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News Corp. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: May 5, 2011 06:20AM
News Corp. (NWS) filed Quarterly Report for the period ended 2011-03-31. News Corp. has a market cap of $48.69 billion; its shares were traded at around $18.55 with a P/E ratio of 17.6 and P/S ratio of 1.5. The dividend yield of News Corp. stocks is 0.8%.
Highlight of Business Operations:
In fiscal 2011, the Company agreed to backstop 400 million (approximately $525 million), of financing measures that were being initiated by Sky Deutschland of which approximately 342 million (approximately $450 million) has been completed. As part of these financing measures, the Company acquired 108 million additional shares of Sky Deutschland, increasing its ownership from approximately 45% to 49.9%. The aggregate cost of the shares acquired by the Company was approximately 115 million (approximately $150 million) and the shares were newly registered shares issued pursuant to the total capital increase.
In addition, in accordance with the backstop, the Company agreed with Sky Deutschland to subscribe to a bond issuance that is convertible for up to 53.9 million underlying Sky Deutschland shares. The convertible bond was issued to the Company in January 2011 for approximately 165 million (approximately $225 million). The Company currently has the right to convert the bond into equity, subject to certain black-out periods. If not converted, the Company will have the option to redeem the bond for cash upon its maturity in four years. The remaining amount under the backstop of approximately 58 million (approximately $75 million), must be funded prior to December 2011 and will be provided as a shareholder loan to the extent Sky Deutschland does not generate other proceeds through capital increases or convertible bond issuances.
In November 2010, the Company formed a joint venture with China Media Capital (CMC), a media fund in China, to explore new growth opportunities. The Company transferred the equity and related assets of its STAR China business along with the Fortune Star Chinese movie library with a combined market value of approximately $140 million and CMC paid cash of approximately $74 million to the Company. Following this transaction, CMC holds a 53% controlling stake in the joint venture and the Company holds a 47% stake.
In April 2011, the Company acquired Shine Group, an international television production group, for cash. The total consideration for this acquisition included (i) approximately $480 million for the acquisition of the equity, of which approximately $60 million has been set aside in escrow to satisfy any indemnification obligations, (ii) the repayment of Shine Groups outstanding debt of approximately $135 million and (iii) net liabilities assumed. Elisabeth Murdoch, Chairman and Chief Executive Officer of Shine Group, and daughter of Mr. K. R. Murdoch and sister of Messrs. Lachlan and James Murdoch, received approximately $214 million in cash at closing in consideration for her majority ownership interest in Shine Group, and is entitled to her proportionate share of amounts that are released from escrow.
Stocks Discussed: NWS,