June 27, 2016 Volume XLII, Issue VI News Corporation NASDAQ: NWS, NWSA Dow Jones Indus: 17,140.24 Initially Probed: Volume XLI, Issue VI @ $14.03 S&P 500: 2,000.54 Last Probed: Volume XLI, Issue XI & XII @ $13.26 Russell 2000: 1,089.65 Trigger: No Index Component: S&P 500 Type of Situation: Business Value Price (NWSA Class A): $ 10.62 Shares Outstanding (MM): Cl. A 380.4 Cl. B 199.6 Fully Diluted (MM) (% Increase): 581.7 (0.3%) Average Daily Volume (MM): 3.0(A) / 0.8(B) Market Cap (MM): $ 6,241 Ent. Value (Pro Forma MM): $ 4,542 Percentage Closely Held: Murdoch Family: 14% economic, 39% voting 52-Week High/Low (NWSA): $ 15.63/10.40 Trailing Twelve Months Introduction Price/Earnings: NA News Corporation (“News Corp,” “NWS,” or the Price/Stated Book Value: 0.4x “Company”) is a global diversified media and information services Company that generated $8.6 Net Cash (Pro Forma MM): $ 1,700 billion in revenues in FY 2015. News Corp has been a Implied Upside to Estimate of tremendous disappointment for shareholders since its Intrinsic Value: 87% separation from Fox three years ago, declining by 28% (or 33% starting from when-issued trading) vs. a 24% Dividend: $ 0.20 rise in the S&P 500 Index. Just since AAF’s initial profile Yield: 1.9% of the Company a year ago, shares have declined by 27%. News Corp’s underperformance reflects a long list Net Revenue Per Share: of concerns including continued declines in its legacy 2015 $ 14.81 newspaper and book publishing businesses; growing 2014 $ 14.81 competition in its Australian pay-TV businesses; a 2013 $ 15.38 steady stream of litigation expenses; the deployment of Earnings Per Share: $1.7 billion in capital into M&A with uncertain (and at 2015 $ (0.26) least minimal near term) ROI; and lack of return of 2014 $ 0.41 excess capital. In general, investors appear to have 2013 $ 0.57 “thrown in the towel” and given up on this Murdoch- controlled entity. Fiscal Year Ends: June 30 So what’s to like? For starters, the valuation: Company Address: 1211 Avenue of the Americas News Corp’s $1.7 billion cash hoard and its 62% stake New York, NY 10036 in Australia’s dominant, publicly listed digital real estate Telephone: Phone: 212-416-3400 company REA Group ($3.5 billion valuation) alone are CEO: Robert J. Thomson worth a whopping 83% of the Company’s current Clients of Boyar Asset Management, Inc. own 6,113 shares of News market cap. This is up from 53% a year ago, and REA Corporation common stock at a cost of $13.05 per share. Group’s prospects appear just as bright with Australian Analysts employed by Boyar’s Intrinsic Value Research LLC own revenue growing at 20%-plus and the just-completed shares of News Corporation common stock. acquisition of iProperty now positioning it as the leader in several large Southeast Asian markets. At the - 39 - News Corporation Company’s News & Information segment, print advertising is steadily declining as a percentage of revenue and EBITDA growth in key markets (ex-currency fluctuations) recently turned positive. Recent industry transactions including the sale of the Financial Times ($1.3 billion) suggest The Wall Street Journal alone could be worth more than our $1.7 billion valuation for the entire segment. Fox Sports Australia recently locked up its key sports rights into 2023 and the arguably underpenetrated Foxtel (~30% of households) is finally working toward marketing a triple play product. News Corp is rumored to be in intense discussions to consolidate Foxtel/Fox Sports Australia and buy out (at least partially) Foxtel’s 50% JV partner Telstra, which could be highly accretive and free up Foxtel to pursue new marketing and distribution models. Valuing REA Group at current market value and principally relying on conservative market-level EV/EBITDA multiples for News Corp’s other businesses, our sum-of-the-parts estimate of News Corp’s intrinsic value is approximately $20/share looking out 2 years (FY18) or 87% above current levels. While we do not expect the “Murdoch discount” to evaporate over the next 2 years, accretive deployment of News Corp’s massive cash position (27% of the current market cap) could help. There are risks here, but consolidation of Foxtel and/or increased return of capital (1.9% current dividend yield but minimal share repurchases to date under a $500 million authorization) appear the most likely uses of cash and offer extremely attractive ROIs. Additionally, the cessation of several negative headwinds (News of the World scandal, other litigation costs, exit from the disastrous digital education foray, extreme Australian dollar depreciation, etc.) may allow investors to belatedly recognize News Corp is no longer just a traditional publishing business with cash burning litigation/education vehicles on the side. Finally, while we do not expect News Corp to ever be split up under the watch of Rupert Murdoch (age 85), the next generation appears less wedded to the