Fox: Catching Up With Ted

By Frank Pellegrini Monday, June 29, 1998
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NEW YORK: Stock in Rupert Murdoch's News Corp. has gained 40 percent over the last 18 months -- which is pretty good. But Murdoch's archrival Time Warner (parent company of TIME Daily) is up 127 percent over the same period. Rupert wants to catch up, which is the main reason why News Corp. announced Monday that it would be offering 20 percent of its sexiest subsidiary, the Fox Group -- home to the Fox television network, the 20th Century Fox movie studio and the Los Angeles Dodgers -- to the public in a stock offering later this year. And this time, says Nelson Schwartz of FORTUNE magazine, Murdoch will get top dollar. "Entertainment stocks are very hot right now," Schwartz notes. "There's no Asian exposure because people don't stop going to the movies when things get bad."

Spinning off the Fox Group means Murdoch can show investors his juiciest stuff and use the proceeds to pay off some of News Corp.'s sizable debt load -- which should pay off in a rising stock price. (News Corp. immediately gained $2 on the announcement.) And if there isn't exactly synergy between a baseball team and a movie studio in the entertainment industry, the formula works on Wall Street. Says Schwartz: "He's maximizing the value that he has by putting all the hot properties on sale together." Just imagine if the Dodgers start winning.