Assessing the Value of Brands

Abstract

In 1984 News Group, the Australian flagship company of Rupert Murdoch’s world-wide publishing empire included a valuation for ‘publishing titles’ in its balance sheet. Murdoch did this because the ‘goodwill’ element of publishing acquisitions — the difference between the value of the net assets and the price paid — can be enormous and, being an acquisitive company, the goodwill write-offs which his company was being forced to take were ravaging his balance sheet. He well knew that much of the ‘goodwill’ he was buying comprised the publishing titles; he therefore placed a value on these and included this valuation in the balance sheet. This simple procedure restored his balance sheet, solved many of the problems of goodwill write-offs and dramatically reduced gearing. Indeed, without this balance sheet valuation of publishing titles, it is unlikely that Murdoch would have been able to expand his business by acquisition, particularly in the USA.

This chapter is based on an article first published in ‘Long Range Planning,’ Vol. 23, No. 3, pp. 23–29, 1990