NEWS CORP. ANNOUNCES FOX IPO: HOPES TO BRING IN $2-4B
News Corp. unveiled plans Monday for a stock offering
to include 20% of its film, broadcasting and sports assets
-- including the Dodgers -- in a deal that could raise "up
to" $2B for the company, which would be called the Fox
Group, according to Sallie Hofmeister of the L.A. TIMES.
Last year, broadcasting and film accounted for "about half"
of News Corp.'s $13B in revenue. Paine Webber analyst
Christopher Dixon said that "should it be valued comparably
to CBS, Time Warner or Viacom," the Fox Group would be worth
$16-20B. Following the announcement, shares in News Corp.
went up 12%, or $3.56 per share, closing at $33.06 (L.A.
TIMES, 6/30). CNN's Donald Van De Mark reported that
included in the Fox Group are the RSNs that Fox co-owns with
Liberty Media, the Dodgers and options to buy minority
stakes in the Lakers and NHL Kings ("Moneyline," 6/29).
WHAT IT MEANS: The company said that proceeds from the
sale "are likely to be used to repurchase News Corp. stock,
pay down debt and possibly fund more acquisitions" (WALL
STREET JOURNAL, 6/30). In L.A., Dave McNary writes that
analysts believe that Murdoch's "goal" is to "obtain more
broadcast rights and programming assets." McNary also
writes that "if Murdoch's recent moves are any indication,"
most of the money from the IPO "will be used to expand his
power over professional sports" (L.A. DAILY NEWS, 6/30).
Also in L.A., Sallie Hofmeister reports that sources say
News Corp. "is preparing to buy out its cable partners in
PrimeStar Inc." (L.A. TIMES, 6/30). In N.Y., Phyllis Furman
cites "huge expenses," including Fox's $4.4B NFL TV deal as
a reason for the IPO (N.Y. DAILY NEWS, 6/30). CNN's Donald
Van De Mark reported that Murdoch "wants to pay down debt
and buy back News Corp. stock" ("Moneyline," CNN, 6/29).
REAX: Mark Greenberg, Portfolio Manager at Ivesco
Leisure Fund, a News Corp. shareholder: "The move makes a
lot of sense because it will allow News Corp. to raise money
without [News Corp. Chair Rupert] Murdoch having to give up
control." Cowen & Co. Analyst Gary Farber: "It's all about
stock simplification. News Corp. may be later to the party
than the rest of the guys, but they will benefit" (HOLLYWOOD
REPORTER, 6/30). First Union Capital Markets analyst Bishop
Cheen: "It doesn't take a rocket scientist to figure out
that these assets are worth more if they're separated out.
There's a lot of value that's lost by being part of the huge
[News Corp.] umbrella" (L.A. DAILY NEWS, 6/30).