Value of News Corp plunges as investors take fright

[Turborama]

Source: The Independent (UK)

Value of News Corp plunges as investors take fright at scandal

Source: The Independent

By Stephen Foley in New York
Tuesday, July 19 2011


The gathering scale of the crisis surrounding Rupert Murdoch's media empire alarmed investors and sent News Corporation shares sliding yesterday, as the media mogul prepped for a Parliamentary select committee grilling that could determine his future at the helm of the company.

And last night, the credit rating agency Standard & Poor's piled further pressure on the company, saying it could downgrade News Corp's debt. The company has enough cash coming in to cover financial penalties should investigations on either side of the Atlantic turn up criminal activity, the agency said, but there are potentially bigger implications for News Corp.

"More important in our analysis are the risks to the ongoing business (which) include loss of reputation that alienates current and potential clients; forfeit of important business opportunities, such as closure of a profitable publishing business and abandoning of the company's attempt to take full ownership of the UK's largest pay TV operation; and management distraction," S&P concluded.

Yesterday's 4 per cent share price fall would have been even greater were it not for talk that the crisis would weaken the Murdochs' grip on the company and push News Corp into some shareholder-friendly reforms. The stock is now down 17 per cent since it first emerged that News of the World journalists had hacked into the voicemail of missing teenager Milly Dowler.

Read more: http://www.independent.co.uk/news/business/news/value-of-news-corp-plunges-as-investors-take-fright-at-scandal-2316029.html

[FreakinDJ]

1. Fall Baby Fall - can't wait for liquidation

[cstanleytech]

4. Hate to tell ya but that is imo unlikely to really happen.

For example it didnt happen to BP nor did Microsoft who just got a slap on the wrists, mind you I would love it if they were forced to basically break off Fox News and as well as the WSJ and some other assets but its just very unlikely to happen.

[FreakinDJ]

5. Difference being Virtual Assets vs: Physical Assets

Oil is some thing everyone needs
Tainted News reports - not so much

I know its Bullshit but 1 can only hope

[dipsydoodle]

10. Virtual assets ?

How about the cash mountain which had been set aside for the BSkyB bid ?

LOS ANGELES (AP) — News Corp. investors who shunned the prospect of a drawn-out $12 billion bid for British Sky Broadcasting on Wednesday cheered when the company dropped its bid amid an uproar over alleged phone-hacking by its U.K. papers.

Although analysts said the takeover of profitable BSkyB would have been the best use of the company's growing mountain of cash, dropping the bid before British politicians were to formally oppose it ends the uncertainty and opens the door to other shareholder-friendly moves like increased dividends and share buybacks.

Read more: http://moneywatch.bnet.com/investing/news/investors-bet-on-refocused-news-corp-post-bskyb/6258931/#ixzz1SXeEER4U

There was nothing virtual about that cash.

[aquart]

8. IIRC, Microsoft was set to get more than a slap.

But Bush was elected.

[JHB]

11. Potential difference:

Rupert has also made a lot of enemies, who in theist have been cowed into silence.

The opportunity for payback may tip the scales.

[cstanleytech]

12. He still has a lot of allies though in the government as well

who will defend him with a vengeance because if they lose news corp they lose the free pr news corp provides them with via its news papers and fox news.

[Turborama]

2. News Corp. 'train wreck': How bad is it?

By Gary Strauss and Matt Krantz, USA TODAY Updated 1h 41m ago - 7/18/2011 10:23

As Rupert Murdoch is set to testify before British Parliament Tuesday over the phone-hacking scandal that has roiled politicians, cops and legions of Brits once titillated by his tabloid press, the billionaire's media empire is showing more signs of unraveling.

=snip=

"We're watching a train wreck, but is it a few cars or the whole train coming off the track?" says crisis management expert Robbie Vorhaus. "The big question is will the chief engineer be able to stay on board?"

=snip=

(I particularly liked this little morsel at the end...)

There's also danger that the scandal could spread to the U.S., the biggest source of News Corp.'s business. "This is a potential danger zone," Amobi notes.

Says Wheeldon, "We may well view this as being Britain's Watergate, but what happens to Murdoch now will depend on what happens in the U.S. If we are talking about the man, I would say that he was already a shadow of the one who arrived on the scene in 1969. Having lost any remaining vestige of public and political trust, his war is quite definitely over."

Here's the full article: http://www.usatoday.com/money/media/2011-07-18-murdoch-news-corp_n.htm

[AndyTiedye]

3. It's Pretty Bad

[MADem]

6. On top of the "Murdoch Discount" which values that shitty stock lower than others of similar ilk,

I heard Rupert is buying back his own stock to stop it from free-falling. Even at that, it's taking a huge hit, which is good! Regrettably, his empire is only about a quarter news media and related associations, so he'd have to spend a lot more before he implodes.

Analysts have also pointed to a "Murdoch discount" that explains why News Corp shares have long traded at a lower valuation than peers in the media sector such as Disney and Viacom. Rivals do not have investments in the troubled newspaper industry, which is where Mr Murdoch's emotional attachment remains.

[rhett o rick]

7. Murdoch probably sold short. nm

[dipsydoodle]

9. You've got that back to front

News Corp are now able to buy their own shares back , their published intention , at pre-BSkyB bid inflated figures. The shares have only fallen to the pre-bid figure more or less.

News Corp are net beneficiaries of the share fall in this respect.

[rhett o rick]

13. It's the same. A short sell means that the seller sells shares he borrows.

The borrowed shares are replaced by buying shares at a reduced price.