Here’s how a look at a future News Corp and Publish Corp (our name) and why both could be good investments.

Creating a new corporation

Late Wednesday night, News Corp’s board approved the plan to split the media conglomerate into two pieces. Here’s what is likely happen next:

• News Corp creates Publish Corp as a new independent entity to act as a holding company for book and newspaper assets
• Current shareholders will be offered shares in Publish Corp, which they can accept or decline
• Publish Corp begins operations and possibly prepares an IPO of its own to raise more capital

While the corporate process is fairly predictable, there are some important strategic questions that will only be decided in the coming year. Two are particularly important. The first is whether News Corp decides to put certain publishing assets into Publish Corp or simply sells them outright. The second is how much cash and debt News Corp will distribute to Publish Corp.

Why newspapers may be better off without News Corp

News Corp’s share price is up nearly 15 percent over the last month while the rest of the market stayed flat. Investors clearly believe the company would be better off cutting ties with its publishing division in order to focus on its highly profitable and growing broadcasting and entertainment empire.

But what of the publishing division itself? The News of the World hacking scandal has created a perception in some quarters that the publishing part of News Corp is little more than a money-losing legal quagmire. A look at the books and interviews with analysts at two major investment firms, however, make clear this is hardly the case.

News Corp’s publishing division made more than $800 million in profit last year and most parts of it are healthy. Those parts include publisher Harper Collin, which had sales of around $1.3 billion. It is profitable and is finding its footing in the new world of e-books.

Meanwhile, News Corp’s fleet of more than 100 Australian newspapers generates a majority of the publishing division’s profits thanks to a near-monopoly position,  according to media analyst Ken Doctor. Those profits are expected to shrink dramatically as Australian papers are still in the early phases of the print-to-digital transition but, in the near term, the Aussie papers would provide a cash cow for any future Publish Corp.

But the real prize, according to the two bank analysts, is the expanding empire of Dow Jones and the Wall Street Journal. Both said that there is considerable value that can be unlocked in the division’s financial news brand, which is gaining traction in Germany and other non-English speaking countries. The Journal itself has a robust digital newspaper business that is estimated to generate around $200 million in annual revenue. If this model can keep growing and be replicated around the world, it could both serve as a flagship business for Publish Corp and be a good bet for investors.

Not everything is rosy in the News Corp publishing division, of course. The Times of London is a money pit and the Sunday Times is only scraping by, according to Doctor. News Corp’s other American paper, the New York Post, is also losing money. The bank analysts say, however, that properties like the Post have been a low priority amid News Corp’s rich and sprawling empire. Placed in a standalone Publish Corp, these type of assets couldn’t duck attention and would quickly have to shape up or be sold off.

The September issue will be SmartMoney’s last print issue. Staff now report to Raju Narisetti, managing editor of the WSJ Digital Network. SmartMoney.com has 2.5 million monthly visitors and a print circulation of 800,000. Its ad pages fell 17.4 percent between 2010 and 2011, according to the MPA.

In addition to its own site, SmartMoney.com content and tools will now be available through “an expanded co-branded personal finance site on MarketWatch.com.”

Dow Jones and Hearst launched SmartMoney jointly in 1992 and Dow Jones acquired Hearst’s stake in 2010.

The site, WSJ Live, mirrors the always-on channel the Journal has been beaming to iPods, Xboxes and other devices. The new centralized platform, which is also drawing content from Barron’s and other Dow Jones properties, provides a TV-channel like experience and aims for higher viewer quality and easier discoverability.

The move is part of the Journal’s strategy  to extend its brand into a video universe in order to complement its print products and tap into the high premium of video ad dollars. The strategy is being overseen by digital maven Alisa Bowen, who was promoted this week to head of product for all of Dow Jones.

The new central hub adds some coherence to WSJ Live, which is popping up all over the place but so far lacks an overall editorial identity. A user turning on the iPhone app, for instance, might see anything from a Journal reporter discussing mortgages to a random nature feature.

As we’ve discussed before, the Journal’s ambition to be first to every platform could pay off at a time when customers are discovering the still nascent world of always-on video. But the company is still taking a risk by flooding those platforms with questionable content. This morning, for instance, the primary hub was streaming a grainy video of an unpolished reporter talking about Euro 2012 from what appears to be his hotel room:

Is anyone actually watching this? Even a devout Journal reader with a passion for soccer would soon flip to ESPN, the BBC or, well, anything but this. It’s early days yet, though, and the Journal still has time to separate the wheat from the chaff as it perfects the technical dimensions of WSJ Live. These include new sharing tools that allow viewers to more easily pass video to friends and colleagues and, soon, an integration with Facebook’s Social Graph that will notify others what they are watching.

