Murdoch says he's staying
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China Daily via Agencies, July 20, 2011
Rupert Murdoch said he was the best person to clean up News Corp. Investors agreed.
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A man (L) tries to attack News Corp Chief Executive and Chairman Rupert Murdoch with a white substance during a parliamentary committee hearing on phone hacking at Portcullis House in London July 19, 2011. [Photo/Chinanews.com] |
The company's stock had its best day since the phone-hacking scandal broke, rising more than 5 percent Tuesday while Murdoch and his son and deputy, James, testified before a committee of the British Parliament in London.
The gains restored about $2.2 billion of the $8.3 billion in market value the company had lost during the furor.
Murdoch, 80, said he was ashamed at revelations that the News of the World, a News Corp. tabloid, had broken into the voicemail of a murdered schoolgirl, potentially interfering with investigators and giving false hope to her family that she was alive.
But Murdoch declined to take personal blame in a crisis that has extended to the top levels of the British police and to the prime minister. Asked whether he was considering resigning as head of News Corp., he said: "No."
"I feel that people I trusted, I'm not saying who, I don't know at what level, have let me down," Murdoch said. "And I think they behaved disgracefully, betrayed the company and me, and it's for them to pay. I think that frankly, I'm the best person to clean this up."
News Corp. stock was up all day, with some cable channels in the United States showing its price changing, cent by cent, while Murdoch spoke in London. The stock rose steadily throughout his testimony and closed at $15.79, up 82 cents.
"It became more certain from comments from Rupert that he intends to stay in place. That certainty is something that markets like," said Laura Martin, an analyst for Needham & Co., an investment banking and asset-management firm.
She gave Murdoch "an A" and James Murdoch, 38, his son and heir apparent, an "an A-plus" for showing a good grasp of facts, appearing contrite and describing how they reacted appropriately when they learned of wrongdoing.
Martin said the succession plan that markets believed was in place, with James assuming the top job in a few years and Chief Operating Officer Chase Carey staying in his role, was now believed to be unchanged.
Late Monday, Thomas Perkins, a News Corp. board member, said top management had the board's full support. He denied a report that it was considering an immediate change.
News Corp. owns media properties around the world, including Fox television, the 20th Century Fox movie studio, The Wall Street Journal and the New York Post. It closed the News of the World earlier this month.
The company employs 52,000 people around the world. Its stock is still down about 13 percent since the scandal broke, a loss of about $6.1 billion in market value.
At the hearing, British lawmakers pushed for details about the Murdochs' ties to Prime Minister David Cameron and other members of the British political establishment. They questioned London police about reports that officers took bribes from Murdoch's journalists.
David Joyce, an analyst with trading firm Miller Tabak & Co., said the father-son pair did a good job distancing themselves from wrongdoing by saying they run a decentralized company and trust their employees.
"I think the stock is up as their apologies point to a desire to salvage the company as-is, and that significant asset sales are not likely," Joyce said.
Rupert Murdoch also said he had seen no evidence that victims of the September 11, 2001, terrorist attacks had been victims of hacking by his journalists.
"Rupert came across very direct, very clear that this doesn't touch U.S. soil," said Jeffrey Logsdon, an analyst for BMO Capital Markets. "So if the scorched earth is going to remain unfortunately somewhere else, that's a relief."
Some investors may have bought News Corp. stock because it seems cheap, said Morningstar analyst Michael Corty.
"In the long run, the fundamentals in the business aren't changed by all these headlines and the scandal," Corty said. "We think it's undervalued, but it's not a screaming buy."
News Corp. made $2.5 billion on $32.8 billion in revenue in its last fiscal year, putting it in the same league as Time Warner and Disney among the world's largest media companies. Analysts have valued the company primarily on its money-making TV and movie businesses and have considered newspapers a drag on profits despite Murdoch's attachment to them.
More than two hours into the hearing, a spectator wearing a plaid shirt walked up to the table where the two Murdochs sat and appeared to hit the elder Murdoch squarely in the face with a paper plate full of shaving cream.
Murdoch's wife, Wendi Deng, who was sitting behind Murdoch and had touched his elbow occasionally to stop him thumping the desk, lashed out, slapping the man in the face before falling down.
Police quickly took the man away. As he left the room, Deng picked up the plate and hurled it at the man. The panel took a 10-minute recess. When it resumed, the elder Murdoch was without his suit jacket but apparently cleaned up. That's when he was asked if he was considering resigning over the affair.
News Corp. stock edged up about a percentage point after the incident. Thomas Eagan, an analyst at Collins Stewart, said the attack may have caused investor sentiment to shift "from animosity toward sympathy."
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