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News Corp shares rally as directors support Murdoch

NEWS CORP'S independent directors rallied behind their leader Rupert Murdoch after his faltering phone-hacking committee appearance in London, with analysts and shareholders giving a broadly positive reaction despite others warning of ongoing uncertainty.

NEWS CORP'S independent directors rallied behind their leader Rupert Murdoch after his faltering phone-hacking committee appearance in London, with analysts and shareholders giving a broadly positive reaction despite others warning of ongoing uncertainty.

An independent board member, Viet Dinh, issued a statement to the stock exchange: "We are united in support of the senior management team to address these issues. In no uncertain terms, the board and management team are singularly aligned and committed to doing the right thing."

The independent members have now hired their own legal representation, but one - Tom Perkins - told The Wall Street Journal that the board "honestly thinks Rupert is a genius and we need him and the company needs him".

The Australian-listed shares rose 5 per cent yesterday to close at $15.22 after Mr Murdoch and his son, James, survived the committee questioning battered, but not out.

The Journal, owned by News Corp, said that some large shareholders thought Mr Murdoch did not come across well in the hearing. "It was painful to watch. He seemed like an old man," it quoted one big shareholder as saying, and that it would be "shrewd" to make the chief operating officer, Chase Carey, chief executive.

US analysts who updated their ratings after the Murdochs appeared before the committee were of one voice - buy - but their optimistic view varied widely in target price, ranging from US$17 ($15.9) to $US26 a share.

On the Nasdaq exchange, News Corp voting shares were US$16.25 and non-voting shares were US$15.79 at the close after the hearing - up 5 per cent on the day, but still down 13 per cent since the scandal intensified a fortnight ago.

The Citi analyst Jason Bazinet told clients investors had two main fears: that News Corp would be forced to sell its US television stations, or that it would be forced to sell its existing 39 per cent stake in BSkyB. "We think both scenarios are very unlikely."

Yet regulatory uncertainty is far from over, with police investigations and a two-stage judicial inquiry in Britain, an FBI probe in the US and an internal audit in Australia - along with shareholder action and continued public and political criticism.

In Britain, the report of a separate parliamentary committee yesterday found it "almost impossible" to escape the conclusion that News International had been "deliberately trying to thwart a criminal investigation" in 2005-2006.

In other developments, a large public pension fund - California Public Employees' Retirement System - said it was considering its options after the drop in share price. Anne Simpson, its senior portfolio manager, told the BBC that power should reflect capital at risk.

"News Corp does not have one-share-one-vote. This is a corruption of the governance system," she said. "The situation is very serious and we're considering our options."

A smaller shareholder, Christian Brothers Investment Services, has filed a motion for its annual general meeting to split the positions of chairman and chief executive - both positions are held by Mr Murdoch.


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