News Corp.'s 1Q Results Demonstrate Challenges Facing Newspapers; Shares Fairly Valued

News Corporation's first-quarter results demonstrate that most of the value of the firm is in its non-newspaper assets, such as REA, Fox Sports Australia, and its 50% nonconsolidated stake in Foxtel. We are maintaining our no-moat rating and AUD 18 fair value estimate. We view the shares as fairly valued at the current price. Overall revenue fell 3%, with a decline of 10% for the newspaper segment (about 75% of overall sales). Newspaper segment EBITDA improved 6% thanks to the impact of cost-saving initiatives, as the company clearly needs to reduce expenses.