In 2012, News Corp’s (NASDAQ:NWS) stock has continued a recovery that began around December 20. It appears that investors are now rewarding the company for fundamentals rather than punishing it for the phone-hacking scandal. The scandal involved the company’s U.K. newspapers engaging in phone hacking, bribery and other improper influence to publish news stories. It has significantly eroded News Corp’s market value, well outside the portion of business it prominently affected. The U.K. newspaper business constitutes just about 5% to News Corp’s stock as per our estimates. News Corp competes with other media conglomerates such as Time Warner (NYSE:TWX), Disney (NYSE:DIS) and CBS (NYSE:CBS) in TV programming, filmed entertainment and publishing businesses.
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Another trigger for the stock rise could be that the company is close to settling several lawsuits pertaining to the phone-hacking scandal, just ahead of the trial that begins next month. [1] This is still a small portion of total number of cases filed against the company.
In an unrelated development, News Corp’s Fox Broadcasting is adding animated shows to its Saturday-night lineup. [2] We estimate that Fox Broadcasting constitutes a little over 10% to News Corp’s $23.10 Trefis stock price estimate.
Our estimate stands at a premium of about 25% to the market price.
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Notes:- News Corp. Pushes Phone-Hacking Settlements as Trial Nears, Bloomberg Businessweek, Jan 6 2011 [↩]
- News Corp.’s Fox to Add Late-Night Animated Shows as ‘Simpsons’ Turns 23, Bloomberg, Jan 9 2012 [↩]
