This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

News Corp.: Most Undervalued Stock Is Now a Buy

NEW YORK ( TheStreet) -- Whenever I write about News Corp. (NWS) I get yawns from readers.

It doesn't matter whether I'm bullish or bearish. It doesn't matter whether I'm talking about politics or avoiding the subject. News Corp. is just something investors don't want to read about, a company they're tired of. The stock has been a laggard so long, they're past hearing.

But bear with me. I'm going to try to make you some money here.

Since announcing on June 28 it will split into two units -- print and broadcasting -- NWS is up 13.5%. I think this wildly understates what is possible once the split is finished.

The publishing assets took a $2.9 billion writedown in its June quarter, notes Yahoo! Finance, but they're going to be dumped in the break-up. What you're left with is a vertically integrated broadcasting company much like Disney (DIS).

Count Fox, the National Geographic Channel and Dow Jones among its assets. There's a movie studio, a sports division, television production, plus TV channels, cable networks and satellite broadcasting assets necessary for distribution.

This is what the old movie studios had, back in the day. What happens when you put a Fox TV show or movie on a Fox broadcasting or cable channel? You pay yourself and you make money every time.

My own back-of-the-hand estimate is that NWS makes, in an ordinary year, about $3 billion in net income. Its current market cap is near $60 billion, but some of that is going into the publishing unit. Say they claim that's worth $10 billion -- there are profitable book publishing and magazine units in there, as well as The Wall Street Journal.

Now you've got roughly $3 billion in profit on a market cap of $50 billion. Sell your shares in the publishing company the moment the spinoff happens, and you have a happy dividend, plus a company that looks more like Disney at a lower multiple.

Then there's the potential.

As a broadcaster, News Corp. doesn't innovate. It copies. This is not a criticism. News Corp. sees what is succeeding, then gives it a tweak that makes its operation more profitable. Fox News only looks like a clone of CNN. It is, in fact, a talk radio station, which means it costs much less to run, and is much more profitable. You don't really need the print assets to feed what passes for a news hole there.

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,116.14 +44.92 0.26%
S&P 500 1,981.31 +3.51 0.18%
NASDAQ 4,514.5410 +8.6890 0.19%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs