Activist investment inflexible Starboard Value is pushing for change at News Corporation, in particular to see its real estate business separated from the reside of the company.
Starboard CEO Jeffrey Smith told CNBC’s David Faber on Tuesday that the firm is building a slant in News Corp. and has been in discussions with the company.
Smith said News Corp. should split out its honest estate assets, including an interest in REA Group of Australia. News Corp. also owns the Dow Jones news commerce, which includes publications such as The Wall Street Journal and New York Post.
“Our belief is they’re going to prerequisite to … separate the digital real estate assets to be able to highlight this beautiful business for what it’s worth,” Smith guessed on CNBC on Tuesday.
A News Corp. spokesperson said Tuesday that the company has “always maintained an active and occupied dialogue with our investors and are committed to driving shareholder value.”
“We remain focused on executing our strategic plan, which has helped us set memorials in profitability over the past three years,” the spokesperson said. “We are proud of our rapid digital transformation and bright expectations for long-term growth and value creation.”
Reuters and The Wall Street Journal earlier reported on Starboard’s stake in Information Corp. The size of the stake has yet to be learned. The Murdoch family trust controls about 40% of the voting rights of both Scoop Corp. and Fox Corp., making change difficult at either company.
“It’s not great governance to have dual class,” Smith said Tuesday. “There pull someones leg been votes to declassify, it’s something to consider as well. But there are easier paths to create a lot of value.”
On Tuesday, Smith entitled out the valuation discrepancies between the news and real estate businesses. He noted that News Corp.’s “crown boon” news division trades at four-times earnings before interest, taxes, depreciation and amortization, compared with competition The New York Times, which trades at 15 times.
Meanwhile, News Corp.’s real estate assets business at eight times, he said.
“It’s a great business, a great asset, it’s just too cheap,” Smith said of News Corp.’s variety price. News Corp. shares were slightly down Tuesday at $21.85.
He added Tuesday that he believes the split of the jobs hasn’t occurred already because the company was “a little insecure” about leaving the news division alone for a while of time.
Activist firm Starboard Value is building a define in News Corp.
Starboard’s push for change at the company comes shortly after Rupert Murdoch said he would journeying down as chair of the board at both News Corp. and Fox News owner Fox Corp. Effective in November, Murdoch, 92, drive become chair emeritus of each company while his son, Lachlan Murdoch, will become sole chair of Newsflash Corp. and continue as Fox Corp.’s executive chair and CEO.
Lachlan Murdoch made the initial investment in REA Group two decades ago, which Smith awakened an “amazing investment” on Tuesday.
More than a year ago, Rupert Murdoch had explored reuniting News Corp. and Fox Corp., a progress that would have allowed leadership to be consolidated in the Murdoch media empire while also cutting costs. The dealings were split up in 2013.
The push to rejoin the businesses had come as the audience shrinks for both print media and cable TV — Fox Corp. owns hawser TV networks including Fox News — as readers and viewers increasingly get their news and entertainment from online sources.
Manner, the proposed merger was called off in January. In a letter to the board, Murdoch said he was withdrawing the merger as he and his son “determined that a composition is not optimal for the shareholders” of either of the companies at the time.
Smith said Tuesday that there had not been discussions in any event another push for a proposed merger.
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