Murdoch expected to announce one company will hold his entertainment businesses, and the other his publishing assets

Rupert Murdoch is expected to announce plans to split his troubled empire in two on Thursday, severing his US media assets from the newspaper division tarnished by the phone hacking scandal.

Murdoch met with key executives on Wednesday at News Corp's headquarters in New York to outline plans for the biggest corporate shakeup in his company's history. According to the News Corp owned Wall Street Journal the evening meeting lasted roughly an hour and a half.

Murdoch told executives one company would house News Corp's entertainment businesses including 20th Century Fox and the Fox broadcast network while another would hold publishing assets including Dow Jones, publisher of The Wall Street Journal, News International, publisher of and the Times and Sun in the UK, HarperCollins book publishing and News Corp's recently established education business.

The move is volte face for Murdoch who has consistently fought off calls to split his troubled newspaper assets from his more fast growing media assets. The news has cheered investors and News Corp shares have leapt 11% since Tuesday when the media company first confirmed it was contemplating a split.

The move is unlike to end News Corp's legal woes, according to legal experts. US authorities are now investigating the company and executives including Murdoch and his son James, former boss of the News International newspaper division, under the foreign corrupt practices act (FCPA).

The FCPA is a powerful US law used to investigate allegations of bribery by US executives involving foreign officials and News Corp stand accused of bribing policemen and other officials to obtain stories for its now closed News of the World tabloid and other papers.

The new largely US-based News Corp would be formed from businesses that accounted for $23.5bn (£15.1bn) in revenue in the year ended in June 2011. The publishing arm that would the UK papers, the WSJ and the New York Post, The Australian and the book publisher, as well as HarperCollins generated $8.8bn (£5.6bn) in the same period.

News Corp called in its newspaper editors from around the world on Wednesday to reassure them that the new company remained committed to publishing.

Murdoch's career started in newspapers and as the company's largest shareholder he has, until now, stood firm against calls to split his media empire. The media baron is expected to explain his change of heart tomorrow and will be interiewed on News Corp's Fox Business channel.