A News Corp without newspapers?

Saturday, July 16, 2011

LONDON, England (AFP) — Rupert Murdoch built his vast fortune selling newspapers, expanding a single daily in his native Australia into a media and entertainment empire that spans the globe.

But the phone-hacking scandal in Britain which led to the shock closure of the News of the World is raising the once-unthinkable possibility of a News Corp without newspapers — or at least no British dailies.

Within hours of the announcement that News Corp was abandoning its bid for full control of British satellite TV broadcaster BSkyB, Nomura analyst Michael Nathanson was arguing for a strategic reorientation by the company.

"Perhaps this rebuke will force News Corp to reconsider its ownership of UK newspapers," Nathanson said.

"We hope this is a turning point for the company's strategy and asset allocation as the ownership of highly inconsequential newspaper assets has forced the dropping of a strategically important asset," he said.

Barclays Capital analyst Hale Holden said pulling out of the deal for BSkyB, which owns the rights to English Premier League football, was a negative for News Corp since it would have been a strong source of reoccurring revenue and free cash flow.

The Wall Street Journal reported Wednesday that the spiraling News of the World phone-hacking scandal has already forced News Corp to consider selling off its remaining British newspapers.

Citing unnamed sources, the News Corp-owned Journal said News Corp has explored whether there are any potential buyers for News International, which includes British newspapers the Sun, the Times of London and the Sunday Times.

News Corp's other newspaper holdings are in Australia, where Murdoch began after inheriting The Adelaide News from his father, and in the United States, where News Corp owns the New York Post in addition to the Journal.

The scandal has been confined to Britain so far but it is threatening to spread to the United States, where US senators called on the Justice Department and Securities and Exchange Commission on Wednesday to open an investigation.