In the wake of the News Corp.‘s (NASDAQ:NWSA) recent phone-hacking scandal, Nomura analyst Michael Nathanson is analyzing Rupert Murdoch’s assets and dividing them into three categories: good, bad, and toxic.
Toxic assets include all of News Corp.’s (NASDAQ:NWSA) U.K. and U.S. newspapers, to which Nathanson assigned zero market value, while “bad” assets include the company’s film division and book and magazine businesses. The “good” assets include the company’s cable networks and broadcast TV. According to Nathanson, these “good” assets would bring in $17.3 billion in revenue in 2012, valuing the stock at $14.54 a share, just more than a dollar below last week’s closing price of $14.64. In turn, “bad” assets would account for $10 billion in 2012 revenue, two-thirds of which would come from the studio, giving these assets an implied value of $1.10 per share.
While Nathanson argues that many of News Corp.’s (NASDAQ:NWSA) assets add very little to the company’s value that is not to say that, if Murdoch was to sell or spin off these assets, that they would be worthless. A separation of some of News Corp.’s less profitable businesses has a “potential upside for longer-term, value-based investors” says Nathanson.