By Liana B. Baker and Jennifer Saba
March 8 Rupert Murdoch's News Corp will
start its largely print-based publishing company with no debt
and $2.6 billion in cash when it completes the spinoff.
The amount of cash and debt, which analysts generally
expected, gives the publishing company a purse to buy other
assets should it choose. News Corp released the details in a
regulatory filing on Friday.
"You can never count out Murdoch when it comes to buying
companies," said Gabelli & Co analyst Brett Harriss.
News Corp said in the filing the publishing company's assets
are worth $18.6 billion, which includes newspapers such as The
Wall Street Journal and Times of London, book publisher
HarperCollins and its ownership stake in other assets such as
Australian pay-TV company Foxtel.
Media businesses, especially anything related to print, are
going through major ownership changes. Tribune Co is exploring
the sale of its newspaper assets, which include the Los Angeles
Times and Chicago Tribune. Time Warner Inc is spinning
off Time Inc, home to magazines Sports Illustrated, Fortune,
People and its eponymous newsweekly.
Analysts estimate that Time Inc, which is expected to become
a stand-alone public company at the end of the year, will be
worth about $2 billion to $3 billion.
News Corp's publishing operations "certainly have the fire
power to buy Time Inc," Harriss said.
News Corp declined to comment on acquisition opportunities.
PHONE HACKING TAB
News Corp is injecting money into the new publishing company
as the print industry faces unrelenting declines in readership
and advertising revenue.
The $2.6 billion in cash is more than three times the $741
million that the publishing division had on hand as of Dec. 31.
At that time, News Corp as a whole had $7.8 billion in cash
and cash equivalents and a little more than $16 billion in
short- and long-term debt.
The publishing division had revenue of $4.16 billion for the
six months ending December and an operating profit of $291
Last June, the global media conglomerate announced the plan
to split its publishing and entertainment assets into two
publicly traded companies.
The publishing company will retain the News Corp name. The
entertainment businesses, which include the 20th Century Fox
film studio, Fox broadcasting network and Fox News channel, will
be called the Fox Group.
The spinoff company will be traded on the Nasdaq, while the
shares will also be listed on the Australian Securities
Exchange. The trading symbol is still unknown.
News Corp also said the Fox Group would be responsible for
any payments in the civil cases and any investigations involving
the telephone hacking scandal at its British newspapers.
For the past several years, News Corp has been dealing with
the fallout from the scandal, which stemmed in large part from
its now-defunct News of the World.
On Friday, a former policeman and an ex-prison officer
admitted to selling information to the Murdoch-owned tabloid the
News Corp shares were up 2.1 percent at $30.59 in afternoon
trading on the Nasdaq.