According to the Associated Press, Rupert Murdoch, CEO of News Corp. (NWSA) shelled out approximately $20.2 million to acquire 1.2 million shares of his own company.
Murdoch’s buyback was of non voting shares with an average cost of $16.81 per share and reflects his confidence on the well-defined future prospects of the company.
Previously, Financial Times reported that News Corp. is on the verge of buying the Shine group, founded by his daughter, Elisabeth Murdoch, in 2001.
Shine engaged JPMorgan to advice about the strategic alternatives and expansion opportunities of the company in the coming years.
The buyout of Shine Group would take Ms. Murdoch back into her father’s media territory, and is likely to place her as a promising heir to the 79 year old, Rupert Murdoch. Earlier, Elisabeth refused to be a board member in her father’s company as it would have clashed with her ownership of Shine.
The acquisition will bring in certain drawbacks for Shine. The company would lose its sovereign standing and in turn, would lose the chance of offering ideas to BBC and other media houses, which are all by regulations, required to give external producers an opportunity to participate with native studios.
The production company of Elisabeth creates many well-liked television shows and drives production groups in numerous countries. Elisabeth Murdoch possess more than 50% stake in Shine, with Sony Corporation (SNE) holding around 20%, British Sky Broadcasting about 13%, while the remaining amount is owned by management.
A week before, News Corp posted better-than-expected second-quarter 2011 results on the heels of improved advertising performance at its Cable Networks and Television Stations.
The second quarter results highlight the increasing worldwide channel business on the back of widening subscriber base, rise in affiliate fees and improved advertising market place. The U.S.broadcasting business, which includes local TV stations and the Fox Broadcasting Company, also continues to recover its lost sheen.
News Corporation’s quarterly earnings of 29 cents a share came a penny ahead of the Zacks Consensus Estimate, and rose 16% from 25 cents in the year-ago quarter.
News Corporation’s total revenue rose marginally by 0.9% year over year to $8,761 million driven by strength across Cable Network Programming (up 12.4%), Television (up 9.7%), and Publishing (up 0.8%), offset by Filmed Entertainment (down 4.7%) and Direct Broadcast Satellite Television (down 6.3%). The Other segment’s revenue tumbled 28.6%. Total revenue came ahead of the Zacks Consensus Estimate of $8,743 million.
Total segment operating income, excluding one-time items, jumped 6.2% to $1,287 million during the quarter.
Currently, we have a long-term “Neutral” recommendation on the stock. Moreover, the News Corp holds a Zacks #3 Rank, which translates into a short-term ‘Hold’ rating.
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