Credit Appraisal and Valuation Using Comparables Company Method, DCF and Market Valuation

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NEWS CORPORATION
CREDIT APPRAISAL MEMORANDUM
The report contains credit appraisal and valuation of the company on the basis of comparables company method, DCF and market valuation. Aditi Phadnis
11/02/2013

NEWS CORPORATION
Feb. 11
EXECUTIVE SUMMARY
COMPANY SNAPSHOT
News Corp (“NWSA” or the “Company”) is one of the largest international diversified entertainment and media companies in the world. The Company operates in five industry segments
Cable Networks- This includes channels such as Fox Ne ws, FX and Regional Sports Networks. th

Filmed Entertainment consists of 20 Century Fox, which distributes motion pictures and television series, through the box office, home video sales, VOD and television.

Television , which principally consists of the broadcasting of network programming in the United States and the operation o f 27 full power broadcast television stations, including 9 duopolies, in the United States (of these stations, 17 are affiliate d with the FOX Broadcasting Company (“FOX”) and 10 are affiliated with Master Distributi on Service, Inc. (“MyNetworkTV”). 

Direct Broadcast Satellite Television, which consists of the distribution of basic and premium programming services via satellite and broadband directly to subscribers in Italy.

Publishing, which principally consists of the Company’s newspapers and information services, book publishing and integrated marketing services businesses. The newspapers and information services business principally consists of the publication of national newspapers in the United Kingdom, the publication of approximately 140 newspapers in Australia, the publication of a metropolitan newspaper and a national newspaper (with international editions) in the United States and the provision of information services. The book publishing business consists of the publication of English language books throughout the world and the integrated marketing services business consists of the publication of free -standing inserts and the provision of in -store marketing products and services in the United States and Canada. 

Other, which principally consists of the Company’s digital media properties and Amplify, the Company’s education technology businesses.

Revenue
Operating Segments
($ in MMs)
Revenue
Cable Network Programming
Filmed Entertainment
Television
Direct Broadcast Satellite Television
Publishing
Other
Total Revenue
EBITDA
Cable Network Programming
Filmed Entertainment
Television
Direct Broadcast Satellite Television
Publishing
Other
Total EBITDA

LTM
12/31/2012 Y/Y Growth

% of Total

9,859
7,273
3,510
3,510
8,216
766
33,134

16.4%
-2.1%
-4.4%
-8.4%
-4.8%
-2.8%
0.7%

29.8%
22.0%
10.6%
10.6%
24.8%
2.3%
100.0%

3,798
1,308
850
435
1,007
-644
6,754

16.1%
-1.3%
1.7%
-30.0%
-3.8%
-29.1%
2.3%

56.2%
19.4%
12.6%
6.4%
14.9%
-9.5%
100.0%

Key Credit Risks
1. Exposure to advertising dependent Businesses
2. Exposure to Newspapers in Secular decline
3. Emergence of new digital competition
4. Reputational and financial impact from phone hacking scandal in the UK

2

NEWS CORPORATION
Feb. 11
NARRATIVE
NARRATIVE
Key Risks/ Mitigating Factors:
KCR#1 Exposure to advertising dependant businesses
Mitigating Factors:

News Corp generated over 45% revenues outside US making them geographically diverse and lowering its reliance on any one economy. This provides for greater operating stability in periods of domestic weakness. Additionally, these interna tional markets provide better opportunities for long term growth, specifically through Sky Italia, BSkyB, and the company’s cable properties . 

NewsCorp has successfully generated affiliate fees from cable operators due to the success and market demand for i ts cable properties Fox News, FX, the RSNs etc). Additionally the Company is negotiating with Broadcasters in order to generate higher retransmission revenues for its leading network...
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