News Corp plans to buy back $5 billion in stock over the next 12 months as the media company tries to contain the telephone hacking scandal that has sent its share price down about 14 per cent since last Thursday.
News Corp's shares rose less than 1 per cent to $15.57 in early trading today as Rupert Murdoch's media conglomerate responded to investor pressure to support the stock. Shares earlier rose more than 2 per cent on the news of the buyback.
The company, which is home to the Fox television network, the Wall Street Journal and a clutch of British newspapers at the centre of the phone hacking scandal, said today it would increase the program of about $1.8 billion remaining under the company's current buyback to $5 billion.
That is about 16 per cent of the company's market capitalization.
The program includes class A and class B stock. Investors during the past week suggested that News Corp should buy back shares rather than pursue its $14 billion acquisition of UK satellite operator BSkyB. The phone hacking scandal, which began at the now-defunct News of the World newspaper, has thrown the deal's success into doubt.
Analysts estimate News Corp had around $13 billion of cash on its balance sheet as of June 30 and will use some of that cash for the buyback in lieu of its delayed BSkyB acquisition.
Mr Murdoch is to be called to appear before a British parliamentary committee that scrutinises the media to face questions about allegations of phone-hacking at his newspapers.
