 |
| News Corp. headquarters in New York. |
News Corp. (NWSA), trying to rebuild investor confidence after a phone-hacking scandal, may raise its quarterly dividend by 20 percent when the company reports earnings tomorrow.
The payout probably will rise to 9 cents a share from 7.5 cents, according to projections. News Corp. (NWS) may instead hasten share purchases under a $5 billion buyback, said Brett Harriss, an analyst at Gabelli & Co., which owns voting and nonvoting stock of the New York-based company. News Corp.’s board meets today and earnings are set for tomorrow after markets close.
The dividend and buyback may mollify stock investors stung by a 25 percent drop since July 4, when a story by the U.K. Guardian newspaper led to revelations of widespread phone- hacking by the company’s News of the World tabloid. Chairman Rupert Murdoch, 80, will be on an investor conference call after the profit report, said a person with knowledge of the situation who wasn’t authorized to talk publicly.
“I think most investors want to see an aggressive repurchase,” said Harriss, who has a “hold” rating on the stock. “They would highlight that there’s a $5 billion authorization and say they intend to repurchase aggressively.”
First Gathering
Today’s board meeting at the Twentieth Century Fox studio in Los Angeles marks the first formal gathering of company’s 16 directors since the U.K. phone-hacking scandal broke. The public relations firm Sard Verbinnen & Co., hired to help News Corp. respond to the crisis, has surveyed the largest shareholders to gauge investor opinion ahead of the earnings conference call.
News Corp. fell $1.05, or 7.2 percent, to $13.62 yesterday in Nasdaq Stock Market trading on a day when the S&P 500 index declined 6.7 percent for the biggest drop since December 2008. The stock slipped 1.4 percent to A$13.76 at the close of trading in Sydney today.
Bloomberg LP, the parent of Bloomberg News, competes with News Corp. units in providing financial news and information.
Teri Everett, a spokeswoman for News Corp., owner of the Wall Street Journal and Fox TV networks, didn’t respond to requests for comment.
In the wake of the scandal, News Corp. formed a Management and Standards Committee to assist in the official U.K. investigation and to examine the company’s practices.
Earnings Call
The panel reports to Joel Klein, a company executive vice president and director. Klein, in turn, reports to Viet Dinh, the independent director who heads the Nominating and Corporate Governance Committee. Both will update the full board, News Corp. said on July 18.
The dividend projections are based on seven criteria, including a company’s guidance, dividend history, regression- analysis and put-call parity. News Corp. last raised its quarterly payout in February 2010 by 25 percent, to the current rate from 6 cents.
Murdoch’s participation on the call will be his first in a year, according to transcripts of past earnings conferences. He was reported to be traveling and unavailable in November 2010 and didn’t participate on calls in February and May this year.
The News Corp. chairman did take part in a February press conference announcing the company’s “The Daily” news product for Apple Inc.’s iPad tablet computer.
David Joyce, a Miller Tabak & Co. analyst in New York, said a small dividend increase is possible. Analysts will be most interested in the outlook for the company and economy after the phone-hacking scandal forced News Corp. to abandon its 7.8- billion-pound ($12.7 billion) offer for the 61 percent of British Sky Broadcasting Plc that it doesn’t own.
Apologies
“We were looking for BSkyB to be part of the company, because it was going to add a lot to cash flow, but that isn’t going to happen now,” said Joyce, who recommends investors buy News Corp. shares.
Murdoch may also apologize again for the phone-hacking scandal, Joyce said. The revelations led to the closing of the 168-year-old British tabloid newspaper, the resignations of two executives and the arrests of at least 11 people.
Last month, James Murdoch, 38, the company’s deputy chief operating officer and son of Rupert, apologized for the newspaper’s phone hacking in testimony before the U.K. Parliament’s Culture, Media and Sports Committee in London.
Rupert Murdoch, also the company’s chief executive officer, apologized to the family of murdered U.K. teen Milly Dowler. The Guardian’s July 4 report that the News of the World hacked her telephone and deleted voicemails after the 2002 killing sparked the scandal.
Share Buyback
“Someone might still ask if there has been any advertiser concern about the issue spilling into other assets, like in the U.S., where the FBI is looking into reported claims of 9/11 victims’ hacking,” Joyce said of tomorrow’s earnings call.
News Corp. almost tripled its existing share repurchase authorization to $5 billion on July 12, a week after the phone- hacking scandal exploded. The plan was to buy those shares over the coming 12 months, according to the company announcement at the time.
The company probably finished the June quarter, the last of its fiscal year, with $12.3 billion in cash and short-term investments, according to Harriss. News Corp. closed the March quarter with $11.8 billion and $15.5 billion of long-term debt, according to company reports.
No comments:
Post a Comment