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News Corporation (NWSA) to Buy Base Chemicals for $295M Cash

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·4 min read
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News Corporation NWSA continues to execute strategic buyouts to enhance its portfolio. In its latest move, NWSA agreed to acquire the Base Chemicals business from S&P Global and IHS Markit in a cash deal worth $295 million. Base Chemicals will join Dow Jones’ Professional Information Business, besides the Oil Price Information Service (OPIS).

Base Chemicals is popular for its pricing data, insights and forecasting abilities for the world’s major base chemicals delivered through its renowned Market Advisory and World Analysis services. This boasts a solid record of growth, including a revenue base of about 100% digital and recurring. It has a significant geographical footprint, thanks to its continued global demand for base chemical pricing, analysis and forecasting. Base Chemicals is likely to gain from Dow Jones’ expertise in news, research and events.

News Corporation’s Dow Jones business will benefit from Base Chemicals’ robust analysis and forecasting capabilities. These strengths are expected to enrich Dow Jones’ data, price and news solutions. We note that this buyout is subject to customary closing conditions with regulatory approvals as well as the completion of the S&P Global and IHS Markit merger.

The Base Chemicals and OPIS transactions will fortify NWSA’s Dow Jones segment. These additions will expand Dow Jones’ information services business. In August, this year, management had announced that it will acquire OPIS and the related assets from S&P Global and IHS Markit. Hence, the purchase of Base Chemicals will complement the OPIS business. These additions will help create and expand the Energy, Chemicals and Renewables verticals at Dow Jones.

During the recent fiscal year ended Nov 30, 2021, Base Chemicals was likely to deliver revenues of $65 million. Base Chemicals’ key products consist of Market Advisory Services and World Analysis. While the former offers pricing, insights and weekly/monthly reports, the latter generates annual reports with long-term predictions and has a database of trends. Management believes that Base Chemicals has great potential, aiding Dow Jones to widen its information services’ reach to the new professional users and industries.

What Else?

News Corporation’s Dow Jones segment is benefiting from increased circulation, subscription and advertising revenues as well as gains from the buyout of Investor’s Business Daily. Revenues at this division rose 15% year over year to $444 million in first-quarter fiscal 2022. The segment’s digital revenues contributed 75% to total revenues compared with 73% in the prior-year quarter. Adjusted revenues also increased 9% while adjusted EBITDA rose 24%.

During the fiscal first quarter, the overall average subscriptions to Dow Jones’ consumer products touched 4.6 million average subscriptions, up 18% from the comparable quarter’s level in the prior fiscal year. Digital-only subscriptions rose 24% during the fiscal first quarter.

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Shares of this currently Zacks Rank #2 (Buy) globally diversified media player have appreciated 25.3% in the past year. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Other Stocks to Consider

Other top-ranked stocks include AMC Networks Inc. AMCX, Entravision Communications Corporation EVC and The New York Times Company NYT.

AMC Networks, a global entertainment company known for its popular and critically-acclaimed content, carries a Zacks Rank #2 at present. AMCX has a trailing four-quarter earnings surprise of 185.9%, on average.

The Zacks Consensus Estimate for AMC Networks’ next financial-year revenues suggests growth of 3.4% from the year-ago reported figure.

Entravision Communications, a global media, marketing and technology company, has a Zacks Rank of 2 at present. EVC has a trailing four-quarter earnings surprise of 29%, on average.

The Zacks Consensus Estimate for Entravision Communications’ upcoming financial-year revenues and EPS suggests growth of 15.5% and 6.4%, respectively, from the corresponding year-ago readings.

The New York Times Company, a diversified media and information services company, is currently Zacks #2 Ranked. NYT has a trailing four-quarter earnings surprise of 31.1%, on average.

The Zacks Consensus Estimate for The New York Times Company’s next financial-year revenues and EPS suggests respective growth of 7.9% and 13.3% from the corresponding year-ago tallies.


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