2006 Trade 4 -News Corp
The whole range of media stocks have been significant underperformers; newspaper, cable, satellite, free to air broadcasting, content providers are all coming to terms with the new operating environment. Technological and regulatory changes have given the consumers more choices and that in turn have caused the fragmentation of the advertising dollar.
I believe the current environment represents a great opportunity for investors, but one fraught with danger as well. I narrowed down my choice of investment to News Corp (NWS), not that it is the cheapest nor the one with the biggest upside potential, but because I believe it is the least risky.
Rupert Murdoch, the Chairman and CEO who build this media has a significant part of his networth tied up in the company. Listen to any conference call and you will find a hands-on CEO who is on top of things. His vast experience and enterprenurial instincts will come in handy as the industry navigates in this unfamiliar territory.
The gearing level for this company is relatively low and allows the company to exploit the current low valuations to make acquisitions or aggressively embark on stock buybacks. Operating Cashflow has doubled over the past 3 years giving him even more ammunition to drive future growth.
Non-US earnings contributes to more than half of its turnover and is also showing much stronger growth, particularly in Asia. This is a truly global media company, its satellite broadcasting interest spans Asia(StarTV), Europe (SKY) and the US (DTV). With Warren Buffet's recent comments on the attractivenes of companies with strong foreign revenues, NWC looks even better. Their unique and diversified assets provides for unparalleled stability and synergies within the group.
I believe the current environment represents a great opportunity for investors, but one fraught with danger as well. I narrowed down my choice of investment to News Corp (NWS), not that it is the cheapest nor the one with the biggest upside potential, but because I believe it is the least risky.
Rupert Murdoch, the Chairman and CEO who build this media has a significant part of his networth tied up in the company. Listen to any conference call and you will find a hands-on CEO who is on top of things. His vast experience and enterprenurial instincts will come in handy as the industry navigates in this unfamiliar territory.
The gearing level for this company is relatively low and allows the company to exploit the current low valuations to make acquisitions or aggressively embark on stock buybacks. Operating Cashflow has doubled over the past 3 years giving him even more ammunition to drive future growth.
Non-US earnings contributes to more than half of its turnover and is also showing much stronger growth, particularly in Asia. This is a truly global media company, its satellite broadcasting interest spans Asia(StarTV), Europe (SKY) and the US (DTV). With Warren Buffet's recent comments on the attractivenes of companies with strong foreign revenues, NWC looks even better. Their unique and diversified assets provides for unparalleled stability and synergies within the group.
You will find the usual suspects in this value stock, Oakmark, Longleaf etc, but the interesting discovery for me was that Baupost/Seth Klarman has a concentrated 53% of his fund in this stock. Wow, and all this comes from the man who wrote the classic "Margin of Safety".
Paid $16.60 for NWS-A shares.
Not A Lemming
Paid $16.60 for NWS-A shares.
Not A Lemming
posted by Not A Lemming at 5:19 AM
3 Comments:
It'll be interesting to see how digital content evolves. Microsoft's latest Origami attempts to make content truly portable. Something like that is coming that will let us do everything we use multiple devices to do today. I think that includes media, news, communication, and entertainment.
I don't think the print media will survive. I no longer subscribe to any magazines or newspapers. I think most folks under 40 have no use for those things.
Print media might not survive, but I believe journalism will. That's the bottom line to these media companies -- high quality, researched content. Google is just a conduit -- not a source of information. It's an aggregator. Print media will steer away from print, into digital content. But, trust me -- content is king.. and we need reporters to document in the news.
I think there is growing consenus that the print media will play a significantly diminished role in the future. I will be very reluctant to put money into a pure newspaper play. My own sense is that these stocks will slowly melt away until it attracts the private equity or LBO guys.
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