This is turning out to be a catastrophic week for Rupert Murdoch and his News Corporation. First he had to close down the News of the World due to the mushrooming phone hacking scandal, then today the news comes out that News Corp. is a getting billions in tax refunds every year, and on top of all of that News Corp's stock price has been going down the toilet.
News Corp. Announces Stock Buyback as Shares Slip Again
The News Corporation moved on Tuesday to reverse the accelerating drop in its stock price, announcing a program to repurchase $5 billion in shares.
Since last week, when a phone-hacking scandal involving one of the company’s British tabloids was revealed to be far more widespread than previously known, the company’s stock lost about 15 percent of its value. Investors, nervous that the widening controversy would imperil the company’s bid to acquire the parts of British Sky Broadcasting, or BSkyB, that it does not already own, have dumped shares over the last several days.
The announcement of the stock repurchase had only a fleeting positive effect on the News Corporation’s share price. While the price rose early in the day, it closed at $15.35, down almost 1 percent. The News Corporation had $11.8 billion in cash and cash equivalents as of the end of March, money that it had planned to put toward the purchase of BSkyB, a satellite company.
Clearly News Corp's top management is flushing billions of dollars into a futile effort to stem the stock's slide. Lets just hope they lose enough money that they have to kiss their BSkyB deal goodbye.
Sweet Schadenfreude.
In case you missed it earlier.
It pays to be Murdoch. Just ask US gov't: DCJohnston
Over the past four years Murdoch's U.S.-based News Corp. has made money on income taxes. Having earned $10.4 billion in profits, News Corp. would have been expected to pay $3.6 billion at the 35 percent corporate tax rate. Instead, it actually collected $4.8 billion in income tax refunds, all or nearly all from the U.S. government.