A trio of new stock recommendations sent the shares of Dutch music giant Polygram and Rupert Murdoch’s News Corp. upward on Wall Street Tuesday.

PaineWebber initiated coverage of Polygram, putting an “attractive” rating on the stock.

Entertainment analyst Chris Dixon said he likes Polygram as a longer-term player. “With close to 60% of its total music sales coming from Europe, the company is superbly positioned to benefit once the European economy begins to improve in mid-1994,” Dixon said.

He also is attracted to Polygram’s “measured” approach to expanding its motion picture business. “Distribution agreements with Disney, Sony and Universal, as well as the opportunity to distribute product via the company’s video arm and Manifesto, suggest that Polygram’s taking a cautious, albeit staged, approach to getting into the movie business,” Dixon said.

“The fact that Polygram has no debt and is capable of generating very stable cash flow from its core international music business goes a long way to minimizing the risk and providing the capital to build out the film business.”

Dixon said the extraordinary results of both the Warner Bros. film “The Bodyguard” and the soundtrack to the film “attests to the very real importance of cross-promoting music and film.”

He said there is every reason to believe Polygram will attempt to take advantage of similar synergies, adding, “This could be a very attractive and interesting strategy for them.”

While Dixon said the film division will not contribute to earnings this year, by 1996 it could contribute an incremental 75 cents to 80 cents in earnings per share. Dixon is predicting full company earnings per share of $ 1.80 this year and $ 2.35 in 1994.

S.G. Warburg’s London and Amsterdam offices also upped their recommendation on Polygram from a “hold” to a “buy.” Warburg increased its 1993 earnings-per-share estimates from $ 1.75 to $ 1.82 for 1993 and $ 1.95 to $ 2.07 for 1994.

Polygram gained 7/8 yesterday to close at $ 26.625.

News Corp. gets ‘buy’

Oppenheimer analyst Jessica Reif returned the shares of News Corp. to the brokerage’s recommended list with a “buy” recommendation yesterday. She had downgraded the stock to a “hold” in December.

Reif said News Corp. should benefit from improving economies in English-speaking parts of the world.

“Advertising in both the U.K. and Australia is starting to pick up,” Reif said. “Because they have such dominant market share (65% market share of Australian newspapers and 35% of the U.K.), not only will they get the lion’s share of the advertising increase, but because only a very small portion of their costs are variable, a lot of that incremental revenue should flow through to their bottom line.”

News Corp. jumped $ 1.50 to close at $ 42.75.

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