Rupe Circles the Wagons

News Corp. on Monday launched a $6 billion bid to buy up the rest of its majority-owned programming subsidiary, Fox Entertainment Group. The mothership is going after the remaining 18 percent of Fox that it does not own in a cash-free swap of 1.9 shares of News Corp. for each outstanding share of Fox.

Fox Entertainment encompasses the myriad Fox cable channels, the broadcast network and media generators that include movie studios and television production. Fox content ranges from "The Simpsons" and "American Idol" to "The Passion of the Christ."

News Corp. already holds 82 percent of Fox and controls 97 percent of the voting rights, so the bid for the rest didn't receive whole-hearted applause across Wall Street. Richard Greenfield, an analyst with of Fulcrum Global Partners, parted ways with several analysts who suggested Fox was worth more than the News Corp. bid, because News Corp. is growing faster than Fox. Fox has total assets of about $31 billion and total annual revenues of about $12 billion. News Corp. holds around $52 billion in assets and has annual revenues of around $22 billion.

Greenfield also noted that Fox is trading at its highest level since the company's IPO Nov. 11, 1998. Fox shares are around $34, while News Corp. is hovering around $17. Greenfield also believes the potential free cash flow from digital television is overrated.

However, News Corp. chief, Rupert Murdoch, is a creature of long-term strategies. By buying the entirety of Fox Entertainment, the company will no longer be compelled to publicly report financial details. Consequently, News Corp. will have more flexibility in how it structures the content carriage deals between its programming and distribution properties, potentially driving up the price of Fox content to other carriers.