News Corp’s plan to sell its major US real estate property-listing group, Move, has suffered a major blow with the putative buyer, US property data company CoStar Group, dropping out of the deal.
CoStar’s decision was revealed in a briefing on an analysts’ conference call on Wednesday morning, Sydney time, by CEO Andy Florance. The talks and decision to drop the deal were not mentioned in the company’s fourth-quarter earnings release on Tuesday.
The deal was said to have valued Move at US$3 billion. Move is 80% owned by News Corp and 20% by ASX-listed REA Group, a 61% part-owned subsidiary of News.
The failure of this deal is the second major blow to the ambitions of the Murdoch clan in a month. In January, the proposed merger of News and Fox Corp, the family’s other US media company, fell through after Rupert and Lachlan Murdoch pulled the plug.
The CoStar deal quickly emerged as a fairly solid transaction, along with a cost-cutting plan for News that will see about 1250 jobs go worldwide, 200 of which have been cut at its HarperCollins book publishing business. News Corp Australia has also revealed A$20 million in cost cuts between now and 2025.
News Corp confirmed the end of the deal in a statement to the US SEC and the ASX, saying: “News Corp today confirmed that it is no longer engaged in discussions with CoStar Group, Inc regarding a potential sale of Move, Inc, operator of Realtor.com.
“News Corp will continue to actively assess opportunities to support the company’s strategy to optimise the value of its digital real estate services segment and otherwise maximise shareholder value.
“News Corp does not intend to make any additional comments regarding this matter unless and until it is appropriate or required to do so.”
The company is left with a business that no one wants at the price it wants. A deal could be done at a lower price, but will News Corp be willing to show weakness by selling cheaply?
It was reportedly planning to use the sale’s cash to help lower debt and finance the revamping of the company to one based around the highly successful Wall Street Journal newspaper and its corporate entity, Dow Jones.
US analysts saw the value of Dow Jones and the 61% of REA as having a combined value of well over the present US market value of News Corp of US$16.5 billion. That means its Australian and UK papers, the New York Post and Foxtel in Australia have no value to the market at all! Non-News Corp shareholders in REA Group will miss out on nearly US$600 million (A$870 million).
