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Canaccord Genuity Analyst Thomas Eagan, Albert Fried & Co.’s Rich Tullo and FBN’s Dennis Kneale on News Corp. considering restructuring into t...
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-- there let's get to a big news story of the day shares of News Corp.
the parent company of this network.
Hitting multi year highs today on the news that the company is considering splitting into two separate.
Publicly traded entities the Wall Street Journal broke the story.
And that of course and News Corp.
came out said you know what were confirming that we're looking into it which is -- usual.
Because in the past they have said absolutely not but shake it up but the team get all the angles -- assailants here.
Our media reporter along with News Corp.
analyst Thomas Eagan and MSG analyst rich to what we're bringing in Madison Square Garden.
Folks because Cablevision used to -- all of chemistry and then they spotted off into a separately traded entities I wanna start with Dennis that Dennis get -- -- -- Starts -- parent company News Corp.
says it may split -- -- the two.
And us stock -- almost a five year high of one company would be for all the -- and entertainment businesses Fox Business.
Fox News fox broadcasting and the other for news -- publishing businesses including the Wall Street Journal.
And harpercollins book publishers.
Now News Corp.
cable channels.
They are the single biggest contributor to total profit 2.5 billion dollars or 54% of all profit the first nine months publishing attribute only 10% of the total.
News corps chief executive controlling shareholder Rupert Murdoch.
Would likely retain control of both companies media side would hold as I said Fox News -- track I think for a century fox film.
-- this is is that comprise consent if -- a total revenue in 90%.
Total profit publishing side that said to be Rupert real love had over six billion dollars in revenue and earnings -- less than half a billion.
And the first nine months.
So you gotta wonder years it's a real split of equals or is the way of cleaning off the twentieth century old slow growth print business so -- electronic stuff can.
Really people.
-- -- to -- more to the revenue when it comes to the entertainment thing but let's bring him at the issue with our analysts and Thomas -- you cover News Corp.
you've got -- -- on this company.
Let's talk about this up because it certainly is is reminiscent of what say Viacom did with CBS splitting into two parts as we said Cablevision MSG.
Do you like system right now you have a bite the moment what do you think.
We think this move makes complete sense for us we've been asking for this for -- while.
Essentially because.
-- the publishing division has been weighing down the multiple.
It has -- -- slower.
-- ebitda growth and has a lower margin -- -- and we again weighing on the multiple by splitting it off and allows the I think media assets to to trade at a much higher multiple.
Okay let's not forget that there are litigation costs for the hacking scandal related to the publishing part Dennis.
So by splitting -- -- -- does that then allow the entertainment division to run more freely.
I think the litigation cost actual levels nothing in a multi billion dollar company some people speculate that one reason they do really well genocide is not a little.
You have but some people say the -- thing is politically.
Do they hate it they want to build -- piper B -- -- The satellite and yet they had to back off of that plan to buy the rest of the company when they got trouble on the press side to get rid of the print side maybe you'll have as many enemies when you do try to go back -- and buy the rest of B -- B.
What -- too -- in outlook you cover amnesty for Albert fried and this is an example of a company that split off from Cablevision its parent.
And has done very well of course the big news today is that MS GS Fox Business first told you it was imminent.
Back June 7 is buying the fabulous form in Los Angeles so.
What do you think and they can they -- -- News Corp.
learned something from the -- Cablevision did this because MSG stock has certainly done very well.
Yeah absolutely and I would say more germane to use court would be the spin -- of AMC which we also cover.
5 AMC since the spin off the multiple is done.
From roughly eight times CB -- -- dot.
To about ten times CB to be and price traded twelve times -- -- dvd -- once it's controversies we -- is -- So you can see.
That's -- -- point that Tom was making good call Tom by the way.
That when you get rid of the old media assets and let the cable company's float on the around.
By that -- can realize shareholder value.
Currently needs book is trading about seven times he -- dot today right and it's his traded between ten and fourteen times.
That's also what -- guys that.
-- break ups are are often really good for its shareholders you know what Barry Diller split up IAC and up five separate entities a couple of years ago one point we track it.
They were up 200% when the S&P was up only 15% when Time Warner spun off Time Warner Cable the cable stocks soared it's up -- like 20% this year to year to date.
-- Time Warner the a limit -- to -- is up only 2%.
I think that all these companies that built an eighty's and ninety's.
Could really help themselves many of them by some.
Matchup of Thomas what about the issue of succession at News Corp.
we we sit around in the hallways and wonder what eventually happens when Rupert Murdoch.
Decides that he's going to step down what would this be finally at least I'm actually -- more.
Got an easier path I guess for a non family member to then eventually take over you have somebody like Chase Carey people talked about running the entertainment division successful.
Right I think that but clearly chase -- -- -- guy and -- -- -- right behind -- in terms of controlling the company I think that.
It's been up this publishing division really has his hand -- all over it.
So yeah I think it does make eighties humans interpret -- for him to -- And according to company while rich let me get back.
