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BY STEVEN HSIEH
ANCHOR MEGAN MURPHY
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Rupert Murdoch’s News Corp announced a $5 billion stock buyback Tuesday.
The move comes amid a phone hacking scandal which has shaken the media conglomerate and threatened Murdoch’s plans to acquire satellite-broadcasting company British Sky Broadcasting, or BSkyB.
CNBC’s David Faber believes what the company is really buying is confidence.
“After that significant decline in News Corp stock, of what, 7.6 percent. They do come out, and perhaps listen to their shareholders, and say hey, ‘we’re here for the long-term, and we’re going to listen to you, and we’re going to buy back what is a significant amount of stock,’ should they follow through with the full $5 billion over the next twelve months.”
Murdoch has a legion of believers. News Corp stock rose 1.9 percent immediately following the announcement. Portfolio manager Lawrence Haverty – who owns 6 million NewsCorp shares – says BUY.
“I think what people don’t understand about the company, looking at it with a historic perspective, is he has a very, very stable, loyal management. There’s very, very little turnout of management at News Corp. And the second thing is he’s always been able to surround himself with superb advice from outside to augment the management… When this blows away, and it will in fact blow away, he’s going to be faced with some pleasant dilemmas, and I think the stock is very, very attractive.”
But CNBC’s Jim Cramer argues, don’t forget why News Corp is in this mess in the first place. He warns – the problems are bigger than business.
“I do feel that we don’t want to underestimate this. The journalists I hang out with at all different levels are just talking about the destruction of the credibility of an empire – not of the profits, but the credibility. And what people are doing at the Wall Street Journal, right now, that work there. And what people are doing at the New York Post. And I do feel that turmoil is being underestimated by Wall Street, because Wall Street doesn’t talk about the inner-machinations of journalism.”
News Corp says the share repurchase program may be – quote “extended, modified, suspended or discontinued at any time.” A writer for Forbes notes of other Murdoch commitments...
“...this one is only as ironclad as he chooses to make it… If the storm clouds lift and shares take off, bye-bye, buyback.”
The British Competition Commission will review News Corp’s 12.5 billion dollar bid for BSkyB. Meanwhile, Murdoch and other News Corp executives have been called to appear before the UK Parliament next Tuesday over the hacking scandal -- which has now extended beyond News of the World, to some of Murdoch’s other media companies.
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