As part of the split, one company will operate as a newspaper and book publisher, and the other will be an entertainment company that will include the 20th Century Fox movie studio, the Fox broadcast TV network and the Fox News cable channel.
While News Corp.'s board unanimously approved the split, it will need to review a more formal proposal on the matter. The deal is also subject to shareholder and regulatory approvals. News Corp. said it plans to hold a meeting of its shareholders sometime in 2013. The entire process may take a year to finalize.
The Murdoch family, which controls nearly 40 percent of the voting shares in News Corp., is expected to maintain control of both companies. Rupert Murdoch will serve as chairman of both companies and CEO of the media and entertainment company. News Corp. said it plans to assemble management teams and boards for both companies over the next several months.
Murdoch said in a conference call with investors that a split would result in two strong companies.
"We've come a long way in our journey that began nearly 60 years ago with a single newspaper operating out of Adelaide," Murdoch said, referring to the Australian newspaper he inherited from his father and became the foundation for News Corp.
The split of News Corp. is a symbolic turning point for Murdoch, 81. Through the years, Murdoch maintained a fondness for newspapers even as he purchased entertainment companies. In hearings last summer before U.K. lawmakers, he conceded that he regularly called newspaper editors under his employ with the greeting: "What's doing?"
Investors have already blessed the split. They've pushed the company's Class B stock up 10 percent since the news of the plan broke early Tuesday. The stock edged down 15 cents to $22.26 in midday trading Thursday.
Under the plan, News Corp. shareholders will receive one share of common stock in each new company for each share of News Corp. that they hold. Each company will maintain two classes of stock.
Analysts relished the prospect that the faster growing entertainment segment would be valued more highly by new investors who weren't willing to buy shares in a company being dragged down by a newspaper industry in decline.
The publishing company, which will include The Wall Street Journal, is expected to be the much smaller of the two. Some analysts value it at about $5 billion, compared with the current market value for News Corp. as a whole of about $54 billion.
Murdoch emphasized on the call that the split doesn't mean he's giving up on his publishing business.
"Our aim is nothing less than this: To create the most ambitious, well-capitalized and highly motivated news and publishing company in the world," Murdoch said.
Still, many analysts had questions about which company would bear the financial risks of a probe in the U.K. into phone hacking and bribery. Besides legal costs, News Corp. also faces potential fines in the U.S. under the Foreign Corrupt Practices Act, which punishes companies that have bribed officials abroad.
It is unclear if the split will appease the British telecommunications regulator, Ofcom, which is reviewing whether British Sky Broadcasting - of which News Corp. holds a 39 percent stake - is "fit and proper" to hold a broadcasting license. Ofcom is expected to wrap up its review later this summer.
British authorities have been probing allegations that News Corp. journalists at News of the World, which it closed last summer, and other newspapers hacked into phones and bribed public officials to gain exclusive information.
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Business Writer Ryan Nakashima in Los Angeles contributed to this report.
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