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News Corp ups buy-back to $5bn as damage spreads

July 12, 2011

News Corp has upped buy-back plans to $5 billion of stock over the next 12 months as the company tries to contain damage from the telephone hacking scandal in Britain that has sent its share price down up to 14 per cent since last Thursday.

Shares rose over two per cent to on Tuesday as the group responded to investor pressure to support the stock. The company said it would increase the programme of about $1.8 billion remaining under the company’s current buy-back to $5 billion. That is about 16 per cent of the company’s market capitalisation.

Some analysts have called for the funds earmarked for the BSkyB deal should be used for a buy-back as they now discount the chances of that $14 billion deal going through in the foreseeable future. Analysts estimate News Corp had around $13 billion of cash on its balance sheet as of June 30th and will use some of that cash for the buy-back in lieu of its delayed BSkyB acquisition. News had been criticised for having no Plan B if the BSkyB bid were blocked.

Meanwhile revelations continue and are beginning to spread beyond the closed News Of The World to other newspapers in the group. There are now real fears News Corp’s US media assets could be affected by the evidence of miss management and criminality in the UK. Assorted Class Action lawsuits are being mooted, while Court TV’s founder Steve Brill, speaking on ABC’s This Week’ show on July 10th said that News Corp owns a number of Federal Communications Commission licenses in the US, “and you must be of good character to have such a licence. Someone,” he suggested, could be depended upon to “make a big deal of whether News Corp is fit to have FCC licences under current management.”

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