Twenty-First Century Fox (ASX: FOX) on Friday announced the final step in its consolidation of Chinese assets by selling down its remaining 47% stake in Star China TV to its joint venture partner China Media Capital (CMC).
Twenty-First Century Fox was formed in mid-2013 when it was separated from parent company News Corporation (ASX: NWS). Fox owns a series of broadcast, pay-TV, film, and satellite-TV assets across six continents. Included in that are popular stations such as the Fox News and Fox Sports networks, National Geographic, and the film production company 20th-Century Fox.
Since 1993, Rupert Murdoch's News Corporation has been trying to crack the Chinese market through its Star TV network. The network operates stations in China, India and many smaller Asian nations but has been hampered by a ''brick wall'' of regulation and censorship in China.
As a result, News Corp sold down controlling rights for its three Star TV Chinese stations to CMC in 2010, in order to consolidate its focus on the higher-growth and less-restricted Indian market. Following the completion of the sale, Fox's only presence in China will be via sports channels operated by the ESPN Star Sports Network. Fox purchased the Network in 2013 from joint venture partner ESPN and appears to have renamed the network Fox Sports Asia in line with its worldwide sports network marketing.
The investment community view of Fox appears to be almost universally positive. Long-time CEO Rupert Murdoch heads the group and his son James Murdoch runs the international part of the business. Fox's global cable network, successful film studio, and exceptionally popular news and sports networks give the company an advantage over peers and should sustain growing revenue and earnings in comings years.
As an added benefit, there are few large risks in the business model and growth will likely come from increased exposure to developing markets.
Foolish takeaway
Fox strongly outperformed the ASX 200 in 2013 and finished the year well, rising over 6% in December alone. Fox is now trading on a price-to-earnings ratio of over 16, which is above that of the wider market and the broader media sector, however Morningstar forecast the company to grow revenue by 7.5% per year for the next four years, which may account for the higher ratio. Strong management, a great business model, and a manageable debt load all point to Fox being a great company to invest in.