Dan Gross lays out the details of the huge, embarrassing, 50% discount to value that that News Corp properties are suffering under the reign of its autocrat: Rupert Murdoch.

“Murdoch’s willingness to skirt rules and play rough has also caused shareholders harm. Last year, it paid $500 million to settle a lawsuit from a rival in the ad supplement business that it accused it of antitrust violation. The missteps in handling the hacking scandal will exact a financial cost — the company shut down what had been a profitable newspaper. But the missteps can also inhibit the ability of other parts of the Murdoch empire to expand in regulated industries. Last week, for example, News Corp. withdrew from a bid to increase its stake in BSkyB, the lucrative satellite television business in the U.K.

As a result, as Tara Lachapelle, Danielle Kucera and Alex Sherman of Bloomberg report, investors now value the company as significantly less than the sum of its parts:

By valuing each of News Corp.’s businesses separately, the New York-based media conglomerate would be worth $62 billion to $79 billion, estimates from Barclays Plc and Gabelli & Co. show, indicating News Corp. trades at an almost 50 percent discount to its units. ‘There’s just sort of this generic Murdoch discount, which encompasses the concern that he will make decisions that are not consistent with other shareholder interests,’ said Michael Morris, an analyst at Davenport & Co. in Richmond, Virginia.

That’s the Murdoch Discount.”

Ouch!

>

Source:
News Corp: The Murdoch Discount and the Murdoch Premium
Daniel Gross
Yahoo Contrary Indicator, July 18, 2011
http://finance.yahoo.com/blogs/daniel-gross/news-corp-murdoch-discount-murdoch-premium-200342587.html

Category: Financial Press, Legal

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

26 Responses to “The Murdoch Discount”

  1. jaymaster says:

    Sounds like a buying opportunity.

    (Assuming old media isn’t all dying.)

  2. Orange14 says:

    Trouble with looking at this as a value proposition is the Murdoch family controls about 40% of the voting shares and probably will hold out to the very end. I’m unsure what all the institutional investors will do in terms of recapturing value. Maybe Carl Icahn should sell his CLX stake and buy NEWS.

  3. KidDynamite says:

    and a different view:

    http://ftalphaville.ft.com/blog/2011/07/18/625971/the-good-the-bad-and-the-ugly-news-corp-edition/

    ~~~

    BR: Is that so different a view? Nomura suggests spliting News Corp into three companies with distinct revenue and earnings profiles, vs selling off pieces.

    It looks like a different weighting for the discount . . .

  4. GeorgeBurnsWasRight says:

    I’d expect Murdoch to take the company private about the time he thinks the stock is done going down. With 40% of the voting shares, he effectively controls it now anyway, so why not get rid of the SEC regulations and a bunch of accountants and lawyers needed just to comply with the regs. If he times it right it could be his biggest financial score of his career.

    I know investors tend to like it when management has “some skin in the game”, but at 40% it’s more like the whole hand.

    ~~~

    BR: Now all he needs is $60 billion dollars cash . . .

  5. Mike in Nola says:

    Looks like the rubes who watch Fox News won’t know what’s going on Britain. The Murdoch’s and Brooks are supposed to appear before a parliamentary committee Wed. There was speculation about what attitude they would take with the consensus being that they would be contrite. Someone pointed out that Rupert is doing a Jekyll and Hyde, giving an interview with the WSJ wherein he claimed that there had only been minor mistakes while on the next day he visited that dead girl’s family and then ran full page apologies in Britain.

    BR already covered the WSJ whitewash today. I can’t bring myself to look at the Fox News Channel but if you look at their web page there is barely a mention of the scandal and nothing in the tiny type about the resignation of two of the top men at Scotland Yard and the arrest of Brooks. I suppose that will be the pattern of Saruman.

    Lulzsec and some other hackers have been doing good work.

    One group hacked the Sun and replaced the front page with a story about Murdoch’s body being discovered:
    http://www.examiner.com/anonymous-in-national/the-sun-hacked-writes-rupert-murdochs-death-photo

    Another group has been tweeting the email and other login credentials members of Murdoch’s British Empire.
    http://www.gizmodo.com.au/2011/07/antisec-hackers-spill-rebekah-brooks%e2%80%99-email-login/

  6. Frwip says:

    Seconding GeorgeBurnsWasRight.

