News corp stock rises on sale of foxtel group

News Corp. (NASDAQ:NWS), the media conglomerate founded by Rupert Murdoch, completed the sale of Foxtel Group, its Australian cable television provider, to DAZN Group, a sports streaming network.

As part of the $3.4 billion deal, $592 million in shareholder loans were repaid to News Corp. Further, News Corp received a 6% minority equity interest in DAZN and Deputy Chief Financial Officer Andrew Cramer will join the DAZN board.

“Foxtel’s successful transformation to becoming a leading provider of sports and entertainment is a result of the team’s tenacity, creativity and professionalism. Foxtel employees should be proud of their contribution to that success in the ultra-competitive content contest,” Robert Thomson, News Corp’s chief executive, said. “We are confident that DAZN is poised to drive the next phase of Foxtel’s growth and we are delighted to be DAZN’s partner and shareholder. And we are pleased to have extra capital strength and optionality.”

News Corp stock was up about 1% on the day to as high as $30.60 per share. Year-to-date, the stock is flat and it is up about 15% over the past 12 months.

News Corp stock has a strong five-year track record

News Corp has a good track record of returns, with a 5-year annualized return of 28.7% over the past five years.

The company owns a variety of media properties including book publisher Harper Collins, Realtor.com, The Wall Street Journal, Dow Jones, Barron’s, and various newspapers including the New York Post, The Times (UK), The Daily Telegraph, and The Australian, among others. It spun off Fox News in 2013.

The company says the sale of Foxtel will allow it to focus more resources on its growth pillars, which include digital real estate, Dow Jones, and book publishing. It will also help improve the company’s balance sheet.

“The sale of Foxtel is significant for News Corp, and will enable greater focus on our core growth pillars, which drove over 95 percent of Total Segment EBITDA in the company’s fiscal second quarter,” Lavanya Chandrashekar, News Corp’s chief financial officer, said. “It will also meaningfully strengthen our balance sheet, and should reduce future capital intensity and improve return on invested capital. We expect the disposition will also be accretive to earnings per share.”

Analysts are bullish on the stock as it has a median price target of $37.50, which indicates 39% upside over the next 12 months. It has a P/E ratio of 40.