7/19/2011 04:32:00 AM
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News Corp.’s other papers tumble in value
STEVE LADURANTAYE
Rupert Murdoch’s empire was built on newsprint, but as a phone-hacking scandal engulfs his multimedia corporation, pressure is growing for the company to give up on the printing press altogether and focus on its hugely profitable cable and television businesses.
The prospect of Mr. Murdoch selling or shutting papers in England and the United States was unthinkable only two weeks ago, but as the News of the World scandal threatens to taint his profitable movie and television holdings, there are signs the media baron might be forced to abandon the print journalism business altogether.
He has already shut down the 168-year-old tabloid at the heart of the scandal, after news broke that its reporters had hacked into the phone of a murdered teenager and erased messages, even as police were investigating her death.
While some of the papers are among the highest-profile holdings in the News Corp. (NWSA-Q14.96-0.68-4.32%) portfolio – The Wall Street Journal, Times of London and New York Post among them – they account for only a fraction of the company’s profits.
Analysts expect the newspaper division to contribute about $500-million (U.S.) to News Corp.’s operating income this year, a small slice of the total $4.9-billion it will generate. The cable news networks, by comparison, are expected account for $2.8-billion.
The papers are practically worthless as long as News Corp. owns them, analysts say, because nobody really knows how deep the scandal will go. There is a danger that advertisers will pull their ads across all of the papers – whether they are implicated directly or not – if there are more embarrassing or criminal revelations. The crisis showed no signs of abating on Monday, as two top officers at Scotland Yard resigned and a former News of the World reporter who blew the whistle on managers at the paper was found dead in his apartment.Read more....
The prospect of Mr. Murdoch selling or shutting papers in England and the United States was unthinkable only two weeks ago, but as the News of the World scandal threatens to taint his profitable movie and television holdings, there are signs the media baron might be forced to abandon the print journalism business altogether.
He has already shut down the 168-year-old tabloid at the heart of the scandal, after news broke that its reporters had hacked into the phone of a murdered teenager and erased messages, even as police were investigating her death.
While some of the papers are among the highest-profile holdings in the News Corp. (NWSA-Q14.96-0.68-4.32%) portfolio – The Wall Street Journal, Times of London and New York Post among them – they account for only a fraction of the company’s profits.
Analysts expect the newspaper division to contribute about $500-million (U.S.) to News Corp.’s operating income this year, a small slice of the total $4.9-billion it will generate. The cable news networks, by comparison, are expected account for $2.8-billion.
The papers are practically worthless as long as News Corp. owns them, analysts say, because nobody really knows how deep the scandal will go. There is a danger that advertisers will pull their ads across all of the papers – whether they are implicated directly or not – if there are more embarrassing or criminal revelations. The crisis showed no signs of abating on Monday, as two top officers at Scotland Yard resigned and a former News of the World reporter who blew the whistle on managers at the paper was found dead in his apartment.Read more....
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