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Investors suffer as Murdoch's scandals continue

An Australian Securities Exchange (ASX) board shows the Rupert Murdoch owned News Corp. listing in Melbourne on July 15, 2011.

Kai Ryssdal: Here's one I wish I could claim credit for, but sadly can't. The whole scandal with Rupert Murdoch's media empire and his British papers: "Murdoch-alypse." Pretty good, right?

Shares of Murdoch's News Corp. continued their continued downward price spiral today. It's off more than 16 percent in the past couple of weeks. More than $6 billion in shareholder value gone -- just like that.

There's all kinds of speculation that Murdoch's control of the company could even be threatened. Still, and with the caveat that it all depends, a lot of analysts are expecting News Corp. to emerge shaken, but mainly intact. Here's our senior business correspondent Bob Moon.


Bob Moon: So why the rush to unload News Corp. stock at the same time many analysts have maintained a recommendation to buy? At High Pointe Capital Management, investment advisor Gautam Dhingra believes there's little threat to News Corp.'s biggest U.S. operations, including its "crown jewel" TV and cable properties.

Gautam Dhingra: Personally speaking, I think the assets are worth a lot. I would say the reputation of Fox News at this point is undamaged.

Dhingra sees this as a buying opportunity for investors -- provided they're satisfied Fox News is clean.

Dhingra: If, however, the shareholders do not want to take a chance that the U.S. assets might be tainted, then it's time to bail.

But considering the company is on track to generate about $7 billion in operating cash flow in the year ahead, some analysts argue the sell-off has gone too far. James Dix watches News Corp. for Wedbush Securities.

James Dix: Seems to me as though they're probably over-discounting what the likely results are going to be on the downside.

But Dix concedes investors hate uncertainty, and the future at News Corp. is still too cloudy.

Dix: To the extent the outlook for the stock depends on the outcome investigations of conduct at the News of the World, those investigations can take time, and as a result, you could have volatility in the stock price for sometime.

Before you think the news from London doesn't affect you, consider that you might at least indirectly already own a piece of News Corp. Its top institutional shareholders range from Goldman Sachs and other investment banks, to Vanguard, Invesco and other big-name mutual funds.

I'm Bob Moon for Marketplace.

About the author

Bob Moon is Marketplace’s senior business correspondent, based in Los Angeles.

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