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It is unclear if the spun-off publishing unit would also bear the legal costs of the U.K. probe. In the first nine months of the fiscal year, probe costs have totaled $167 million.

The point of a split is not to create a smaller company “that would just wither and die,” Eagan said. It would have to contain enough profitable businesses to attract investors.

Eagan pointed to the successful spin-off of cable TV giant Time Warner Cable Inc. from the entertainment company Time Warner Inc. in March 2009. Because the cable division was more willing to pay out dividends and buy back shares, its stock price has more than tripled since then. Meanwhile, Time Warner’s stock price has doubled.

Time Warner shareholders were granted stakes in both separated companies, but “overall you are better off” with the split, Eagan said.

The problem for News Corp. isn’t just that newspapers and books make less money than television and film. It’s also that investors value the earnings from each differently. They are willing to pay less for a single dollar of earnings from the former than they are for a single dollar of earnings from the latter.

On Monday, investors buying News Corp. stock were paying the equivalent of $5.80 for every $1 of operating earnings that the combined company is expected to generate this year, according to Gould. That is 20 percent lower, or $1.50 less, than investors are paying for more pure play TV and film companies like CBS Corp. and Viacom Inc.

Do the math on News Corp.’s expected $6.6 billion in operating earnings this year, and that means the company is being valued $10 billion less than its TV and film rivals. Gould says the idea behind the split is to capture some of that $10 billion, and he thinks the company could do it. He is recommending that his investing clients buy the stock.

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Associated Press writer Raphael Satter in London and Business Writer Bernard Condon in New York contributed to this report.