The board of Rupert Murdoch's News Corp has agreed in principle to separate its larger entertainment division from struggling publishing businesses, according to The Wall Street Journal.
An official announcement is expected to come Thursday, said the newspaper, which is one of the units of the global media-entertainment conglomerate.
The Journal, quoting an unnamed person familiar with the situation, said the decision was made at a board meeting Wednesday evening that lasted about 90 minutes.
The move comes with Murdoch's empire under pressure from the phone-hacking scandal in Britain that resulted in the closure of the company's flagship News of the World tabloid and the resignation of several senior executives.
The carve-out would likely lead to one unit including 20th Century Fox movie studios, the Fox broadcast network and Fox News Channel, competing more directly against Disney, Time Warner and Comcast, which controls NBC Universal.
The company's publishing assets -- including The Wall Street Journal, New York Post, The Times of London and The Australian newspaper, as well as the HarperCollins book publishing house -- would be part of a second entity.
Some see the move as an effort to "ring fence" the problems stemming from the hacking scandal and give Murdoch a chance to carry out his plan for a full takeover of satellite broadcaster BSkyB, in which News Corp has a 39 percent stake.
But the reorganization also could boost shareholder value for a conglomerate hurt by a so-called Murdoch discount.
Analysts at SNL Financial say the publishing unit has been "an albatross" around the neck ofNews Corp, generating lower profit margins.
The media units have also been hurt by the slump in newspaper circulation and advertising amid a move to the Internet.
Ken Doctor, a media analyst with Outsell Research, said a news-only division might have some advantages as well, which could maximize the value to its most prized asset, the Wall Street Journal.
"Wouldn't the Wall Street Journal, its DigitalNetwork, and Dow Jones more generally, be better off as a separate standalone company of its own, rather than pooled together with flagging general interest newspapers?" he said.
"The Journal has far more potential to make serious money as the global digital business news economy is becoming real.
He said this unit might "move fairly quickly to jettison moneylosers, reviving the trust idea for the Times of London and seeking buyers for the New York Post."
News Corp shares have been rallying since word leaked out and the company confirmed it was considering a split. Shares rose another two percent Wednesday to $22.41.
Shares have now surged more than eight percent since news of the split emerged earlier this week.
"Everyone has been aware that the board vote was imminent and now it looks clear that they are going to do it," said Fat Prophets analyst Greg Fraser in Australia.
"The share price is reacting because the entertainment side of the business is going to get a more realistic valuation."
Analyst Anthony DiClemente at Barclays said this week that the publishing arm accounts for just seven percent of the value of the company and that a split could be positive.
In the most recent quarter ended March 31, News Corp profit was up 47 percent to $937 million, as revenues rose two percent to $8.4 billion.
Cable operations and entertainment accounted for much of the profit.
The Australian-born Murdoch has been a target for criticism as the British scandal has deepened. In April, he denied that he had exerted a decades-long stranglehold over British politics as he finally testified at an inquiry sparked by the misdeeds of his media empire.
One government minister was forced to resign over allegations of leaking details to Murdoch's News Corp. as it tried to take full control of pay-TV giant BSkyB.
The Australian-born tycoon also denied discussing the controversial BSkyB deal with current British prime minister David Cameron, and rejected rumors he was unhappy with Cameron for setting up the judge-led inquiry.