July 14, 2024

Media Decoder: News Corporation Looks to Bolster Stock With Buyback Plan

The News Corporation on Tuesday moved to stanch the accelerating drop in its stock price, announcing a program to repurchase $5 billion in shares.
Since last week, when a phone hacking scandal involving one of the company’s British tabloids was revealed to be far more widespread than previously known, News Corporation’s stock had lost about 15 percent of its value.
Investors, nervous that the widening controversy would imperil the company’s bid to acquire the parts of British Sky Broadcasting that it does not already own, have dumped shares over the last several days.
But the announcement of the stock repurchase seemed to boost their confidence in News Corporation on Tuesday. Shares rose more than 1 percent on the Nasdaq and were trading at around $15.70 in late morning.
News Corporation had $11.8 billion in cash and cash equivalents as of the end of March, money that it had planned to put toward the BSkyB purchase. It already owns just under 40 percent of the satellite company, but last year bid for the remainder. The deal is a centerpiece of News Corporation’s efforts to expand.
But those plans are now delayed for at least several months — time the company hopes will allow for the furor over the hacking to subside. On Monday, News Corporation withdrew its intention to spin off BSkyB’s 24-hour Sky News Channel, a move that automatically triggered a more lengthy regulatory review process.
The deal appeared in increasing jeopardy in recent days, with members of the British government urging News Corporation’s chairman, Rupert Murdoch, to withdraw his bid. Nick Clegg, the deputy prime minister, said Monday that Mr. Murdoch should “do the decent and sensible thing, and reconsider” his efforts to buy the rest of BSkyB.
Mr. Clegg’s remarks helped send News Corporation’s shares tumbling almost 8 percent on Monday.

Article source: http://mediadecoder.blogs.nytimes.com/2011/07/12/news-corporation-looks-to-bolster-stock-with-buyback-plan/?partner=rss&emc=rss

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