Fox to be most international conglom post split

Analyst sees it at $27 a share, newspapers at $4-$5

Fox Group will become the most international of major media congloms after it splits from News Corp., which could be worth up to $4 to $5 a share, said Nomura Analyst Michael Nathanson in a report Friday titled “When Bad News become New News.”

He valued Fox at about $27 after combing through News Corp.’s massive SEC filing late last month that included early details of its plan to break in half, separating newspapers from entertainment.

Fox Group will take in 60% of revenue from the U.S. and the rest from overseas, mostly Europe. That compares with 66% Stateside sales for Discovery, 71% each for Viacom and Time Warner, 75% Disney and 87% for CBS.

At the so-called new News Corp., half of revenue comes from advertising, 30% from circulation and subscriptions. Newspapers rep 70% of the business — 42% from Australia, 35% the U.S. and 23% the U.K.

Nathanson said he awaits key stats on balance sheet and capital usage in an updated proxy filing expected in late February or early March after the next quarterly financial results. He currently assumes $3 billion of cash will be allocated to new News Corp. and only limited debt of $480 million.

The proxy kicked off the process and started a dialogue with the SEC. News Corp. has said it expects to complete the split midyear. It would first create “new” News Corp. as a wholly owned subsidiary of parent Fox Group and will then break it off into a publicly traded company with its own stock. That’s done by issuing shares for the new company and distributing all of them to current shareholders of News Corp.

Besides newspapers, related digital services and News America Marketing, the new News Corp. will house publisher HarperCollins; Australian’s REA Group, a digital advertising company specializing in real estate services; Amplify, the startup education division led by Joel Klein; Fox Sports Australia; and 50% of Foxtel, Australia’s largest pay TV provider.

Fox Group will cover filmed entertainment, broadcast and cable television and direct broadcast satellite.