Wall Street Journal is About 5% of News Corp’s Stock

News Corp (NASDAQ:NWS) owns some of the most popular newspapers like New York Post, Wall Street Journal, Dow Jones and The Times that cover general, financial and local news.

Though quite diversified in number of brands, we estimate that the total newspaper business constitutes only about 11% of the $18 Trefis price estimate for News Corp’s stock.  This translates into a $5 billion business based on our estimated $46.5 billion value for News Corp.

The Wall Street Journal (WSJ) is one of the prime contributors of value and and a growth area for News Corp’s newspaper business.  We estimate that WSJ contributes around one-fourth of the total newspaper revenues for News Corp and accounts for about 5% of News Corp’s stock.

WSJ Is the Prime Growth Factor for News Corp’s Newspaper Business

WSJ contributes to News Corp’s business in two ways: 1) advertisement supported revenues, and 2) circulation and subscription revenues. We estimate that WSJ will continue to see growth in its ad and subscription revenues primarily due to the following reasons:

1. WSJ is a strong brand in the financial community. With an improving economy and a  recovering ad market, advertisers are expected to spend more on newspapers and websites like the WSJ.
2. WSJ subscribers are an attractive demographic sought by advertisers.  More than 50% of WSJ subscribers belong to the top management of companies, with an average household income of over $240,000 and net worth of nearly $2.5 million.

WSJ’s Ad Revenues and Subscribers Expected to Rise

We estimate that WSJ’s ad revenues will increase from about $1.2 billion in 2009 to about $2.5 billion by the end of Trefis forecast period.  We also forecast a low single digit growth in the number of WSJ subscribers, and expect the number to reach close to 2.5 million by the end of Trefis forecast period from our estimate of less than 2.2 million for 2010.

By modifying our forecasts above, you will see how slower growth in the number of subscribers and ad revenues will impact News Corp’s stock price.

Excluding WSJ, News Corp Loses About 5% of Its Value

We estimate that currently WSJ constitutes about 25% of News Corp’s newspaper business revenues. However, this percentage contribution is expected to grow close to 40% by the end of Trefis forecast period.  WSJ’s revenue growth over the same period will exceed 70%, almost 5x the expected revenue growth from News Corp’s total newspaper business.

The WSJ is crucial for News Corp’s newspaper business and, if WSJ were to separate from the company, News Corp would lose an estimated 5% of its value.

For additional analysis and forecasts, here is our complete model for News Corp’s stock.