Brightbridge Wealth Management Headlines: News Corp. Weighs Next Steps
July 17th, 2011 | 
Author: http://online.wsj.com/article/SB10001424052702303678704576442253328212070.html
JULY 13, 2011
Rupert Murdoch and his tight-knit group of advisers at News Corp. have put a variety of strategic options on the table as they attempt to stem the fallout from a scandal and map out a future for their businesses, according to people familiar with the situation.
One idea contemplated in recent weeks is an option Mr. Murdoch has long shot down: selling his other British newspapers. News Corp. has informally explored whether there were any potential buyers for its U.K. newspaper unit, News International, according to people familiar with the matter. The unit, which includes the Sun, the Times of London, the Sunday Times and—until this week’s closing—News of the World, was once one of Mr. Murdoch’s flagship divisions and one of his favorites.
Given the poor economics of the newspaper business, there didn’t appear to be any buyers, according to these people. It is possible that News Corp. could revisit the idea of selling or spinning off News International in the next six months, one of the people familiar with the matter said.
The idea of shedding News International shows just how swiftly times are changing for News Corp. As U.K. police investigate allegations of phone-hacking and police payments at the now-shuttered News of the World, News Corp. has been looking to calm jittery investors and appease its critics.
A range of deals related to assets of all sizes are on the table, making the company prone to a reshaping, the people familiar with the matter said.
A spokeswoman for News Corp., which also owns The Wall Street Journal, declined to comment.
In addition to the sudden closing of News of the World on Sunday, the scandal already has forced the company into a series of smaller decisions that could have larger implications in the years to come.
Earlier this week, the company took steps to delay its proposed deal to acquire the 60.9% of British Sky Broadcasting Group PLC it doesn’t own. The company withdrew prior concessions it made to get the pay-TV takeover deal approved, thus triggering a review by the Competition Commission. Now, there’s more time for the political atmosphere to cool off. But the U.K. government is backing the opposition party’s call for News Corp. to drop its takeover offer.
While the deal is an important strategic move for the company to double-down in television distribution, if it fell apart it wouldn’t necessarily have a big effect on News Corp., according to one person close to News Corp., who noted that the company already controls BSkyB and was pursuing the remainder because it felt the deal was the best current use for its cash.
Tuesday, the company threw shareholders a bone, announcing plans for a $5 billion stock buyback, increased from the $1.8 billion remaining in its current stock-repurchase program. News Corp. shares, which fell 7.6% on Monday, traded higher for some of Tuesday but finished down 13 cents to $15.35 in Nasdaq Stock Market trading.
News Corp. has been going through some sweeping transitions. In March, Mr. Murdoch promoted his 38-year-old son, James Murdoch, who had been head of European and Asian businesses, to deputy chief operating officer to give him a greater role in the company’s U.S. operations. The previous month, News Corp. agreed to acquire Shine Group, the TV-production company run by Mr. Murdoch’s daughter, Elisabeth, bringing her into the News Corp. fold. The company also has been pursuing a smattering of small deals, such as its recent sale of the Myspace social network.
News Corp., which had revenue of $32.8 billion for the fiscal year ended June 2010, has contemplated selling or spinning off News International or spinning off all of its papers periodically for years, according to people familiar with the matter. It has also considered various other permutations, such as spinning off its satellite-TV operations.
But Rupert Murdoch’s love of newspapers suppressed any newspaper deal. “It was basically one of those things where it was talked about for maybe two to five minutes and Rupert would say, ‘No way,’ ” another person familiar with the company said, referring to the newspapers.
James Murdoch is among those who have been frustrated by the U.K. papers and has been itching to sell U.K. assets and bulk up more internationally, according to a person familiar with the matter.
The feeling among some executives is, “If the U.K. government is going to be this vindictive, maybe we should just sell out altogether and let them see how these [newspapers] do without [us],” one person familiar with the matter said, referring to politicians’ efforts to dig into reporting tactics.
There could be a business case for doing so, as well. Before the decision to close News of the World, News International already was planning a host of cuts to deal with the industry-wide decline in print advertising. It is unclear how News of the World’s closure has affected the cost-cutting plan.
The next few weeks could require more decision-making as investigations continue. Politicians and the public expect to hear more from key players soon. Rupert Murdoch, James Murdoch and Rebekah Brooks, chief executive of News International, were asked to appear before a parliamentary committee as early as next week.
