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"In a way," says Jeffrey Goldfarb Tuesday, "the scandal may have been the best thing to happen to News Corp (NASDAQ:NWS)," on the grounds that Hackgate is likely to end up forcing Rupert Murdoch to spin off his newspapers, along with HarperCollins, into a new, separate company.

I can see what Goldfarb means: it's probably fair enough, if you're writing for a service like BreakingViews, to assume that whatever is good for a company's share price is good for that company. But from a journalistic perspective, the news at News is much less good.

I was at the Loeb Awards gala dinner Tuesday night, where the WSJ's Jerry Seib won the Lifetime Achievement Award. He's been at the WSJ since 1978, and in his acceptance speech he talked about the culture shock which descended upon the newspaper after it was bought by Murdoch. At the same time, however, he welcomed it: "there's a reason it's called the News Corporation," he said - and he's right. Murdoch, at heart, is a news man, and although most of his wealth is attributable to sports and entertainment, it's clear that his heart is very much in journalism. More so, it should probably be said, than most of the Bancrofts who sold him the Journal.

In the short term, this makes sense. It would give the entertainment company more latitude to operate without the reputational baggage associated with News International, and if anything it would allow Rupert Murdoch to further consolidate his control of his newspapers, since the valuation of the spun-off company would be low enough that he could quite easily take it entirely private, if he wanted. Rupert Murdoch won't be any poorer after this deal is done - in fact, he'll be richer, thanks to the eradication of the "Murdoch discount" - and so his newspapers' charmed lives as playthings of a billionaire who doesn't care much about ROE are likely to continue either way.

But so long as the print properties remain public, shareholders are going to be even noisier about making them pay than they are right now. At the moment, News Corp shareholders mostly just want the newspapers to go away. But after the spin-off, shareholders in the new company will be agitating noisily for profits. Murdoch will ignore them, of course - but that kind of thing is difficult to ignore entirely.

Up until now, Murdoch has never really needed to worry very much about his newspapers' profitability, because the rest of his empire was throwing off such enormous profits. That's going to change. Even if he does take the papers private, none of his heirs particularly wants to inherit them. There's a big question mark over the papers' future, now, which will only grow as Murdoch gets older.

There's also the fascinating question of what's going to happen with Fox News. When News Corp loses most of its news properties, only Fox News and Sky News are likely to remain - and when big broadcast companies own news operations, those news operations tend not to perform very well. The fact that news is part of News Corp's DNA has surely been a crucial factor in Fox News's success; now that's coming to an end, Fox News's new overseers might view the channel in a significantly different light.

Again, nothing is going to happen overnight: Murdoch will continue to have personal control of both companies, and both will be run exactly the way he wants them to be run. But in the world of journalistic business models, I've always been a fan of being owned by a benign gazillionaire, who cares about more than just profits. Both Bloomberg and Reuters fall into that category, as do outfits such as the Atlantic, Condé Nast, and The New Republic. But Murdoch has always been the first billionaire you think of when you think "press baron". And it's foolish to believe that a change as big as this at the corporate-structure level will have no effect on his individual properties.

Source: News Corp. Loses Its News