News Corp Split May Make Disney Last Media Tycoon
Murdoch built News Corp. through the company's newspaper assets, which currently include The Times of London, The New York Post and HarperCollins' book business. News Corp's publishing unit contains Dow Jones, the owner of the Journal, after a $5 billion 2007 acquisition.
Fueled by split up considerations, stock buybacks, and a string of management changes, News Corp's shares are up over 25% in the last 12 months. Still, even with expectations of drastic change, News Corp's one-year share gains match those of Disney, which is pushing ahead with a conglomerate strategy, while expanding into new markets and media platforms.
Over the past five years, Disney has posted a near 40% return, trumping share losses in the Dow Jones Industrial Average and at News Corp. Disney's also outperformed media giants like Viacom and Time Warner, even after they executed on spinoffs that were widely considered shareholder friendly moves.
Cable giant Comcast (CMCSA) is the other notable M&A aggressor in media creation and distribution after it bought a 51% stake in NBC Universal from General Electric (GE) , in a blockbuster deal to move into content creation. Notably, unlike News Corp. and Time Warner, Disney doesn't have printed media businesses like newspapers or magazines.
A continuation of Disney's outperformance may validate the company's strategy to use characters and intellectual property to drive synergies and revenue opportunities throughout its empire of cable and broadcast TV, movie studio and theme park assets. Such an M&A and conglomerate-based outperformance would be a stark contrast to recent media industry spinoffs and a widely held rejection of the industry's previous attempt to own disparate media assets as a driver of profitability.
From 2000 to 2009, the largest media conglomerates wrote down $200 billion in assets as a result of a bad acquisitions and misguided 'strategic' investments, according to The Curse of the Mogul, a sweeping study on why an overstretch of C-Suite ambition has destroyed shareholder value throughout the industry.
-- Written by Antoine Gara in New York