BSkyB back-off propels News into recovering some of its loss
SHARES in Rupert Murdoch's News Corporation rallied yesterday after the company announced that it was abandoning its bid for British broadcaster BSkyB because of the phone-hacking scandal that has engulfed the company.
SHARES in Rupert Murdoch's News Corporation rallied yesterday after the company announced that it was abandoning its bid for British broadcaster BSkyB because of the phone-hacking scandal that has engulfed the company.News Corp voting shares rose 46?, or 3.1 per cent, a rare positive performance in a media sector caught up in gloom over the outlook for retail advertising.The decision to abandon the bid for complete control of BSkyB, made hours before a humiliating unanimous vote against the deal in the British House of Commons, also frees up $US12 billion in cash.But with the threat of US regulatory action looming, yesterday's gains could not make up for falls since the phone-hacking scandal gripped Britain.A former British prime minister, Gordon Brown, who was targeted by News Corp's British papers, also called on regulator Ofcom to investigate whether the company was a "fit and proper person" to retain its existing 39 per cent stake in BSkyB.The pay TV company is also under pressure from institutional investors to sack Mr Murdoch's son, James, as BSkyB chairman and clean up "questionable governance practices"."BSkyB has been run as an arm of News Corp," one major investor said. "This was tolerable with the bid situation. It's not any more. Change needs to happen - and from the top."News Corp's rise came as other media stocks fell after retailer David Jones issued a shock profit downgrade late on Tuesday night.Shares in the Herald's publisher Fairfax Media, which is heavily dependent on retail advertising, fell for the third day running, shedding 2?, or 4.2 per cent, to 91?. TV groups Seven and Ten also fell as did radio network Austereo.Despite yesterday's surge, at the close of Australian trade yesterday News Corp voting stock was still languishing $1.84, or 10.7 per cent, below its level last Monday.The fall in News Corp's share price had cost Mr Murdoch and his family, with about 38 per cent of the voting stock, about $US750 million on paper, the Financial Times reported.Media & Marketing Page 10