businesses and we believe News Corp’s assets could be worth substantially more than $20/share if broken up. Business Description Note: Please see the June 2015 Asset Analysis Focus report on News Corp for a more detailed business description. News Corporation is a global diversified media and information services Company reporting in five business segments: News and Information Services (NIS); Cable Network Programming (Fox Sports Australia); Digital Real Estate Services; Book Publishing; and Other. The following table breaks down financial performance by segment in fiscal 2015 (News Corp’s fiscal year ends June 30). News Corporation also holds a 50% stake in Foxtel which is reported under the equity method but may be the Company’s most valuable asset after REA Group. From a geographical perspective, in FY 2015 News Corp generated 45% of revenue from North America, 32% from Australia and Asia/Pacific (principally Australia), and 23% from Europe (including ~18%-19% from the UK). Inclusive of News Corp’s Foxtel stake, Australia would account for approximately 40% of revenue. Financial Performance by Reporting Segment YTD 3Q FY 2015 ($MM) Revenue Segment EBITDA News & Information Services $ 3,921 $ 334 Cable Network Programming $ 337 $ 101 Digital Real Estate Services $ 593 $ 169 Book Publishing $ 1,213 $ 135 Other $ 2 $ (136) Total $ 6,066 $ 603 News & Information Services The Company’s News and Information Services segment consists of Dow Jones, News Corp Australia, News UK, the New York Post and News America Marketing (NAM). The News and Information Services segment generates revenue primarily through print and digital advertising sales and through circulation and subscriptions to its print and digital products. Although News Corp does not break out revenue within the News & Information segment by business, the following provides a rough breakdown based on information contained within Company filings and other publicly available sources and Boyar Research estimates. - 40 - News Corporation News and Information – Revenue by Business, FY15 (%) News Corp News Australia America 25% Marketing 17% Dow Jones News UK 26% 32% Total News and Information Revenue $5.7 Billion Source: Company Filings and Boyar Estimates (note: New York Post is not included as it represents an insignificant amount of segment revenue). • Dow Jones – Operations include the global print and digital product offerings of The Wall Street Journal and Barron’s publications, Marketwatch.com, and the Company’s suite of professional information products (Factiva, Dow Jones Risk & Compliance, Dow Jones Newswires, Dow Jones Private Markets, etc). • News Corp Australia – News Corp Australia owns over 120 papers covering a national, regional and suburban footprint. As of March 31, 2015, News Corp Australia’s daily, Sunday, weekly and bi-weekly papers accounted for more than 62% of the total circulation of newspapers in Australia with its Sunday newspaper network read by ~4.3 million Australians on average each week. Key properties included the Australian (only nationally distributed paper with an unduplicated print and digital audience of ~3.0 million), the biggest selling weekday newspaper (Melbourne’s Herald Sun) and the biggest selling newspaper of all (Sydney’s Sunday Telegraph with print circulation of ~470,000). News Corp Australia also holds a 15% stake in radio/outdoor ad company APN News and Media as well as a 12.9% stake in online Southeast Asian employment marketplace SEEKAsia. • News UK – The Company publishes leading newspapers in the UK including The Sun, The Sun on Sunday, the Times and the Sunday Times. As of June 30, 2015, the sales of these four titles accounted for approximately one-third of all national newspaper sales in the UK. Of particular note, The Sun is the most read national paper in the UK (readership: 5.5 million Monday to Saturday; 4.4 million for The Sun on Sunday), while the Times and the Sunday Times boasted readership of 1.1 million and 2.2 million, respectively. • News America Marketing – A leading provider of coupon promotions, advertising programs, special offers and other direct to consumer marketing solutions through a network of more than 1,900 publications, 56,000 retail stores and 300 partner sites, including smartsource.com. Cable Network Programming (Fox Sports Australia) News Corp’s Cable Network Programming segment encompasses the Fox Sports Australia (FSA) networks. Fox Sports Australia runs 7 subscription TV channels in both standard and high definition: five Fox Sports channels, Fox Sports News, and the Fox Footy channel dedicated to the Australian Football League (AFL). Fox Sports Australia also operates the popular website foxpsorts.com.au. Fox Sports Australia is principally distributed by satellite and cable through long-term carriage arrangements with Foxtel. Fox Sports Australia is also offered by Optus and available over the Internet via Foxtel Play.