By Duff McDonald
July 21, 2011

FORTUNE — The media frenzy over the News Corp. phone-hacking scandal has been a thing to behold. There’s nothing like a good comeuppance to get journalists all hot and bothered, and the sight of Rupert and James Murdoch taking the “we’re not criminals, we’re just clueless” defense in front of Parliament will surely go down as one of the year’s most entertaining spectacles. We now know that Rupert just might be a doddering old fool, that his son can prevaricate with the best of them, and that Wendi Deng has clearly been put on edge by the whole experience.

What we also know is that a somnolent and acquiescent board has been shocked into a state of alertness that might even rival that of Rupert’s wife. They’re said to be considering a whole range of options. One: ditching the company’s entire UK Newspaper business (odds: not too bad). Two: separating the roles of chairman and CEO, kicking Rupert out of the chief executive’s chair and replacing him with president Chase Carey (odds: not too good). Three: a $5 billion stock repurchase effort (odds: seemingly 100%). What they’re hopefully not going to do is allow Rupert to make any more ego-driven but dilutive acquisitions, such as that of Dow Jones and its flagship the Wall Street Journal.

Wall Street analysts like to do something called a sum-of-the-parts valuation when it comes to big conglomerates like News Corp. (NWS).It helps them (and their clients) to better understand how one can even consider putting a price on the totality of such a disparate and diverse collection of assets. Normally, though, these are just thought exercises—all the more so when you have a dictatorial chief executive like Rupert who is hell-bent on collecting as many toys as he can before he croaks. Ask him six months ago if he planned to break up News Corp., and he would have laughed in your face. Ask him today, and while he may still laugh, the board of News Corp. won’t be laughing with him. All options seem to be on the table.

Michael Nathanson, an analyst at Nomura Equity Research, ran an interesting breakup analysis of News Corp on Monday. In it, he envisioned splitting the company into three separate parts: Good News Corp, Bad News Corp, and Toxic News Corp. In his analysis, the parts look to be worth more than the sum.

Nathanson’s Good NWS includes the company’s cable networks, its television properties, its BSkyB stake, and its Sky Italia business. He estimates that Good NWS would have $17.3 billion in fiscal 2012 revenues, just under half that of the combined company. Even after saddling Good NWS with all of News Corp’s current debt (albeit all its cash as well), he sees impressive earnings growth of 30% annually. Putting a 14x multiple on those earnings that’s comparable to other pure play cable assets, he gets to $14.54 per share of Good NWS alone. NWS shares were trading at $16.90 as of Thursday morning.

Nathanson then takes Toxic NWS—all of its newspaper assets—and throws them overboard, despite their accounting for just under 9% of estimated 2012 earnings before interest and taxes. That’s a combined $6.2 billion in 2012 revenues onto which he puts a value of zero. The investment community has long considered the newspaper holdings nothing more than a result of Rupert’s vanity and chokehold on News Corp. votes, and has discounted the shares accordingly. Sure, the company may make money if it sells them, but under current ownership, they’re worthless to investors, if not worse.

Finally, we come to Bad NWS. Into this pile Nathanson throws filmed entertainment, magazines, and book publishing. While filmed entertainment does have value, including syndication deals, negative DVD trends have Nathanson choosing to be conservative and to include them in the less attractive half of Good/Bad NWS. Combined, these businesses would account for an estimated $10 billion in 2012 revenue and earnings per share of $0.39.

Here’s where the numbers get really interesting. If you subtract his Good NWS valuation of $14.54 from today’s share price of $16.90, you’re left with $2.46 per share that is attributable to Bad NWS. (Remember, Toxic NWS is worth nothing.) Divide that by $0.39 of 2012 earnings, and you’re paying just 6.3 times those earnings for Bad NWS. (Earlier in the week, with the shares at $15.64, you were only paying 2.8x earnings.) “Not entirely free,” wrote Nathanson at the time. “But very, very cheap.” The argument still stands today. If the board does do its job and forces Murdoch to seriously consider all strategic options, there just might be some real money to be made on these shares.

The biggest risk that Nathanson can see is that the company’s derailed acquisition of the part of BSkyB that it didn’t own leaves Rupert with too much money to play with, therefore increasing the likelihood of his making another value-destroying acquisition like that of Dow Jones or MySpace. It says a lot about a company when analyst reports are concerned that the chief executive has too much money at his disposal.

And he’s right to be concerned: Even with all the hush money this firm has apparently been paying out to phone-hacking victims, and including the $5 billion share buyback, News Corp. will have an estimated $9.4 billion in cash on hand at the end of 2012. So there’s your big bet: the stock is a BUY if the board can stop Rupert from doing something stupid with the money, while also forcing him to consider breaking the company up for the good of its shareholders.

After his performance on Tuesday, it doesn’t seem like either one of those tasks is going to be too hard.

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