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News Corp. Surges on Plans to Sell 'Disappointing' Amplify Unit

Thursday, 13 August 2015 11:03 AM

News Corp. jumped the most in more than two years after disclosing it is in the “final phase” of talks to sell its Amplify Inc. education unit.

The shares rose 6 percent to $14.97 at 9:57 a.m. in New York, and climbed as much as 13 percent to $15.92, the biggest intraday gain since billionaire Rupert Murdoch split the company in June 2013, separating 21st Century Fox Inc.

Amplify was supposed to help New York-based News Corp. take advantage of growth in the market for digital education, which is gradually replacing print textbooks. After investing more than $1 billion in the business, results have been “disappointing,” Chief Financial Officer Bedi Singh said on a conference call Wednesday evening to discuss quarterly earnings.

“We are in active conversations with an outside investor,” Joel Klein, the Amplify CEO, said in a note to employees Wednesday.

The company said it will no longer sell its tablet computer product for schools and will only support existing customers. Amplify’s largest order for the tablets — to the Greensboro, North Carolina, school district — was plagued by technical glitches when it was introduced in fall 2013.

News Corp. reported a fiscal fourth-quarter net loss after writing down its investment in Amplify by $371 million. The company entered the business when it acquired Wireless Generation, a maker of digital school assessments, for $360 million in November 2010. Most of Amplify’s revenue still comes from that line of business.

‘Much Slower’

Amplify also has developed its own digital English language curriculum. It hired Walter Isaacson, best-selling biographer of Apple Inc. co-founder Steve Jobs, to help write a unit about the Declaration of Independence. Actor Chadwick Boseman, who starred in a biopic about baseball player Jackie Robinson, was enlisted to read the the autobiographical works of escaped slave and abolitionist leader Frederick Douglass as part of the curriculum. Still, Singh said sales of the curriculum had been “much slower to develop than we initially expected.”

Though Amplify makes up only a fraction of News Corp.’s more than $8 billion in annual revenue, News Corp. had said that education could be an engine for growth as profits shrink in other parts of the company’s business, including newspapers such as the Wall Street Journal.

Klein, the former New York City schools chancellor under Mayor Michael Bloomberg, owner of Bloomberg LP, said that “the lead investor would be backed by Amplify’s management team, some of whom also plan to participate in the investment.”

News Corp. revenue fell 2 percent in the fourth quarter to $2.14 billion. That compared with analysts’ projections of $2.18 billion. Profit excluding some items was 7 cents a share, topping the 5-cent average of estimates compiled by Bloomberg.

Bloomberg LP, the parent of Bloomberg News, competes with News Corp. in providing financial news and services.

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News Corp. jumped the most in more than two years after disclosing it is in the "final phase" of talks to sell its Amplify Inc. education unit.
news corp, stocks, shares, amplify
Thursday, 13 August 2015 11:03 AM
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