Should the large-scale AI license promoted by News Corp with OpenAI and meta require action from News (NWSA) investors?

• News Corp recently signed two major AI content licensing deals, including a 2024 deal with OpenAI and a subsequent deal with Meta, reportedly worth up to US$50 million annually, strengthening its role as a major content supplier for large AI platforms.
• By monetizing premium journalism as “input” to its AI systems, News Corp is seeking to secure the value of verified, professional content before its future bargaining power is potentially weakened.
• We then consider how these AI content licensing deals could reshape News Corp’s investment story, particularly around recurring digital revenue.

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News Investment Story Summary

To own News Corp, you need to believe the company can offset pressures in traditional print, book publishing and circular advertising by moving into digital, data and content licensing. OpenAI’s new AI deal with Meta strengthens the short-term boost around recurring digital licensing revenue, but does not eliminate the key risk that audience softness for companies like Realtor.com and print media could still weigh on overall growth and profits.

Among recent announcements, the reaffirmed half-year dividend of US$0.10 stands out alongside the AI ​​news as it highlights management’s confidence in cash generation even as the business mix evolves. If AI licenses grow as expected, it could support the company’s ability to continue raising dividends while investing in high-margin digital and data products, but any setbacks in digital real estate or professional information services could soon test that balance.

But investors should also consider the risk that News Corp’s bargaining power and licensing economics could deteriorate as AI content creation accelerates and legal disputes with technology platforms intensify.

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News reports that by 2028, revenue is projected to be $9.3 billion and revenue to be $754 million. This would require annual revenue growth of 3.2% and revenue growth of $274 million from the current $480 million.

News’ forecast reveals how it yields a fair value of $34.05, 38% higher than the current price.

explore other perspectives

Relative to their baseline outlooks, the most optimistic analysts were already assuming revenues of around US$9.8b and profits of nearly US$995m by 2028, so your own outlook for News Corp could be either much more cautious or much more optimistic than theirs if the AI ​​license and associated legal risks play out differently than expected.

Check out the other 3 fair value estimates in the news – find out why the stock is worth 38% more than its current price.

Create your own verdict

Don’t just follow the ticker, dig deep into the data and truly build your own beliefs.

• A great starting point for news research is an analysis that highlights four key perks that can influence investment decisions.
• Our free news research reports provide comprehensive fundamental analysis compiled into a single visual (snowflake), making it easy to assess the overall financial health of news at a glance.

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This article by Simply Wall St is general in nature. We provide commentary using only unbiased methodologies, based on historical data and analyst forecasts, and articles are not intended to be financial advice. This is not a recommendation to buy or sell any stock, and does not take into account your objectives or financial situation. We aim to provide long-term, focused analysis based on fundamental data. Note that our analysis may not factor in the latest announcements or qualitative material from price-sensitive companies. Simply Wall St has no position in any stocks mentioned.

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