Can News stop the stench spreading?
If Ofcom does eventually find against New Corp and force the company to sell out of BSkyB, it does not automatically threaten its right to hold a broadcast licence in other countries. ACMA is not required to follow an Ofcom decision with an inquiry of its own into News Corp as a quarter owner of Foxtel, although it would clearly intensify pressure for one.
Nor would an Ofcom decision automatically raise questions about its ownership of US cable groups. Authorities there have rarely pulled broadcasting licences.
So, the scandal has not yet widened enough to spook investors – the financial market has in fact rejoiced that the hacking inquiries and expected charges might finally force Rupert Murdoch to relinquish his emotional ties to the print business and spin it off as a separate company. This hope has driven the share price close to two-year highs, and even after this week, the share price remains only just shy of those highs.
The financial markets have long valued the parts more highly than the whole, because News’ pay TV arm is the biggest generator of profits for the company. Analysts have said that separation would lift the overall value of the group by about $6 billion.