    Let’s say the stock goes down another $3 and a leveraged buy-out becomes a slam-dunk.

    ~~~

    BR: That would be another 80% down from here!

  7. RW says:

    News Corp is a tool of, and front for, the Murdochs: This is the fundamental reality of oligarchy; analyzing the entity on a value or arb basis is largely meaningless.

  8. jaymaster says:

    So assuming you LBO/take it private theorists are correct, the best thing for Murdoch to do would be to testify some place, or at least make some statements.

    And say something to the effect of, “ I don’t know how deep this problem goes. But there are indications it might impact The Wall Street Journal. And possibly, Fox News.”

    Then sit back and wait for the stock price drop further……

    Damn, how did I get to be this cynical?

  9. Greg0658 says:

    as per GeorgeBurnsWasRight @8:46pm .. I’d be remiss not to play devil advocate in the take a corp private and fu rules and manipulators on family company will .. buying sympathisers and assistance has a cost .. maybe its 60% .. a corp can’t go private like this … its gotta be under the radar

  10. JimRino says:

    The Murdoch’s look guilty of criminal activity.
    It might be better for the family to sell out now, to have deep pockets for a legal defense.
    Let’s face it the only thing worth anything are the TV[ Glee ] and movie business.
    Everything else is tainted.

  11. Moss says:

    It will be interesting watching the fair and balanced coverage of the Rube in front of Parliament.
    If Cameron goes down the spectacle will be Harvard Business Review material.

    I just love corporate governance.

  12. Bob A says:

    hopefully it goes a lot lower. zero would be about right.

  13. GabrielN says:

    That’s not the Murdoch discount… that’s the Wendi Deng discount (double ouch!).

  14. Dow says:

    Public vs private is irrelevant if no one wants to advertise in News Corp venues.

  15. Mike in Nola says:

    Parliamentary hearing going on now. Currently police in hotseat.

    http://www.bbc.co.uk/news/uk-politics-14193124

  16. KidDynamite says:

    @BR – I described it as different as it basically suggests that NWS is fairly valued – not valued at a 50% discount…

  17. VennData says:

    There’s no “Murdoch discount” he was giving people what they want: salacious gossip, polinfotainment, obtained by hook or by crook.

    Without that ability to get the dirt that other media organizations find morally repugnant (and illegal) his collection of assets is worth a lot less. What has happened is the “Murdoch premium” in the dual share class structure has vanished.

    Now when I hear anger, red-faced white guys complain about “immigrant criminality” I nod and snarl the names Murdoch, Fox, and WSJ

  18. AHodge says:

    careful with this “pieces” of Newscorp stuff
    you just wrote how the WSJ aint what it was
    can they make the SAME money without the hacking and the sleaze?
    lets see
    Al gore owning Fox or Barrons
    i almost shorted a week ago, dont bother to chase now
    (But Some businesses like Dow Jones should be clean)

    love the theater
    Rebekah’s feelings all over her face
    anger/annowance first
    then “Annie” Sooo grateful Daddy Murbucks has his shoulder to hang onto
    now fear and depression post arrest

    follow the money– its absurd to think the Ms and R didnt look at the millions budget items going to Cops. Royal security, phone company. much less why the lawsuit payoffs
    follow the coverup
    the 3000 missing emails etc

  19. AHodge says:

    also how about all their licence approvals and “good character”
    AND somewhat like an ad agency
    the staff can walk
    forget the company the subsidiary and the equity,,, hire all the (unindicted) staff.

  20. AHodge says:

    on fast money last night “value” players Tilson and Finerman said ” no way” “way too early” “it has hair all over it”

  21. AHodge says:

    so i see the P/E right now is 13.4
    you cite approvingly its worth double ??????????
    citing Gabelli well known shills…

  22. jaymaster says:

    I’ve been watching the show trial. The little Murdoch is pretty damn impressive. I thought he was Rupert’s attorney for about the first half hour.

  23. AHodge says:

    according to my dow Jones newsfeed
    there is no NWS news for Newscorp out this morning
    did i say they were clean? oops

  24. jaymaster says:

    Murdoch just got a pie in his face!

  25. AHodge says:

    gosh his wife defending him then smacking the pieman
    rupert manly continues…….. to completely wimped out questioning?
    you couldn’t pay for theater that good???????