For Immediate Release
Chicago, IL – June 28, 2012 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include News Corp. (NWSA), CBS Corporation (CBS), Viacom Inc. (VIAB), Time Warner Cable Inc. (TWC) and Time Warner Inc. (TWX).
Get the most recent insight from Zacks Equity Research with the free Profit from the Pros newsletter: http://at.zacks.com/?id=5513
Here are highlights from Wednesday’s Analyst Blog:
The Possible Spilt-Up of News Corp.
It seems that News Corp. (NWSA) will finally have to bow before disgruntled shareholders, who from a long time have been pressing hard to sever the publishing business. Yesterday, the company confirmed that it is contemplating on splitting the company into two separate publicly traded companies, thereby giving shareholders a reason to cheer.
The stock price jumped 8.3% on the news to close at $21.76, the highest level achieved since 2007.
The diversified media conglomerate is mulling on spinning the newspapers, HarperCollins book publisher and education operations, and creating a much more profitable entity including Fox broadcast TV network, Fox News Channel and the 20th Century Fox movie studio, as reported by The Wall Street Journal, the company's flagship newspaper. Presumably, Murdoch’s family will spearhead both the companies.
We believe that the breakup would help News Corporation to lift its image, which was tainted due to the phone hacking scandal that resulted in the closure of the publication of ‘The News of the World’ and abstinence from acquiring the remaining 61% stake in the British Sky Broadcasting Group.
Further, there has been immense pressure from shareholders to divest the publishing arm which has been grappling with lower operating profit compared with the entertainment unit. The secular headwinds and the migration of advertisers to the Internet due to increasing online readership have been hurting the publishing business.
This was quite evident from a 19% decline in operating income to $130 million during the last reported quarter on account of a fall in advertising revenue at the Australian and U.K. newspapers, partly offset by gains from Dow Jones, HarperCollins and the integrated marketing services business.
On the contrary, operating income jumped 15% to $846 million at Cable Network Programming. Advertising revenue climbed 10% on the back of growth registered across FOX News and the National Geographic Channels. Filmed Entertainment operating income rose 10% to $272 million.
If News Corporation goes ahead and decides to split the business, it is obvious that the entertainment company with better prospects will enjoy greater chances of luring investors than the publishing entity, which in order to expand, would seek acquisitions and spread wings in the education industry.
In the past there have been instances when companies split into two separate entities in order to unlock hidden value. CBS Corporation (CBS) was born out of Viacom, Inc. (VIAB) when the latter split into two publicly traded companies Viacom and CBS Corporation on December 31, 2005. Based in New York, Time Warner Cable Inc. (TWC) formerly operated as a subsidiary of Time Warner Inc. (TWX). From March 12, 2009, Time Warner Cable started operating independently leaving Time Warner.
Currently, we have a long-term ‘Neutral’ recommendation on News Corporation. Moreover, the company holds a Zacks #3 Rank that translates into short-term ‘Hold’ rating.
Want more from Zacks Equity Research? Subscribe to the free Profit from the Pros newsletter: http://at.zacks.com/?id=5515.
About Zacks Equity Research
Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.
Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.
Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Subscribe to this free newsletter today: http://at.zacks.com/?id=5517
Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978 by Leon Zacks. As a PhD from MIT Len knew he could find patterns in stock market data that would lead to superior investment results. Amongst his many accomplishments was the formation of his proprietary stock picking system; the Zacks Rank, which continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros at http://at.zacks.com/?id=5518.
Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.
Follow us on Twitter: https://twitter.com/zacksresearch
Disclaimer: Past performance does not guarantee future results. Investors should always research companies and securities before making any investments. Nothing herein should be construed as an offer or solicitation to buy or sell any security.
Zacks Investment Research
800-767-3771 ext. 9339
More From Zacks.com