Way back in 2007, Rupert Murdoch shocked the media world by making a hyper-aggressive play for the Wall Street Journal–and getting it.
At the time, the stock of Dow Jones, which owned the Journal, was trading in the $30s. Senior execs at the company had a goal of getting the stock to $45. No one thought it was worth more than $50.
Murdoch offered $60.
And the Bancroft family, who controlled Dow Jones and who, for years, had floated on the pride and cash it delivered, initially scoffed–and then took the money.
And, in so doing, they did what other newspaper-owning family dynasties like the Sulzbergers did not: They cashed out at the top.
So Murdoch got his prize. For $5 billion.
Five years later, Murdoch’s News Corp. is now planning to split News Corp. into two parts: The “good businesses” part, which will contain News Corp’s TV assets, and the “crappy businesses” part, which will contain the newspapers and book-publishing assets.
The latter company will hold the Wall Street Journal. But it will also hold all of the other newspapers that Rupert Murdoch owns, along with Harper-Collins and other assets.
And how much will it be worth?
According to Goldman Sachs, about $5 billion.
The entity, Goldman says, will generate about $1 billion of EBITDA (a measure of cash flow). The New York Times trades at about 5X EBITDA, Goldman says, so that’s about where News Corp.’s newspapers will trade.
In other words, all of News Corp’s newspapers, along with its book publishing house, will be worth the same amount that Murdoch paid for the Wall Street Journal five years ago.
Thank God for News Corp’s other assets, namely FOX.
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