News Corp And Murdoch: Facing Analysts Over Dow Jones
News Corp earnings come out after the bell, followed by a conference call at 4:30 eastern. Analysts focus on the call (there's always a Q&A period after the presentation) will be much less on the numbers, and much more on CEO Rupert Murdoch's guidance. The hot topic of the day is Dow Jones .Analysts may ask Murdoch to justify the 67% premium he's paying for the company in an industry facing such slow growth.
As Soleil analyst Laura Martin told me, even if regular newspapers are growing 0-2% and Dow Jones is growing at 5-7% it's still growing far slower than a lot of other industries Murdoch could invest in. So on the table: How's he going to integrate Dow Jones? Where will he generate growth?
And then there's the issue of share buybacks--is News Corp under leveraged? Larry Haverty, who runs Gabelli Asset Management's media portfolio--and has Dow Jones as one of his top five assets--says that he'd like to hear Murdoch say that he's buying back three to five billion dollars of stock.
Haverty tells me he thinks Murdoch should neutralize the dilution caused by the Dow Jones transaction with this stock buyback. "I'd like to see a repeat of what Disney did with Pixar," Haverty said. "They bought all the shares they issued when Pixar was purchased and the stock went from 24 to 34." Haverty thinks Murdoch could wring similar growth from NWS stock.
And then there's the issue of the Internet. There's no question that MySpace is fantastic and that Murdoch snagged it for a steal. But how are all those dedicated users being monetized. MySpace recently made a deal with Google to monetize that traffic, and some of that should be showing up on the income statement, and perhaps some guidance from Murdoch. But is this Google deal working? Or is Google taking too much of News Corp's online revenue?
For a company that provides so much guidance, the Internet division has been more opaque, and investors are ready for more guidance.
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