Dav|d new|t Dav|dCnew|tQgma||com

Long recommendaLlon nWSA 11/11/2011

news CorporaLlon ls a dlverslfled medla conglomeraLe wlLh operaLlons ln Lelevlslon broadcasLlng moLlon plcLure
and Lelevlslon programlng and prlnL medla publlcaLlon nWSA's flnanclal resulLs are polsed Lo exceed sLreeL
esLlmaLes ln l?12 drlven by sLrong growLh ln recurrlng subscrlpLlon based revenue sLreams ln lLs Cable and
8roadcasL 1v segmenLs ln Lhe wake of Lhe news of Lhe World hacklng scandal nWSA's board has made a radlcal
change ln lLs caplLal allocaLlon sLraLegy and ls reLurnlng slgnlflcanL amounLs of caplLal back Lo shareholder's for Lhe
flrsL Llme ever 1he sLock ls exLremely undervalued compared Lo lLs peers earnlngs growLh raLe and own hlsLorlcal
valuaLlon l expecL Lhe comblnaLlon of sLrong flnanclal resulLs and dlmlnlshlng publlclLy of Lhe news of Lhe World
scandal Lo enable shares Lo reLurn Lo Lhelr lnLrlnslc value




Cab|e networks Cable saLelllLe broadcasLlng accounLs for 24 of nWSA's revenue and 33 of operaLlng
lncome 1he segmenL ls flrlng on all cyllnders raLlngs are sLrong adverLlslng sales are marLlally ouLgrowlng Lhe
markeL and operaLlng lncome ls growlng ln Lhe mldLeens AfflllaLe fees accounL for 70 segmenL revenue
growLh ls polsed Lo acceleraLe ln 2012 wlLh lox news up for a ma[or renewal cycle and lnLernaLlonal afflllaLe fees
conLlnulng Lo grow 20 lox news ls consldered a musL have channel especlally durlng a presldenLlal elecLlon
ApproxlmaLely Z of lox news' dlsLrlbuLlon agreemenLs are up for renewal over Lhe nexL several quarLers and raLes
are expecLed Lo lncrease by 30 (CvC seL precedenL lasL year) ln C?11 lox news wlll generaLe 873m ln afflllaLe
revenue Lhese new afflllaLe agreemenLs wlll boosL LhaL flgure by $220m ln C?12 wlLh nearly all proceeds falllng
rlghL Lo Lhe boLLom llne

Cable adverLlslng revenue ls also expecLed Lo show falrly robusL growLh even ln a slugglsh economy 1oLal
adverLlslng expendlLures as a percenLage of Cu are sLlll runnlng 3 below Lhelr hlsLorlcal Lrend llne afLer belng
cuL slgnlflcanLly durlng Lhe 20082009 recesslon AddlLlonally Cable 1v conLlnues Lo be a share galner ln Lerms of
adverLlser's overall medla budgeLs Medla forecasLlng flrm Magna Clobal expecLs naLlonal Cable 1v adverLlslng
spendlng Lo lncrease 3 ln 2012 and 7 ln 2013 nWSA's unlque properLles wlll allow Lhe company Lo conLlnue Lo
ouLgrow Lhe markeL AdverLlslng for sporLs programlng (lox SporLs) ls exLremely sLrong because lL ls one of Lhe few
varleLles of mass audlence programlng LhaL people do noL uv8 and nWSA's lx channel has sLeadlly cllmbed up Lhe
raLlngs charL and ls now Lhe #3 channel for males aged 1844





upsl de/uownsl de 3608 8eta 126
Ups|de 2300 $ Ga|n 436 1arget kat|ona|e 14x l?13 esL LS
Downs|de 1300 $ Loss (126) Downs|de kat|ona|e 12x 11M LS
l?09 l?10 l?11 l?12 l?13
r|ce 1717 $ Sa|es 30423 32778 33403 34209 33930
Shares 2612 DCn Sa|es 30423 32778 33403 34793 36363
Market Cap 43629 Lb|tda 4778 3728 6238 6982 76661
Cash 13796 DCn Lb|tda 4778 3728 6238 7360 8282
Debt 13446 LS 082 $ 108 $ 123 $ 138 $ 171 $
Net debt (3300) DCn LS 066 $ 103 $ 119 $ 149 $ 182 $
LV 432787 DCn ICI 1147 2940 3300 3690 4310
Short |nterest 18 Cata|ysts
l?09 l?10 l?11 l?12 l?13
uCP /L 239x 163x 144x 116x 93x
uCP Lv/Lbl Lda 93x 79x 72x 62x 33x
uCP lCl yl el d 26 66 74 82 101
(01x) (01x) (01x) (00x) (00x)
SLreeL lorecasLs
val uaLl ons
uCP neL debL/Lbl Lda
8roadcast 1V 8roadcasL 1v accounLs for 14 of nWSA's revenue and operaLlng proflL 8eLransmlsslon fees are
emerglng as an underappreclaLed hlghmargln second revenue sLream Lo adverLlslng revenues Slmllarly Lo afflllaLe
fees wlLh cable 1v channels broadcasLers are demandlng MSC's Lo pay monLhly fees for Lhe rlghL Lo alr conLenL
lox blacklng ouL Cablevlslon cusLomers durlng Lhe 2010 World Serles was a very publlc example of Lhe power
conLenL provlders have over MSCs Lo exLracL exLra paymenLs under very conservaLlve assumpLlons Lhese re
Lransmlsslons agreemenLs should add an lncremenLal $300m Lo operaLlng proflLs ln C?12 and $600m Lo operaLlng
proflLs ln C?13



