Analyst: News Corp. should separate assets

Recommends divvying up 'good' vs. 'bad'

NEW YORK -- The idea of the U.S. government shoring up the financial system and financial-services giants by separating assets into "good banks" and "bad banks" has captured the imagination of at least one media and entertainment analyst.

Michael Nathanson of Sanford C. Bernstein suggested Monday that Rupert Murdoch's News Corp. would benefit from a similar approach.

"Why couldn't media companies follow this strategy?" he asked in a research note, arguing that News Corp. would "have the most potentially to gain" from such a split structure.

The analyst suggested that a "good News Corp." would comprise growing assets, such as the conglomerate's cable networks, the Sky Italia and Star Asia satellite TV platforms and MySpace. These could produce a profit of 39 cents a share during the current fiscal year and would have long-term operating profit growth of 17%, he said, assigning it a value of $5.45 a share. He assigns a value of $1.21 a share to the company's "bad" assets.

Meanwhile, "bad News" would include the firm's film and broadcast TV units and its newspapers, book arm and magazines unit, which have been objects of concern. "These 'bad assets' are not quite free but are getting very close," Nathanson said.