Early this morning, Dow Jones stated that President Todd Larsen has resigned, ending his two-year tenure at that position and 13 years at the company. The company followed this with news that it was promoting digital manager Alisa Bowen to head of product for Dow Jones and that it was creating a new department called Data Strategy.

Larsen’s departure has been expected for some time after the company passed him over for the Chief Executive Officer job and appointed Bloomberg vet Lex Fenwick instead. Larsen gets some of the credit for the continued growth of the print and digital sides of the paper under his watch. The Wall Street Journal is the only major newspaper to increase its print circulation over the last few quarters.

But Larsen’s main claim to fame is that he is cited as the person who talked Rupert Murdoch out of making wsj.com free after News Corp purchased Down Jones in 2007. The company now has 1.3 million subscribers across various news and financial platforms.

During his time as President, Larsen also carried out a reorganization that consolidated the company’s enterprise plays like Factiva with its consumer media products like the Wall Street Journal. Larsen’s departure comes at a time when Dow Jones’ enterprise products, which also include its newswire service, is struggling to gain traction against competitors like Bloomberg and Reuters.

Bowen has been the face of WSJLive, an initiative to produce hours of live video and stream them on almost 20 different devices like the X-box and the iPhone. Her promotion suggests Dow Jones will charge forward with its flood-the-zone video strategy.

On Thursday, for instance, the Wall Street Journal (NSDQ: NWS) launched a Jaguar-sponsored “Digital Open House” to provide free website and mobile access to the paper’s premium content. The 24-hour campaign, which gives prominent place to Jaguar ads, follows similar sponsorships last year by Sprint (NYSE: S), Citi and Acura.

The Journal’s main rival, the New York Times (NYSE: NYT), has yet to pursue a paper-wide strategy. Instead the Times has been parceling out smaller windows of free content on a section and platform basis.

In September, for instance, Ralph Lauren paid to make the entire New York Times’ fashion and lifestyle sections available for free on the iPad. The paper has also offered similar vertical-based promotions with a credit card firm and an upscale auto brand. Spokesperson Eileen Murphy said more such promotions would occur in the coming year.

Last year, the Times also ran a promotion in which car-maker Lincoln paid to subsidize subscriptions for 100,000 especially-engaged readers.

As paywalls become more commonplace, a debate may soon emerge about whether it is better to let advertisers pay to unlock the whole site for a period of time or only select pieces of it.

For advertisers, the Times’ approach promises a more granular audience but it may also lack the buzz that comes with an across-the-site sponsorship like the one the Journal offered Jaguar. Raising the entire paywall also offers a chance for the car company, which is in the first day of a new campaign, to maximize its ad exposure.

As for the newspapers, the lift-the-paywall gimmicks may produce higher page views and the potential for pulling in new subscribers. But the real value probably lies in ad money from the sponsorship themselves.

Going forward, the news sites will likely have to decide how far they can push the promotions (might we one day see “paywall free Tuesdays” or Open House Fridays?) without offending paying subscribers.

(Correction: An earlier version of this story incorrectly said the New York Times’ credit card and auto promotions were upcoming. They have already occurred and other promotions are upcoming. We regret the error)

Today’s “Open House” is sponsored by Jaguar. “Working with advertisers to offer open houses has proven to be one of the most valuable and efficient ways to expose our premium content to new readers and potential subscribers,” said Alisa Bowen, general manager of the WSJ Digital Network.

The paper has run similar promotions before but this is the first time that content is free across iPhone and iPad apps.

In a 15-page decision, U.S. District Judge Miriam Cedarbaum concluded that the customers’ subscriber agreement entitled the publisher, Dow Jones, to change the terms and price of the contract.

The subscriber agreement allowed readers of the Wall Street Journal to access Barron’s Online for free but, in January of 2006, Dow Jones required readers to pay an additional $20 for ongoing access to the financial publication.

The law of consumer contracts typically does not allow merchants to change prices on the fly. The judge may, however, have sided with Dow Jones because 79 percent of the WSJ’s approximately 400,000 online subscribers did not access Barron’s at all.

The judge also found that Dow Jones didn’t abuse a provision in the subscription agreement that permitted it to make changes to fees and services:

“There is no evidence that Dow Jones used the discontinuance provision to deprive plaintiffs of an unreasonably large part of WSJ Online’s content, and there is no reason to interpret this provision as permitting such extreme behavior.”

The subscribers also argued that Dow Jones failed to provide fair warning of the price change. Judge Cebarbaum, however, ruled a pop-up box on the website weeks beforehand was adequate notice.

For a broader discussion of the legal issues in the case, see this post by Venkat Balasubramani of The Technology and Marketing Law Blog which was first to report the decision.

