The Murdoch Discount

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.”



News Corp: The Murdoch Discount and the Murdoch Premium
Daniel Gross
Yahoo Contrary Indicator, July 18, 2011

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