Activist investment firm Starboard Value is advocating for changes to be implemented at News Corporation. One significant change they propose is the separation of the real estate business from the rest of the company.
In an interview with CNBC’s David Faber, Starboard CEO Jeffrey Smith revealed that the firm is building a position in News Corp. and has been engaged in discussions with the company. Smith believes that News Corp. should split off its real estate assets, including their interest in REA Group of Australia. News Corp. also owns the Dow Jones news business, which includes publications such as The Wall Street Journal and New York Post.
Smith expressed his belief that separating the digital real estate assets would allow News Corp. to showcase this valuable business on its own merits. When asked about Starboard’s advocacy for change, a News Corp. spokesperson stated that the company has always been actively involved in dialogues with their investors and remains committed to driving shareholder value. Furthermore, the spokesperson emphasized News Corp.’s focus on executing their strategic plan, which has proven successful by achieving record profitability in recent years.
Starboard’s stake in News Corp. was initially reported by Reuters and The Wall Street Journal. However, the exact size of the stake remains unknown. It’s worth noting that the Murdoch family trust controls around 40% of the voting rights of both News Corp. and Fox Corp., making it challenging to implement changes in either company.
While discussing governance issues, Smith highlighted that the existence of dual-class structure is not ideal. He proposed considering declassifying votes as a potential solution. Nevertheless, Smith emphasized that there are other relatively easier paths to drive significant value creation for News Corp.
In a comparison of valuations, Smith drew attention to the discrepancy between the news and real estate businesses. The news division, which he referred to as News Corp.’s “crown jewel,” trades at four times earnings before interest, taxes, depreciation, and amortization (EBITDA). In contrast, competitor The New York Times trades at 15 times EBITDA. Meanwhile, News Corp.’s real estate assets trade at eight times EBITDA.
Smith highlighted the undervalued nature of News Corp.’s stock price, stating that the company’s stock is “too cheap.” At the time, News Corp. shares were slightly down at $21.85. Smith also shared his belief that the delay in separating the businesses might stem from the company’s insecurity about leaving the news division alone for a period of time.
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Denial of responsibility! Vigour Times is an automatic aggregator of Global media. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, and all materials to their authors. For any complaint, please reach us at – [email protected]. We will take necessary action within 24 hours.
