Would BSkyB be protected by News Corp break-up?

There has been speculation about how Rupert Murdoch would seek to protect the bulk of his business interests, which are in television and film, from the reputational and financial damage being caused by the hacking and alleged bribing scandal at his UK newspapers.

The answer, or so it seems, is that their company, News Corporation, would be split into two separate companies. The larger one would hold the television and entertainment assets, such as 20th Century Fox, the Fox broadcast network, Fox News, Sky Italia and a 39% stake in British Sky Broadcasting.

The other company would own all the UK, Australian and US newspapers - including the Wall Street Journal, which first reported the story. It would be the smaller of the two, representing around 25% of current News Corp revenues and 10% of profits.

One potentially significant benefit is that BSkyB would be distanced from the British newspapers where the alleged lawbreaking took place - and so the risk of Ofcom stripping BSkyB of its broadcasting licence would presumably be diminished.

However, both companies would probably continue to be controlled by the Murdochs - which own roughly 40% of News Corp's voting shares.

When I asked News Corp to confirm or deny the break up, its spokesman said no comment would be forthcoming. This will be widely seen as a non-denial confirmation, since News Corp has in the past shot down other reports of its plans to quarantine the hacking debacle.

For what it's worth - and welcome to my surreal world - I told News Corp that the absence of a formal confirmation or denial would be viewed as de facto confirmation. Radio silence ensued.

UPDATE 09:38 BST

For what it is worth, I have now had this from a News Corp insider: "nothing to add to WSJ piece". Which implies - in case you harboured doubts (which I didn't) - that WSJ report of planned break-up of News Corp is accurate.

UPDATE 11:30 BST

If News Corporation breaks itself into two separate companies - one smaller company focussed on newspapers and publishing and the other consisting of TV networks and film studios - it would be the end of an era and of an industrial strategy.

Rupert Murdoch would have abandoned 30 years of trying to fashion a coherent media group out of disparate media interests in print, film and television.

However the demerger would be seen primarily as an attempt to protect his important entertainment interests, which deliver 90% of News Corporation's profits, from the reputational and financial damage stemming from the hacking and alleged bribing scandal at the group's newspapers.

More precisely it may reduce the risk that British Sky Broadcasting, owned 39% by News Corp, would be stripped of its broadcasting licence by the media regulator, Ofcom, because the BSkyB shares would be put into the new TV company, well away from the British newspaper interests where the alleged crimes took place.

And who knows, if the reputation of News Corp's entertainment interests were to revive, shorn of the newspapers it might one day feel it could renew its takeover attempt for all of BSkyB.

Some may think that is a mad idea. But history tells us that Rupert Murdoch is nothing if not persistent.