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Yacktman Unimpressed by News Corp. Spinoff’s Results

Fund Manager Donald Yacktman
Donald Yacktman, founder of Yacktman Asset Management. Photographer: Frank Polich/Bloomberg

News Corp.’s fifth-largest shareholder Donald Yacktman said he was underwhelmed by the financial results of the company’s publishing spinoff, which is poised to become a publicly traded business next year.

“The publishing unit is less than stellar,” Yacktman, founder of Austin, Texas-based Yacktman Asset Management Co., said in an interview. The attractiveness of the company will depend on “how they price the shares when it comes out.”

News Corp., the sprawling media business run by Rupert Murdoch, reported detailed financial figures for its publishing division yesterday -- a prelude to the spinoff in mid-2013. The business had a net loss of $2.1 billion in the most recent fiscal year, largely because of restructuring costs and the fallout from a U.K. hacking scandal. Sales fell almost 5 percent to $8.65 billion in the period, which ended June 30.

Brett Harriss, an analyst at Gabelli & Co. in Rye, New York, estimates that the publishing company is worth about $6 per share, assuming News Corp. issues a 1-for-1 split.

“If it trades at $5, I’d call it a hold, and anything above $6, I would sell,” he said in an interview.

Murdoch agreed to the spinoff in June after coming under pressure from shareholders. The move lets the remaining portion of the company focus on its entertainment assets, including the Fox television and film businesses. Robert Thomson, the managing editor of Wall Street Journal, was named chief executive officer of the publishing spinoff earlier this month.

Yacktman, whose firm owns 5.2 percent of News Corp.’s Class A shares, sees value in the publishing company’s media brands such as the Wall Street Journal. He wouldn’t comment on specific stock-price levels he was seeking. Yacktman is less excited about News Corp.’s New York Post, which loses as much as $110 million a year, Harriss estimates.

“The Wall Street Journal is the plum, and the New York Post is pretty bad news,” Yacktman said. “There are things they could do to make it better.”

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