NWS News Corp (Class B)
Dow Jones and REA are the real engines; the old decline story understated rising margins, though the gap persists.
The story
News Corp is no longer just legacy newspapers. Its value now rests on Dow Jones (subscription B2B data and news with a durable moat), a controlling stake in REA Group (a dominant, high-margin Australian property portal), and HarperCollins. Declining print and UK/Australian tabloids offset part of that. The company is a mature cash generator with a net cash balance sheet, and the mix shift toward digital real estate and professional information keeps pushing margins up.
Facts changed. Revenue grew 6.9% and margin reached 12.6%, above my prior 11% target, so capping margins below current levels contradicts the mix shift. I raised the target margin to 14% (+27%), with year-1 growth of 5.5% and terminal growth of 2.5%. The stronger evidence from REA and Dow Jones also justifies extending the horizon to 8 years and cutting failure probability to 3%. Sales-to-capital stays at 0.9, and beta drops slightly because B2B and subscription revenue is more stable.
Value drivers
| Revenue growth (Y1) | 5.5% |
| Terminal growth | 2.5% |
| Forecast horizon | 8y |
| Target operating margin | 14.0% |
| Years to target margin | 5 |
| Sales-to-capital | 0.90 |
| Beta | 1.05 |
| Failure probability | 3.0% |
| Cost of capital (WACC) | 9.4% |
| Terminal WACC | 9.2% |
Valuation bridge
| PV of explicit FCFF | 3.13B |
| PV of terminal value | 6.63B |
| Equity value | 8.87B |
| ÷ shares → per share | $16.45 |
News
neutral -0.10 · 8 articles
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- News (NWSA) Launches A Geopolitical Risk Council, Is The 22% Upside Still There?
- 1 Profitable Stock to Target This Week and 2 Facing Headwinds
- Is News Corporation Stock Underperforming the S&P 500?
- Why Has Synopsys Stopped Leading With Bad News?
- 3 Cash-Heavy Stocks with Warning Signs
- What's Happening With CRWV Stock?
- News (NWSA) Stock Looks Above Fair Value As Earnings Beat Lifts Shares
Projected free cash flow to the firm
| Yr | Revenue | Growth | Margin | NOPAT | Reinvest | FCFF | PV |
|---|---|---|---|---|---|---|---|
| 1 | 9.52B | 5.5% | 12.9% | 874.08M | 551.71M | 322.37M | 294.57M |
| 2 | 10.01B | 5.1% | 13.2% | 937.61M | 536.70M | 400.91M | 334.75M |
| 3 | 10.47B | 4.6% | 13.5% | 1.00B | 516.26M | 484.97M | 370.01M |
| 4 | 10.91B | 4.2% | 13.7% | 1.06B | 490.37M | 574.00M | 400.18M |
| 5 | 11.33B | 3.8% | 14.0% | 1.13B | 459.06M | 667.33M | 425.12M |
| 6 | 11.71B | 3.4% | 14.0% | 1.16B | 422.50M | 741.70M | 431.76M |
| 7 | 12.05B | 2.9% | 14.0% | 1.20B | 380.94M | 817.36M | 434.77M |
| 8 | 12.35B | 2.5% | 14.0% | 1.23B | 334.72M | 893.54M | 434.31M |
Key risks
- Minority interest in REA (~39%) means consolidated margins overstate the value that reaches NWS shareholders
- A cyclical downturn in the Australian housing market would hit REA listings revenue
- AI disintermediation of news traffic and licensing, plus continued print declines
Catalysts
- Possible simplification of the structure, such as spinning off or monetizing the REA stake, or collapsing the dual-class structure
- AI content licensing deals and Dow Jones Risk & Compliance growth lifting margins