its profitable U.K. pay-TV arm. The proposed split will be wrenching for News Corp. Chairman and CEO Rupert Murdoch, who made a string of newspaper purchases in the 1960s after inheriting his father's small Australian newspaper company and is widely considered to remain emotionally attached to the ailing print media.

News Corp.'s statement, thin on detail, said shareholders would receive stock on a one-for-one basis in each new entity. Like News Corp., both companies will maintain two classes of stock: Class A common and Class B common voting shares.

Murdoch will serve as chairman of both companies and CEO of the media and entertainment company, while News Corp. Chief operating officer Chase Carey will take that role and also the position of president of media and entertainment. Management of the publishing business has yet to be determined.

"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," said Murdoch in a statement, stressing he is "100% committed" to both companies.

"We determined that creating this new structure would simplify operations and greater align strategic priorities, enabling each company to better deliver on our commitments to consumers across the globe," he added.

The prospect of the split Tuesday boosted News Corp.'s stock by about 8% and is widely expected to lift the company's existing market value of $54 billion, possibly by as much as half.

News Corp.'s media and entertainment arm includes movie production and distribution company Fox Filmed Entertainment; Twentieth Century Fox Television,; terrestrial TV network Fox Broadcasting Co., cable-TV programming including Big Ten Network and Star Inc.; and satellite pay-TV including 61% of British Sky Broadcasting Group plc and 25% of Australia's Foxtel, which will increase to 50% if the $2 billion purchase agreed earlier this month of Consolidated Media Holdings Ltd. completes.

Its publishing arm includes Dow Jones & Co. and The Wall Street Journal, New York Post, the Times and the Sunday Times, of the U.K., the Australian and book publisher Harper Collins.

The media and entertainment assets contributed the lion's share of News Corp.'s $4.85 billion operating profit in the year ended June 30, 2011, while publishing brought in $864 million.

Of News Corp.'s $33.4 billion in 2011 revenue, $$8.8 billion came from publishing, making it the biggest single contributor, $1.1 billion came from other, mainly digital, operations, and the rest came from the combined media and entertainment operations.

News Corp said the new publishing company "would be one of the best capitalized in the industry," suggesting a substantial amount of cash may flow over to support the entity.

However, a long-term decline in print media readership and advertising revenue could dull its allure for investors.

News Corp. said the separation will take about 12 months. It doesnt anticipate a shareholder vote on the plan before the first half of 2013.

Skadden, Arps, Slate, Meagher & Flom LLP's Howard Ellin, Brandon Van Dyke, Lou Kling and Steven Matays are providing legal counsel to News Corp. The company is receiving financial advice from John Waldron and Gene Sykes at Goldman, Sachs & Co., JPMorgan & Co., and, reportedly, Centerview Partners LLC.