News Corp's publishing unit gets more cash

The cash flows are still positive, but the challenge is to counter the secular decline in the publishing industry and revive sales.

By Trefis Mar 15, 2013 5:59PM
Revealing more details about the split in its media business, News Corp (NWS) recently stated it will infuse some cash into its publishing unit, which will start off with a total cash pool of $2.6 billion.

We estimate the value of News Corp's publishing business is close to $4.3 billion, taking into account the total net debt that News Corp has and distributing it in proportion of its individual business segments. The company had very little net debt when it reported its results last quarter.

This implies that with $2.6 billion cash infusion, the valuation of News Corp's publishing business could bump up to $7 billion. The publishing business suffered significant losses last fiscal year, primarily due to the write-down of assets. The cash flows are still positive, but the challenge is to counter the secular decline in the publishing industry and revive sales.

With this cash infusion, the publishing company will be little more than one-tenth the size of the remaining video-content focused entity. This includes News Corp's several newspapers in the U.S., the U.K. and Australia, as well as its magazine publishing business.

News Corp Publishing RevenuesThe phone hacking scandal had a severe impact on News Corp's publishing business in the U.K., as well as its image worldwide. Its financial impact on the company's market value was a lot more than that could be justified by its fundamentals. As a result, News Corp decided to separate its TV and movie businesses from the publishing scandal, and redefine its image -- while keeping bad publicity to a separate unit. This way, it can dilute any further impact on the value of its remaining businesses.

Furthermore, unlike its movie and TV networks businesses, the publishing business has not shown much strength and perhaps would be better managed as a separate entity. The publishing business is facing a secular decline, as print media is being replaced by digital media, which has yet to be monetized to the same extent as print. A lot of digital content is available for free while print content has been traditionally distributed based on subscriptions or individual purchases.

Our price estimate for News Corp stands at $30, roughly in line with the market price.

Tags: NWS
Mar 17, 2013 12:31PM

Yeah right,this what we need more right wing news.As if we don`t have enough


Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
100 character limit
Are you sure you want to delete this comment?


Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.


StockScouter rates stocks from 1 to 10, with 10 being the best, using a system of advanced mathematics to determine a stock's expected risk and return. Ratings are displayed on a bell curve, meaning there will be fewer ratings of 1 and 10 and far more of 4 through 7.

125 rated 1
264 rated 2
485 rated 3
679 rated 4
640 rated 5
617 rated 6
632 rated 7
493 rated 8
276 rated 9
153 rated 10

Top Picks

TAT&T Inc9



Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.

Contributors include professional investors and journalists affiliated with MSN Money.

Follow us on Twitter @topstocksmsn.