Rupert Murdoch’s News Corp. (NWSA) recently announced that it has reached an agreement to acquire Shine Group, founded by his daughter, Elisabeth Murdoch, in 2001, for approximately $673.0 million.
The companies signed a non-binding letter of intent and will go on with the regulatory filings obligatory for the deal.
Chase Carey, the company’s deputy chairman, president and chief operating officer will be the reporting head.
News Corporation’s significant international presence has helped broaden its client base and product portfolio. We believe that Shine’s acquisition is highly accretive for News Corp. as it will bring in the international small screen production business and its time-tested track record of famous shows and production groups spread across numerous countries.
The buyout of Shine Group would take Ms. Murdoch back into her father’s media territory, and is likely to position her as a promising heir to the 79 year old, Rupert Murdoch. Earlier, Elisabeth had refused to be a board member in her father’s company as it would have clashed with her ownership of Shine.
The acquisition brings certain drawbacks for Shine. The company will lose its sovereign standing and in turn, would lose the chance of offering ideas to BBC and other media houses, which are all by regulations, required to give external producers an opportunity to participate with native studios.
Both the parties will keep on negotiating the final terms of the deal ,which is subject to get the consent of the audit committee along with the board of both the companies and the receipt of the parity opinion.
The production company of Elisabeth creates many well-liked television shows and drives production groups in numerous countries. Elisabeth Murdoch possesses more than 50% of Shine, with Sony Corporation (SNE) holding around 20%, British Sky Broadcasting around 13% and the balance is owned by management.
Founded in 1922 and headquartered in New York, News Corporation, is a diversified global media company operating under six reporting segments: Cable Network Programming (which includes STAR Group Limited); Filmed Entertainment; Television; Direct Broadcast Satellite Television; Publishing; and Other.
After evaluating the pros & cons, we prefer to maintain our long-term ‘Neutral’ recommendation on the stock. Moreover, News Corp. also holds a Zacks #3 Rank, which translates into a short-term ‘Hold’ rating.
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