News Corp (NWSA) Is Still a Buy at its 52-Week High: Time Warner Inc (TWX), The Walt Disney Company (DIS)

Competitors

News Corp competes with The Walt Disney Company (NYSE:DIS) and Time Warner Inc (NYSE:TWX). While Time Warner operates in three reporting segments, Networks, Film Entertainment and Publishing, Disney is a diversified worldwide entertainment company, which operates Media Networks, Parks and Resorts, Studio Entertainment, Consumer Products and Interactive. As against its main competitors, News Corp is a global media company with a presence in Cable Network Programming, Filmed Entertainment, Television, Direct Broadcast Satellite Television and Publishing.

Disney is the most valuable company out of the three. A comparison of the key financials of the three:

Future Outlook

With Fox Cable Network forming 28.5% of its revenues and 60% of its operating income, the future of the company is explicitly linked to the strength of its cable networks business.

The company’s most recent quarterly results demonstrate that News Corp is decreasing its dependence on advertising revenues and relying more on affiliate fees. Retransmission fees in the second quarter of FY 2013 have almost doubled compared to the same quarter in the previous year. With domestic affiliate fees growing at 13% as compared to 8% growth in advertisement revenues, News Corp is on firm ground as far strategy for revenue growth is concerned.

The stock has appreciated more than 46% in one year and is trading almost at its 52-week high. Buying at this level may be slightly risky but would be worth it in the long term.

However, having taken the plunge to unshackle itself from what was holding it down and spinning off the publishing division will unlock shareholder value. If you are holding the stock when the spin-off happens, remember that it is the entertainment business of News Corp that has the growth potential.

News Corp’s publishing business is more profitable as compared to others in the space, but it can only decline from here. If I were you, I would sell the publishing shares after the spin-off to recover part of my cost.

The article News Corp Is Still a Buy at its 52-Week High originally appeared on Fool.com and is written by Sujata Dutta.

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