News Corp has announced plans to buy back $5bn of its shares in an attempt to halt the slide in value of Rupert Murdoch’s media empire.
The growing phone hacking scandal in the UK has sent News Corp’s shares down 13% since the story first broke. The share price collapse had wiped more than $5 billion off the market value of News Corp. The drop was most painfully felt by the Murdoch family, which with a 39.7% shareholding, saw its paper fortune reduced by more than $2 billion.
News Corp shares opened up 3% in New York at $16.57 after the buyback, which trebled News Corp’s earlier commitment to buy $1.8 billion worth of shares, was announced.
Meanwhile, News Corp has withdrawn its bid for British satellite broadcaster BSkyB in the wake of the growing scandal over newspaper phone-hacking, the company announced on Wednesday.
The announcement came shortly before parliament was to debate a government-backed motion calling on Murdoch to halt his attempt to acquire the 61% of BSkyB his company does not already own.
News Corp has annual free cash flow of about $1.3 billion and very little debt.
The Wall Street Journal reported on Wednesday that News Corp is considering the sell-off of its remaining British newspapers, which includes British newspapers the Sun, the Times of London and the Sunday Times.
The unit also included the 168-year-old News of the World weekly, which published its last issue on Sunday after becoming embroiled in a phone-hacking scandal that shocked the public and drew a furious government reaction.
The Journal, which is also owned by News Corp, said Murdoch himself has long opposed such a move and considers News International one of his favorite components of his media empire.
The Journal, citing the same sources, said that there did not appear to be any buyers because of the poor state of the newspaper industry, but said the company may revisit the idea in the next six months.
The Guardian & AFP