Murdoch’s Humble Day Reaps $5 Billion for His Shareholders
Almost a year after News Corp. (NWS)’s phone hacking scandal broke, Chairman Rupert Murdoch has bowed to the unthinkable: splitting off his beloved newspapers. Investors couldn’t be happier.
News Corp. (NWSA) shares have gained $5 billion in value since revelations last year that journalists at one of Murdoch’s U.K. newspapers hacked into the voice-mail account of a murdered schoolgirl. The scandal forced the company to abandon its bid for British Sky Broadcasting Group Plc (BSY) and close News of the World, its troubled tabloid. News Corp. stock initially plummeted 25 percent, and led to what the 81-year-old Murdoch called his “most humble day” testifying before a U.K. parliamentary committee.
The pressure on the U.K. business eventually persuaded Murdoch to accept a split, said a person with knowledge of the matter who sought anonymity because the deliberations are private. The stock surged 8.3 percent yesterday to almost a five-year high. BSkyB added 2.7 percent in London on speculation that Murdoch might be able to relaunch his offer.
“For shareholders, this past year has been a win-win,” said Lawrence Haverty, a fund manager at Gamco Investors Inc., which holds more than 5 million News Corp. Class A shares, according to data compiled by Bloomberg. The hacking scandal ended up being “the moment of all buying opportunities.”