JULY 13, 2011
Rupert Murdoch and his tight-knit group of advisers at News Corp. have put a variety of strategic options on the table as they attempt to stem the fallout from a scandal and map out a future for their businesses, according to people familiar with the situation.
Britain’s Parliament asked News Corp. Chairman Rupert Murdoch, his son James, and News International CEO Rebekah Brooks to appear for questioning. Bruce Orwall has details on that and why the U.K. government is urging News Corp. to drop its BSkyB bid.
Rupert Murdoch, chairman and CEO: Could be forced to separate himself from or shed News International, once a jewel of his media empire, as he contemplates the future shape of the company
Given the poor economics of the newspaper business, there didn’t appear to be any buyers, according to these people. It is possible that News Corp. could revisit the idea of selling or spinning off News International in the next six months, one of the people familiar with the matter said.
The idea of shedding News International shows just how swiftly times are changing for News Corp. As U.K. police investigate allegations of phone-hacking and police payments at the now-shuttered News of the World, News Corp. has been looking to calm jittery investors and appease its critics.
A range of deals related to assets of all sizes are on the table, making the company prone to a reshaping, the people familiar with the matter said.
A spokeswoman for News Corp., which also owns The Wall Street Journal, declined to comment.
In addition to the sudden closing of News of the World on Sunday, the scandal already has forced the company into a series of smaller decisions that could have larger implications in the years to come.
Earlier this week, the company took steps to delay its proposed deal to acquire the 60.9% of British Sky Broadcasting Group PLC it doesn’t own. The company withdrew prior concessions it made to get the pay-TV takeover deal approved, thus triggering a review by the Competition Commission. Now, there’s more time for the political atmosphere to cool off. But the U.K. government is backing the opposition party’s call for News Corp. to drop its takeover offer.
While the deal is an important strategic move for the company to double-down in television distribution, if it fell apart it wouldn’t necessarily have a big effect on News Corp., according to one person close to News Corp., who noted that the company already controls BSkyB and was pursuing the remainder because it felt the deal was the best current use for its cash.
Tuesday, the company threw shareholders a bone, announcing plans for a $5 billion stock buyback, increased from the $1.8 billion remaining in its current stock-repurchase program. News Corp. shares, which fell 7.6% on Monday, traded higher for some of Tuesday but finished down 13 cents to $15.35 in Nasdaq Stock Market trading.
News Corp. has been going through some sweeping transitions. In March, Mr. Murdoch promoted his 38-year-old son, James Murdoch, who had been head of European and Asian businesses, to deputy chief operating officer to give him a greater role in the company’s U.S. operations. The previous month, News Corp. agreed to acquire Shine Group, the TV-production company run by Mr. Murdoch’s daughter, Elisabeth, bringing her into the News Corp. fold. The company also has been pursuing a smattering of small deals, such as its recent sale of the Myspace social network.
News Corp., which had revenue of $32.8 billion for the fiscal year ended June 2010, has contemplated selling or spinning off News International or spinning off all of its papers periodically for years, according to people familiar with the matter. It has also considered various other permutations, such as spinning off its satellite-TV operations.
But Rupert Murdoch’s love of newspapers suppressed any newspaper deal. “It was basically one of those things where it was talked about for maybe two to five minutes and Rupert would say, ‘No way,’ ” another person familiar with the company said, referring to the newspapers.
James Murdoch is among those who have been frustrated by the U.K. papers and has been itching to sell U.K. assets and bulk up more internationally, according to a person familiar with the matter.
The feeling among some executives is, “If the U.K. government is going to be this vindictive, maybe we should just sell out altogether and let them see how these [newspapers] do without [us],” one person familiar with the matter said, referring to politicians’ efforts to dig into reporting tactics.
There could be a business case for doing so, as well. Before the decision to close News of the World, News International already was planning a host of cuts to deal with the industry-wide decline in print advertising. It is unclear how News of the World’s closure has affected the cost-cutting plan.
The next few weeks could require more decision-making as investigations continue. Politicians and the public expect to hear more from key players soon. Rupert Murdoch, James Murdoch and Rebekah Brooks, chief executive of News International, were asked to appear before a parliamentary committee as early as next week.
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