1he longLerm opporLunlLy ls much greaLer Lhan many belleve nWSA execuLlves have publlcally sLaLed LhaL Lhey
belleve lox ls worLh close Lo $3/subscrlber/monLh 1here ls precedenL for Lhls Loo ulsney charges
$4/subscrlber/monLh Lhelr mosL popular program ls Monday nlghL looLball whlch has a peak audlence of 14
13m vlewers lox's hlL show Amerlcan ldol has a peak audlence of 23m vlewers allyearround

Cap|ta| returns Cne of Lhe blggesL knocks on nWSA over Lhe years has been managemenL use of caplLal 8aLher
Lhan reLurn lL Lo shareholders CLC 8uperL Murdoch has rouLlnely made quesLlonable acqulslLlons ln Lhe wake of
Lhe news of Lhe World hacklng scandal and subsequenL fall Lhrough of Lhe 8S? deal Lhere has been a ma[or
change ln managemenL's Lone Lowards caplLal allocaLlon nWSA auLhorlzed a $38 sLock buyback and pledged Lo
compleLe lL wlLhln one year So far Lhey have held Lrue Lo Lhls promlse nWSA boughL back $138 worLh of sLock ln
l1C12 alone ManagemenL has also sLaLed LhaL Lhey are comforLable wlLh Lhe asseL mlx Lhey currenLly have and
do noL lnLend Lo make any ma[or acqulslLlons

Cn Lhelr l4C11 conference call nWSA Lold lnvesLors LhaL Lhey would llke Lo have a leverage raLlo of 223x L8l1uA
and $238 of cash on Lhe balance sheeL wlLhln Lwo Lo Lhree years 1he company currenLly has a gross debL Lo
L8l1uA leverage of 24x and $1388 of cash on Lhe balance sheeL l expecL Lhe company Lo generaLe $378 of cash
ln l?12 and $438 ln l?13 nWSA can comforLably reLurn over $208 of cash Lo shareholders (44 of currenL
markeL caplLallzaLlon) and sLlll meeL Lhelr balance sheeL LargeLs




Retransmission opportunity 2010 2011 2012 2013 2014 2015
Pay TV subs 97.1 96.6 96.1 95.6 95.1 94.6
% coverage 38.0% 38.0% 38.0% 38.0% 38.0% 38.0%
O&O Subscribers 36.9 36.7 36.5 36.3 36.1 36.0
% paying retransmission 10.0% 30.0% 62.0% 90.0% 100.0% 100.0%
O&O retrans subs 4.2 11.2 22.4 38.4 41.4 41.4
Monthly fee/sub 0.50 $ 0.60 $ 0.75 $ 0.90 $ 1.00 $ 1.00 $
O&O retrans revenue 25.1 80.3 201.7 415.1 497.3 497.3
Affiliate subscribers 60.2 59.9 59.6 59.3 59.0 58.7
% paying retransmission 0.0% 15.0% 50.0% 60.0% 70.0% 75.0%
Affiliate retrans subs - 9.0 29.8 35.6 41.3 44.0
Monthly fee/sub (95% of O&O) 0.48 $ 0.57 $ 0.71 $ 0.86 $ 0.95 $ 0.95 $
Revenue split w/ local network 50.0% 50.0% 50.0% 50.0% 50.0% 50.0%
Fox Network fee/sub 0.24 $ 0.29 $ 0.36 $ 0.43 $ 0.48 $ 0.48 $
AffiIiate retrans revenue - 30.7 127.3 182.4 235.3 250.9
TotaI retransmission revenue 25.1 111.0 329.1 597.6 732.6 748.1
IncrementaI operating income 25.1 111.0 329.1 597.6 732.6 748.1
Incremental margin 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Va|uat|on news Corp ls cheap on boLh a hlsLorlc basls and a relaLlve basls 1he company Lrades aL a /L of [usL 10x
my C?12 esLlmaLe desplLe an expecLed LS growLh raLe of 30 Cver Lhe lasL 3 years nWSA's forward L has
averaged 14x forward LS nWSA's currenL /L ls even more preposLerous when one conslders Lhe buslness mlx
shlfL nWSA has undergone over Lhe pasL 3 years 1he company has made lLs selfmuch less cycllcal ln 2003 Lhe
company generaLed 30 of lLs revenues from adverLlslng (cycllcal) and only 13 of revenues from recurrlng
subscrlpLlon based revenue sLreams (afflllaLe fees reLransmlsslon ecL) nWSA's revenue mlx has slnce shlfLed Lo
33 adverLlslng revenues and 41 subscrlpLlon revenues whlch wlll enable earnlngs and cash flows Lo be much
more reslllenL ln Lhe face of an economlc downLurn








arge Cap Media CY12 CY12 CY13 CY12 CY13
VaIuation Mkt cap PE PEG PE EV/EBITDA EV/EBITDA
NWSA 45,629 $ 11.5x 0.7x 9.4x 7.0x 6.1x
VA/B 26,362 $ 10.4x 0.9x 8.9x 7.5x 7.2x
TWX 35,291 $ 11.1x 0.9x 9.8x 7.1x 6.7x
CBS 17,618 $ 11.5x 0.6x 10.2x 6.7x 6.4x
DS 68,654 $ 12.5x 0.8x 11.0x 7.4x 6.7x
Average 11.4x 0.8x 9.9x 7.1x 6.6x