Yesterday it officially withdrew its offer for the remaining 61 per cent of BSkyB – and the chances of it returning to bid again in the near future are remote.
Still, the pressure continues, the implications are spreading and the results not only threaten the company’s business interests, but also its IR efforts in the US.
News Corp and Murdoch wanted BSkyB because it continues to grow and, according to company financial records, throws off 12 per cent of its revenue as free cash. That’s a big temptation to News Corp, which currently has long-term debt of $15.5 bn.
The pace of increased problems seems only to speed up. Calls for investigations, which eat up management time and create fires that IR personnel must put out, have grown. UK Prime Minister David Cameron said the government will investigate rumours that News Corp journalists tried to gain illegal access to phone data of some victims of the 9/11 attacks in the US.
That could help open a potentially ugly new front for the company. News Corp, which is registered in the US, might already be liable under the Foreign Corrupt Practices Act for alleged payments to police in the UK. Hacking into phones of 9/11 victims would not only add another potential criminal investigation, but one that is an emotional hot button in the States.
Senator Jay Rockefeller has called for an investigation into the allegations, and a group of institutional investors amended a suit filed against News Corp in March to include the current scandal and back allegations that ‘Murdoch has treated News Corp like a family candy jar, which he raids whenever his appetite strikes’, as a copy of the complaint states.
News Corp continues to look for ways out of the scrape, including a $5 bn stock buyback, which is $3.2 bn over and above what remains of an existing buyback plan. And there are other, larger potential changes in the works, such as the sale of its UK newspaper division – well, at least if there were a potential buyer for holdings in an economically wounded industry. But it will take something extraordinary to get ahead of the developing story at this point.
[Article by Erik Sherman, IR magazine]
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