Since 1999, a version of the newspaper favored by New York financial titans has become a quiet hit in dozens of smaller papers across the land, including the Jackson Citizen Patriot and the Kalamazoo Gazette. The local papers publish two to four pages every weekend of original customized content from Wall Street Journal writers that cover business and personal finance issues.

WSJ Sunday editor, David Crook, says the content carries the same sophistication as the Journal’s regular fare but targets a different demographic.

“We ask the writers to take out a zero. The readers may not have $50,000 but they do have $5,000.”

The partnership program, which the Journal says reaches more than 7 million readers through 62 newspapers, provides the publishers with easy-to-load content.

Many local papers also partner with the Journal in a program to share money from national advertisers. Crook says revenue from Wall Street Journal Sunday is growing even though circulation has peaked, and that the program is a way to introduce the brand to millions of new readers.

The weekend pairing of Wall Street and Main Street appears to be a perfect marriage save for one hitch — the Journal has cold feet when it comes to digital. For now, the Journal will not provide its partners with digital copy for their websites. “We need to grow our digital base as much as they need it,” explained Crook.

The decision is a disappointment to people like Todd Benoit, Director of News and New Media at the Bangor Daily News. He says that the Journal’s weekend pages offer hard-to-get content at a “very fair price” to the newspaper’s aging readers, but that there is digital demand too.

“Tell them we would love to get the online version,” said Benoit.

According to Alisa Bowen, General Manager of the Journal’s Digital Network, the paper now has its video on more than 15 different platforms.

“The growth is exponential,” said Bowen, citing three factors that is causing video to take off. “The devices work, consumers have the bandwidth and advertisers are increasing their budgets.”

What this means in practice is that the Journal is showing over four hours a day of live video on devices like the iPad and also using that footage to place clips on platforms like Boxee, Roku and YouTube.

The Journal’s head-first dive into video contrasts with the New York Times’ toe-in-the-water approach. The rival paper is showing just two short clips every day, branded as TimesCast and the newly added Business Day Live.

Bowen says the idea of “WSJ everywhere” taps the convening power of the brand and that its ubiquitous video is now an “inseparable part of the Journal experience.”

An abundance of video also gives news makers more chances to tap a lucrative ad opportunity. NYT media reporter Brian Stelter recently described how the prospect of $20-$50 CPM’s (ad price per 1000 views) is leading everyone from Politico to the Huffington Post to attempt video plays.

Overall, then, the Journal appears poised to use its mass of content to gain the strategic and financial edge in the market for news video. But it may not be simple.

One potential hiccup in the “WSJ everywhere” scheme is that much of the content is virtually unwatchable. While viewers may accept a clip that lacks studio-style polish, they will probably balk at a six-minute clip of a fidgety print reporter who can’t make eye contact with the camera.

Bowen says that readers’ desire to engage with their favorite reporters will outweigh any objections to the production value. Still, it’s hard to believe that even the most fanatical Journal reader would use their X-Box to watch what, in one case, appeared to be a home Skype recording in which the reporter was at times drowned out by a barking dog.

News makers may be glad to meld print and broadcast forms of journalism but their audience, who have watched TV before, may prefer a more conventional respect for formats. In this respect, the Times go-slow approach might make more sense.

But what of the chance to using video volume to grab all those ad dollars? This concept too could use more scrutiny. According to a source who is a broadcast reporter for a business website, video news reports receive little traffic. The opportunity for a viral viewing bonanza comes instead, she says, via short and snappy interview segments with CEO’s and other high profile business figures.

This suggests that traditional news organizations should try to rack up their CPM scores through a few home runs rather than hundreds of bunt singles.

This does not mean the Journal’s current strategy is wrong, however. Even though much of its video content is questionable, the experience the paper is gaining at delivering that content could prove to be a strategic win in the long-term.

The Journal is poised to become the first newspaper to master video delivery on multiple platforms. The only wildcard is whether its audience will still be willing to watch by the time it does.

Perry, who recently left Conde Nast as VP of planning and development, has a remit to take an aggressive approach for the group built around the National Journal politics and policy brand.

It’s a new role at Atlantic Media, where until now National Journal’s digital strategy was run by Scott Havens as Atlantic’s VP for digital operations; Havens was promoted to SVP of Finance and Digital Operations in January. Perry will focus only on National Journal, which relaunched NationalJournal.comin late 2010 and last year announced an enterprise-level membership model that includes access to all of its digital and print publications (NationalJournal.com, National Journal Daily, the weekly National Journal magazine and National Journal Hotline) along with with members-only events.

Perry’s subscription experience with the Wall Street Journal‘s online operations at Dow Jones (NSDQ: NWS), where she was SVP of marketing & business development , should be helpful when it comes to that. She has plenty of work to do. The site currently suggests people interested in subscriptions send e-mail or call, while its membership brochure is a pdf although there is also a handy contact form buried on a contact page. Release.