What’s the deal with News Corp? – ShareCafe

What happened at News Corp, the second media branch of the Murdoch family?

After years of gloom, everything is suddenly sunny in Murdoch’s garden. In the past five days, three deals worth over A $ 1 billion have been announced on a major expansion of the non-print sector in finance, real estate and publishing. books.

On Monday, the REA Group, 61% controlled by News Corp, announced an agreed offer of AU $ 244 million (US $ 186 million) for Mortgage Choice to expand the size of its mortgage brokerage business.

While its SEO business is doing well thanks to the current boom in interest in homes and soaring prices, the Murdoch family, controlled by News Corp, want REA to deepen its involvement with customers beyond the stadium. sales.

Mortgage Choice will be managed as a separate part of REA.

And then about 6 hours later, it became known that News Corp was buying the mainstream book business from US publisher Houghton Mifflin Harcourt.

The deal will add a portfolio of leading novels by authors such as George Orwell, Philip Roth and JRR Tolkien to News Corp’s HarperCollins Publishers division, as well as Mills and Boon novels and the Bible.

The cost is $ 349 million ($ 457 million)

The two deals came just days after news of the takeover trail returned with the $ 275 million (AU $ 360 million) purchase of the financial website and associated company, Investors Business. Daily.

It will be inserted into the growing website industry.

And yet, on Monday, we learned that News Corp wrote to newsagents in western Queensland (west of a line between Carters Towers and Emerald) telling them that as of September 26, they Would no longer get Clan Murdoch titles like Brisbane’s Courier Mail or The Australian because it costs too much to send them there.

ABC News reported that in its letter to newsagents, News said its decision was based on “the very high cost of distribution in your area, in the context of how people access their news today. , [which] makes its continuation untenable ”.

The comeback of acquisitions at News came out of the blue and belies the constant mantra of the past five years to cut, cut, sell, sell.

It is as if someone had rocked the HQ on the Avenue of the Americas in New York at full steam to buy, to buy, to buy.

It was as if we were back in time after the split of the great Murdoch Empire in 2013, which was made to keep tainted newspapers, especially in the UK, away from Murdoch’s ambitions to take full control of Sky Broadcasting. and to dominate news and entertainment across Europe. .

It didn’t happen after UK regulators gave the Murdochs the green light, but it didn’t stop Rupert as chairman and Robert Thomson as CEO of News from embarking on a spending spree.

They bought assets here and there – a bible publisher, bodice ripper / romance publisher from Canada, digital advertising companies, UK radio, Australian regional newspapers and more from Foxtel in 2018. Then the hardships financials hit the fan and News Corp – board and CEO – was forced to back down as fast as they could to offload nonperforming assets, people, shut down newspapers, sell underperforming or unprofitable assets (even paying a few shoppers to take some of their clothes – video advertising business, Undisciplined comes to mind.

News America Marketing, a pre-split buy led by Rupert and previous management was sold in 2020, with buyers actually being paid around $ 50 million to remove the duds from News Corp’s balance sheet.

Company logs were shredded and thousands of jobs were cut – mostly in Australia – in several waves of cuts. UK and US operations in New York Post and the the Wall Street newspaper jobs lost, but nowhere near as numerous as in Australia. Foxtel was bailed out when it failed to repay huge bank debts as they fell due and hundreds of jobs were cut during the 2020 pandemic.

And suddenly, at the end of March 2021, all of News’ pessimism changed and within five days the wallet was opened and three major buys revealed – with a steep price tag.

And yet, all of that spending might not have happened if Robert Thomson had managed to buy book publisher Simon & Schuster from ViacomCBS last November. Instead, German giant Bertlesmann (owner of Penguin Random House) paid Simon & Schuster US $ 2.2 billion, a move that saw Thomson embark on another of his now regular rants:

“There is clearly no market logic for an offer of this size – only anti-market logic. Bertelsmann not only buys a book publisher, but buys market dominance as a book juggernaut. Distributors, retailers, authors and readers would pay for this proposed deal for a very long time. This literary leviathan is said to have 70 percent of the US market for literature and general fiction. There will certainly be legal books written on this deal, although I wonder if Bertelsmann would publish them, ”he was quoted in a press release dated November 25, 2020.

So if News had disbursed $ 2.2 billion (and he couldn’t, he didn’t have enough money and was under pressure to support a struggling Foxtel with hundreds of millions of dollars in loans from shareholders), he would not have been able to buy IBD and REA Group would have struggled to bid for Mortgage Choice because News Corp bankers were reportedly reluctant to allow the use of precious money.

And he wouldn’t have had the $ 349 million for his last deal. As it is News, in its last three transactions, has spent about half of the $ 1.6 billion in cash it had at the end of December (and a $ 750 million revolving line of credit that has yet to be used. ).

The News Corp share price has risen sharply this year – up nearly 32% this year following deals with Facebook and Google and a high number of subscribers to streaming services Kayo and Binge from Foxtel.

About Rhonda Lee

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