rupert murdoch News Corp
Rupert Murdoch (Image: Dennis Van Tine/Abacapress.com)

Ahead of the release of its June quarter and 2020-21 results on Friday morning, News Corp has revealed a huge US$1.15 billion (A$1.56 billion) deal that further downgrades its Australian newspaper and pay TV interests.

Instead of investing in its lagging Australian papers and Foxtel/Sky News, or its faltering UK masthead The Sun, the Murdoch clan’s second company is buying a major global oil and gas data reporting website called Oil Price Information Service (OPIS).

News Corp is paying cash and using up all that money it raised earlier in the year: US$1 billion in a capital raising, plus some of the US$1 billion or so in cash on hand. This is the third deal this year that News has made outside of print — it paid US$349 million for the books and media business of publisher Houghton Mifflin Harcourt, and US$275 million for business news website Investors Business Daily, or IBD. 

That’s a total of US$1.77 billion, or more than A$2.4 billion, which is considerably more than the book value of the company’s mastheads.

The latest deal comes as News Corp has started cutting dozens of jobs from its back offices in Australia as part of the revamp of its shared services across the empire. That is being overseen by Damien Eales, the former chief operating officer of News Corp Australia.

OPIS makes money out of reporting prices and other data from the fossil fuel industry, but is branching out into biofuels and renewables. The vendors of OPIS and related assets are S&P Global (the credit rating giant) and IHS Markit which is a major global business data business. It runs the twice-a-month global surveys of manufacturing and service sector activity that act as an early warning system on the performance of the world’s major economies, including Australia’s.

“The scaled, highly profitable and consistently growing digital data, analytics and insights provider will become part of Dow Jones’ burgeoning professional information business (PIB), which includes Dow Jones Risk & Compliance, Dow Jones Newswires and Factiva,” News Corp spuiked in its statement to the ASX.

“OPIS has a revenue base that is nearly 100% digital, 95% recurring and operates at approximately 50+% adjusted EBITDA margins, with modest capex requirements.“

News Corp said it expects to receive an estimated tax benefit of US$180 million as part of the transaction. A footnote to the transaction reveals: “News Corp expects to receive a step up in tax basis resulting in an annual deduction over the next 15 years with an estimated tax benefit of $180 million on a present value basis.”

That in turn wasn’t explained but it is certain this tax break will continue past the death of founder Rupert Murdoch (aged 90).

“With this acquisition, Dow Jones will also be providing pricing and news and analytics for the coal, mining and metals end markets through McCloskey, among other brands,” it said.

“In addition, Dow Jones will be well poised to leverage the global transition to renewables and the growth opportunities resulting from emerging energy categories like hydrogen, carbon credits, biofuels, LNG, solar, water and electric vehicles.”

So renewables, electric vehicles, solar, hydrogen, carbon credits are seen as a money-making opportunity for News and the Murdochs to enable them to “leverage the global transition to renewables and the growth opportunities” from the emerging energy technologies.

And yet in Australia its media outlets, from The Australian through to Sky News, plus the various tabloids, are cluttered with climate deniers (and COVID deniers) and have been instrumental in sabotaging repeated attempts from Kevin Rudd, Julia Gillard, Tony Abbott, Malcolm Turnbull and Scott Morrison to give Australia a credible and cohesive energy policy to tackle the fallout from global warming.

News Corp is paying a lot of money for a business with not much in the way of revenues. OPIS had US$121 million in revenue for the year to November 2020, and net income of US$41 million. News said it is forecast to have revenues of US$129 million in the year to November 2021. Its bigger competitors include Refinitiv, the old data half of Reuters.

What is interesting is that two global business and economic data giants in S&P Global and Markit did not want to continue to own OPIS — either together or singularly. That tells us something about the prospects for this business.