News Corp. (
) competes with other media conglomerates like Disney (
), CBS (
), Time Warner (
), Viacom (
) and New York Times (NYT) in the media and entertainment business.
Our price estimate for News Corp's stock stands at
, which is a premium of roughly 25% to market price.
News Corp recently revealed its digital magazine "The Daily",
specifically designed for Apple's (AAPL) iPad. Rather
than being a modification of existing magazines or newspapers, this
is a completely new product optimized for tablet viewing. The
company had reportedly invested about $30 million to create the
The move comes as a competitive step against Time Warner, which
has moved to offer subscriptions to its magazines like Sport
Illustrated and People on connected devices. More
specifically, Time Warner's offerings will be available on tablets
from HP and Samsung, which are direct competitors to the iPad. The
media companies appear to be choosing sides in the tablet wars.
News Corp's offering include two subscription plans (weekly and
yearly), interactive pictures with 360 degree images, sharing of
information on social networking sites and recording of audio
comments. It's a unique product and shows that News Corp is looking
towards the future as media shifts to digital.
But the company is still heavily reliant on "old media". Below
we explore how much of News Corp's equity value is exposed to
traditional print media, which could be at risk should a broader
shift to digital content take hold.
22% of News Corp's Value Comes from Newspapers and
We estimate that newspapers like Wall Street Journal, Dow Jones
and NY Post together contribute about 14.2% of
our $23.20 price estimate for News Corp stock
. Notably, this also includes the company's newspapers in Australia
and the U.K. Although some of these also have an online presence,
the prime revenue source is stil the traditional print medium.
See our full analysis and $23.20 price estimate
for News Corp
Apart from this, magazines and book publishing unit Harper
Collins together contribute around 7.3% to News Corp's stock value.
Given that a significant 22% of News Corp's stock value is exposed
to "old media", it makes sense for the company to make the $30
million investment to expand its digital magazine products.
But does it make sense to exclusively stick to Apple? Maybe for
the time being, given that Apple's iPad remains the king of the
tablet market. But as Apple's dominance is challenged in the coming
years from new products entering the market, it might make sense
for News Corp to reach across party lines.