News Corp investors face risk of patriarch ‘not being in charge’ | Media | guardian.co.uk
The Financial Times’s Lex column argues that the cost to News Corp of the phone hacking scandal is its “most overlooked consequence.”
It scuppered the company’s £7.5bn bid to buy the 61% of BSkyB it doesn’t already own, meaning that News Corp was unable to get its hands on annual revenues of £6.6bn plus that “enormous free cash flow.”
Victory, says Lex, “would have given News Corp even more heft in the battle for media industry supremacy, strengthening its pay-TV and content business and making it less dependent on the US.”
It would have been delightful too for the company’s shareholders, who have grown used to Rupert Murdoch’s profligacy with their money.
Look at the financial penalties suffered by investors. In 2005, News Corp bought MySpace for $580m; it was sold a few months ago for $35m.
Dow Jones, owner of the Wall Street Journal, cost $5.7bn in 2007; News Corp has already written off $2.8bn of that.
Lex remarks: “Sooner or later, these sums start to add up. Shares in News Corp have trailed the S&P 500 index on both a five-year and a 15-year time horizon.”