An errant cream pie wasn’t the only thing
that News Corp. chairman and CEO Rupert Murdoch
dodged last week.
The 80-year-old media mogul, after a two-hour grilling by
members of the United Kingdom’s Parliament concerning
the phone hacking scandal at its now-closed tabloid News of
the World, also dodged a bullet, as his performance squashed
speculation that he would step down as CEO and helped goose
his company’s sagging stock price.
As his two-hour testimony before the House of Commons’
Culture, Media and Sport Committee neared its end last Tuesday,
Murdoch avoided — with the help of the right hand of his
wife, Wendi Deng — an attempt by an “activist comedian” in
the gallery to pelt him with a makeshift cream pie. The wouldbe
assailant, identified as Jonathan May-Bowles, aka Jonnie
Marbles, was arrested and later released on bail.
News Corp. stock, down almost 15% between June 30 and July
18 as the scandal progressed, got a needed lift last Tuesday after
Murdoch’s appearance. The stock
closed at $16.25 on July 19, up 5.5% (85
cents) from the prior day.
The optimism continued on July 20,
with shares up another 1.1% (17 cents)
While it is still a far cry from regaining
all of its losses, News Corp. appears
to be weathering the storm.
Murdoch’s performance — where
he claimed no knowledge of the phone
hacking at the paper and apologized
profusely — also helped to squash
speculation that he would give up the CEO title to current chief
operating officer Chase Carey to appease critics.
A report last week in Bloomberg News, the day before
the Parliamentary hearing, cited unnamed sources close
to News Corp. that the media giant’s board of directors
was considering forcing Murdoch to give up his CEO title.
During the questioning, Murdoch pointed out that News of
the World represented less than 1% of News Corp.’s business,
something investors apparently took to heart. That and the belief
that the scandal was isolated
to the British tabloid,
and not News Corp.’s morelucrative
helped drive the shares.
Collins Stewart media
analyst Tom Eagan said
the testimony by Murdoch
and his son, James, News
Corp.’s deputy chief operating
officer and chairman
and CEO of the International
unit, didn’t appear to do
the company damage.
“And while the stock is
likely to be more volatile
over the ensuing weeks
and months (with headlines
emanating from various investigations),
we see more upside than
downside,” Eagan wrote in a research
note. He restated a “buy” rating and
$25 price target on the stock.
Moody’s Investors Service also
backed the stock, stating that the
NOTW scandal should not affect
News Corp.’s business or its credit
“It is likely that advertisers will remain
attracted to the company’s stable
cable- and broadcast-network
viewership, that the general public will continue to see the
company’s films and television shows on an uninterrupted
basis, and that the bulk of the company’s businesses will
not be influenced by the negative media headlines about the
company,” Moody’s senior vice president Neil Begley said in
In an interview with the Associated Press last Monday, independent
News Corp. director Thomas Perkins said Murdoch
has the full support of the board.
Murdoch, during the Parliamentary hearing, said he had no
intention of stepping down.
“I am the one to clear this up,” he said at the hearing, referring
to the hacking scandal.
In the United States, sources said no hearings or investigations
into News Corp. activity were planned by the Senate
Commerce Committee, though panel chairman Jay Rockefeller
(D.-W.Va.) said appropriate agencies, including the Justice
Department and Securities & Exchange Commission,
should look into whether News had violated any U.S. laws. In
the House of Representatives, Rep. Anna Eshoo, a California
Democrat, asked the Energy & Commerce Committee to investigate
News Corp., but as of last week, panel chairman Fred
Upton (R.-Mich.) had not acted on the request.
John Eggerton contributed to this story.