Morningstar | Deal With Disney Appears Likely to Close Soon; Fox Corp. Is a Bet on Value of Live Sports and News
Since we believe that the deal to sell many of Fox’s assets to Disney will be completed, our investment thesis will focus on the successor firm, New Fox Co. Other sections, including moat rating and valuation, will be based on the current firm.After completing the sale to Disney, the Murdoch clan will be overseeing a much smaller media firm, albeit one that still owns some major brands. New Fox will consist of the Fox network, 28 local TV stations, Fox News Group, and Fox Sports. The new firm represents a large bet on the viability of live sports and news, as we estimate that the cable networks, including Fox News and FS1, will generate well over 50% of EBITDA for New Fox. Fox News remains the number-one cable news channel in terms of viewers and the most-watched cable network during the day, despite the loss of founding CEO and Svengali Roger Ailes and on-air talent such as Bill O’Reilly. We think that the recent FCC decision to challenge the Sinclair-Tribune merger will benefit Fox News, as we believe that Sinclair was planning to launch a direct competitor to Fox News. We expect the network to retain its spot at the top of the cable news pyramid, allowing New Fox to increase the affiliate fees while maintaining carriage at both traditional and OTT distributors. Fox’s attempt to beat ESPN, FS1, has not yet reached and may never meet that lofty target, but the network has established itself as a competitor in the cable sports wars. FS1 owns the rights to air several sports, including MLB, college sports, and soccer. While we expect New Fox to continue investing in acquiring rights, we believe that the channel faces an uphill struggle against a much larger competitor in ESPN. While the Fox broadcast network will still have major sports rights including the NFL, Fox will be only one of the four major broadcasters without an affiliated studio. We believe Fox will be able to source new shows from other studios, including independents such as Warner Bros., Lionsgate, and MGM, but we are not as sure as management that Fox will be able to obtain ownership rights to every new show, given the high level of demand for new shows from traditional and new outlets.Twenty-First Century Fox is a media and entertainment company with operations in the following segments: Cable Network Programming, which consists of the production and licensing of programming distributed primarily through cable television systems and others; Television, which consists of the broadcasting of network programming and the operation of power broadcast television stations; Filmed Entertainment, which consists of the production and acquisition of live-action and animated motion pictures for distribution and licensing in all formats in all entertainment media worldwide, and the production and licensing of television programming worldwide; and Other, Corporate and Eliminations.
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors.
Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 18 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries and had approximately $185 billion in assets under advisement and management as of June 30, 2016.
We have operations in 27 countries.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.