Ahead of News Corp's
break-up into two separate divisions, its publishing arm gets a big thumbs down
from a US analyst. In a stinging comment the
analyst writes:
"We believe that the publishing unit has outlived its usefulness as a cash cow."
The anonymous analyst, who
works for The Boston-based Saibus
Research, a research and advisory firm that provides advice to investors and
money managers, was considering the current state of News Corp.
He/she praises Rupert Murdoch for the
corporate restructure that will see his company split into a publishing (print)
division and an entertainment (screen) division.
The analyst points to the
particular success of Fox Cable, calling it a "star
performer" that accounts for 28.5% of News Corp's revenues and 60% of its
operating income, with an operating margin of 37%.
But turning to the
publishing side - which includes News International,
the Wall Street
Journal, the New York Post,
Australian papers and book publisher HarperCollins - the analyst considers that
it has "poor growth prospects" and has held back the overall company's
value.
Even so, he/she concedes
that it is not only profitable but "more profitable than the New York Times and
McClatchy combined."
"We are impressed with the fact that News Corp's publishing business is still more profitable than other similar firms. However, we can admit that print media is at best a cash cow and at worst, a declining business."
And he/she concludes that, even without hacking, "it would make sense to sell or spin off the publishing division to allow shareholders direct exposure to News Corp's higher profit, higher growth entertainment properties…
"While the entertainment group assets… are more desirable to us than the publishing assets… we're not surprised that the publishing division is content to muddle along in the mediocre operating environment for publishing assets."
Then the analyst finishes by registering surprise at Murdoch's decision to include News Corp's Australian pay-TV assets in the new publishing division.
Source: Seeking
Alpha
No comments:
Post a Comment