Stock buy-back

RUPERT Murdoch’s News Corporation yesterday unveiled plans to buy back five billion US dollars (€3.6bn) worth of its own shares as the media giant’s proposed bid for BSkyB was put on ice.

The dramatic move will be seen as an attempt to appease investors, as a buy-back scheme boosts the share price, increasing the value of assets held by shareholders.

News Corp shares have fallen in the wake of the phone-hacking scandal at News International — the stock suffered its biggest daily loss since April 2009 yesterday when the BSkyB approach was referred to the Competition Commission by British Culture Secretary Jeremy Hunt.

News Corp is likely to use $3.2bn of the cash set aside for the BSkyB acquisition to increase its buy-back programme from $1.8bn to $5bn as the deal is effectively in limbo.

Mr Murdoch’s company on Monday withdrew its offer to hive off Sky News as a separate company as part of its proposed bid and said it was now ready to engage with the Commission instead.

The move forced the hand of Mr Hunt, who had faced increasing pressure from the opposition to refer the approach to the regulator. NewsCorp now faces a potential wait of up to a year before any deal can be completed.

Elsewhere, Ofcom said it would write to police and other relevant authorities to determine whether the News International hacking allegations affected NewsCorp’s position as a “fit and proper” broadcast licence-holder.

A group of US shareholders, including the Amalgamated Bank of New York, have filed a lawsuit against the company, accusing NewsCorp chief executive James Murdoch of being aware of “illicit news-gathering practices”.

The stock buy-back announcement had the desired effect, with NewsCorp shares up 0.5% on the New York Stock Exchange.

Shares in BSkyB on the FTSE 100 Index continued to come under pressure, falling 2% to 699.9p, as a number of brokers downgraded their targets for the satellite broadcaster’s share price.