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News Corporation (NWSA) to Buy Investor's Business Daily

·4 min read

News Corporation NWSA has agreed to buy Investor’s Business Daily (“IBD”) from O’Neil Capital Management for $275 million. The addition of this high-margin and fast-growing digital-first financial news and research business is likely to strengthen the buyer’s solid digital platforms. The latest deal, which is likely to conclude in the fourth quarter of fiscal 2021, is subject to customary closing conditions. Management believes that the buyout of IBD, which will be operated by the company’s subsidiary, Dow Jones, will enhance the latter’s offerings, including proprietary data and tools for investors, while assessing the top-performing stocks.

Post buyout, IBD will operate as a stand-alone label forming part of Dow Jones. The buyout will significantly drive the Dow Jones unit’s profits. News Corporation’s chief executive said, “IBD will greatly enhance our e-expertise in finance, with compelling digital coverage, unique tools and high-yielding services. We will be able to cross-sell and up-sell with Dow Jones financial products and provide specialist insights for a knowing business audience."

Founded in 1984, IBD operates the investors.com website, and majority of its annual profits are generated from the unique investor tools, research and analysis products. These research and analysis have been gaining traction as more investors need quality information to steer their financial decisions. Over the past years, IBD witnessed solid revenue increases, with digital accounting for more than 90% of its revenues and subscriptions. In fact, IBD’s revenue base is mostly digital, with about 100,000 digital subscribers across its platforms. We note that IBD continually updates news on investors.com, which saw about 10.8 million average monthly unique visitors last month, per the Adobe Analytics.

More on News Corporation’s Digital Efforts

The abovementioned buyout of IBD is likely to strengthen News Corporation’s digital offerings, which has essentially been an important focus-area for growth.

Markedly, News Corporation has been witnessing a rise in digital-only subscriptions. During second-quarter fiscal 2021, Dow Jones’ digital-only subscriptions surged 29%. Digital-only subscriptions to The Wall Street Journal increased 19% to a record 3.22 million average subscriptions in the quarter, and represented 76% of its total subscriptions. At News Media segment, digital revenues accounted for 31% of revenues compared with 22% in the year-ago period. As of Dec 31, 2020, The Times’ and Sunday Times’ closing digital subscribers were 335,000. Closing digital subscribers at News Corp Australia’s mastheads were 738,300.

Additionally, in the recent past, the company reached a multi-year deal with Facebook, Inc. FB. Per the three-year agreement with Facebook, News Corporation will receive payments in exchange for access to additional stories for Facebook News. This move allows millions of Facebook users in Australia to access trusted news reports through its Facebook News product.

Further, News Corporation announced last month that it has entered into a three-year partnership with Alphabet Inc.’s GOOGL Google. Per the agreement, the former will provide trusted and high-valued journalism content from its news sites around the world in exchange of significant payments from Google.  

Clearly, News Corporation is undertaking prudent efforts to achieve growth in the digital arena, as signified by its deals with technology companies as well as the latest buyout of IBD. Such moves are likely to rake in higher revenues for digital content as well as increase online penetration.

Incidentally, shares of this Zacks Rank #2 (Buy) company have increased 56.7% over the past three months compared with the industry’s 70.8% rally. Another stock worth considering is Lions Gate Entertainment Corp. LGF.A, which also has a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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