Tuesdata: The new new News Corp merger explained in ten graphs
Welcome to Tuesdata, our weekly exploration of the world of marketing and media via numbers.
The full post is only available to Unmade’s paying members; everyone else will hit a paywall further down. At the bottom of this post, beneath the paywall, our paying subscribers will find a code which can be used to access two complimentary tickets to Unmade’s event in Melbourne next month.
Our panel – marketer Andrea Dixon, brand strategist Richard Curtis, media agency boss Naomi Johnston and adman Nick Garrett – will chew over the year in marketing, and look ahead to what promises to be a turbulent 2023.
The two-hour, evening event takes place on Tuesday, November 15. Tickets, starting at $69, are on sale now.
What the numbers tell us about the News Corp deal
Today we explore the data that’s driving the strategic rationale of Rupert Murdoch’s plan to bring News Corp back together with Fox Corporation. It’s not certain to happen but most likely it will.
Until the split in 2013, News Corp was one company, with broadcast, screen production and news mastheads across the English speaking world.
The new News Corp was the most diversified after the separation. Most of the Australian businesses – including the company’s newspaper mastheads, News Corp’s stake in Foxtel, Fox Sports Australia, REA Group and book publisher HarperCollins – ended up in the News Corp bucket.
At the time the other, much bigger, half of the family was 21st Century Fox, which included its film and TV-making studio assets, along with its news and sport networks Fox News and Fox Sports. Four years later, Disney bought the studio business, while the news and sport broadcast operation remained within the newly created Fox Corporation.
Fox Corporation is still bigger than News Corp – in profit terms it’s now roughly double the size.
Profits compared
In the 2022 financial year, Fox Corp’s EBITDA profit was $2.96bn. News Corp’s was $1.37bn.
At the time of writing, Fox Corp’s market capitalisation is US$15.17bn. News Corp’s is US$9.43bn.
Historic share price
Since the 2013 split, the new News Corp’s share price has grown by 59%, with most of the growth coming over the last two years, thanks at least in part to the new money coming from Facebook and Google via the News Media Bargaining Code saga.
Meanwhile, the value of Fox Corp is down 24% since its creation.
Year to date
The share market performance of both companies so far this year is extremely similar. Both are down by 16%.
In a market where many media and technology stocks have fallen by more than 50% for the year to date, that 16% fall isn’t so bad. It also suggests that the two companies – both of which have Rupert and Lachlan Murdoch at the helm – are on a similar commercial track.
How the markets reacted
The markets have reacted slightly differently in how the two stocks have been treated.
Since news of the potential merger broke (earlier than planned) over the weekend, News Corp is up by 3.6%.
However, Fox Corporation had a poor Monday. By the time trading closed at breakfast time in Australia this morning, the company had lost 9.4%.
This was despite most northern hemisphere stock markets jumping overnight after the British government reversed its kamikaze budget steps.
If the companies come together, television and video would become the most significant part of the new new News Corp business.
In the main, Fox Corp’s revenue comes from just two places – affiliate fees from the cable operators who pay for the right to air its channels, and advertising. That revenue stream is particularly cyclical for Fox News, where much of its advertising is political campaign based, so follows the four year election cycle.
Where News Corp’s profits come from
By contrast, News Corp’s profits are driven from five seperate segments.
What used to be the news & information services segment was split into two in 2019, as the Wall Street Journal’s profits became increasingly driven by selling data (the new Dow Jones segment). Video has grown in the profit reporting line mainly because the company increased its stake in Foxtel after doing a deal with fellow shareholder Telstra to fold Fox Sports Australia into the business. Real estate has become an engine in its own right.
A merger would see video go from being one of the smaller profit drivers of News Corp, to the dominant one. I wouldn’t be surprised if the company re-sliced its segments, perhaps reporting the advertising media side of its TV businesses seperately.
Also key to the future of the TV and video segment will be the company’s evolution into streaming. Binge appears to have peaked, although the last quarter did not include subscriptions for House of the Dragon which may help. Sports service Kayo is still on an upward track.
The shifting sands of media will also be apparent after a re-merger.
When the businesses split last time, there didn’t seem to be much logic in leaving the Foxtel stake and Fox Sports Australia within the new News Corp half. It seemed pragmatic. They were profit drivers necessary to prop up the wobbly news business.
This time round, it will likely be the news and real estate businesses that will be carrying investment in the challenged TV and video model.
Bumpy Index
The Unmade Index of listed media and marketing companies survived a nervy Monday on the wider ASX with a relatively small decline of 0.32%. By contrast, the All OrdInaries were down by 1.36% for the day.
The best performer on the Unmade Index was real estate platform Domain, which also helped drag up the share price of majority owner Nine. The worst performers came from the smaller, more volatile stocks of Enero and Pureprofile.
Most likely the index will jump today, after surges in London and Wall Street overnight.
Time to let you go about your day.
As always, thank you for being a subscriber. Your support makes a difference.
I’ll be back with more tomorrow. I’m working on what I think is quite an interesting piece about the murky world of influencers.
Have a great Tuesday.
Toodlepip…
Tim Burrowes
tim@unmade.media
Your code for Unmade’s Marketing in 2023 event:
The code is:
UNMADEVIP
