AUSTRALIAN investors have dumped News Corporation stock after new revelations of phone hacking and payments to police for information at one of the global media giants UK newspapers.
The unfolding saga surrounding News Corp’s News of the World newspaper are the subject of criminal and parliamentary investigations, an advertiser boycott and have prompted a more than three per cent drop in the company’s share price.
On the Australian stock market, News Corp backpedalled 3.61 per cent, or 62 cents, to $16.55 and finished the day as the S&P/ASX50’s worst-performing stock.
News Corp non-voting scrip slipped 3.95 per cent, or 66 cents, to $16.07.
Chairman and chief executive Rupert Murdoch says the company is “committed to addressing these issues fully”.
“Recent allegations of phone hacking and making payments to police with respect to the News of the World are deplorable and unacceptable,” Mr Murdoch said in a statement.
“I have made clear that our company must fully and proactively cooperate with the police in all investigations.”
The falls on the local market mirrored the stock’s slide on Wall Street on Wednesday, when the NASDAQ-listed News Corp dropped 60 US cents, or 3.24 per cent, to $US17.94.
News Corp A class shares slid 3.64 per cent, or 66 US cents, to $US17.47.
Fat Prophets senior analyst Greg Fraser said the market move was an overreaction, given newspapers made only a small contribution to News Corp’s earnings compared with its television properties.
But it was no surprise given Mr Murdoch was involved.
“There’s no doubt that simply due to the profile that Murdoch has, any headline associated with him or his companies will potentially produce an outsized reaction,” Mr Fraser said .
Fresh reports from the UK said News of the World hired a private investigator to hack into the voicemail of a missing schoolgirl in 2002.
Moreover, phone numbers of British soldiers were found in the possession of private investigators used by the newspaper.
It has also emerged relatives of people killed in the July 7, 2005 terrorist attacks on London’s transit system also had phones hacked by News of the World journalists or private investigators hired by the paper.
The scandal has caught the attention of the UK’s communications regulator Ofcom, potentially putting at risk News Corp’s bid to take full ownership of British Sky Broadcasting, up from its current 39 per cent stake.
OfCom said it had a duty to be satisfied “on an ongoing basis that the holder of a broadcasting licence is fit and proper”.
Fat Prophets’ Mr Fraser said the proposed transaction was set to get the regulator’s okay, amid protests from some interest groups, but the latest scandal raised speculation the path to approval may not be so smooth.
“Certainly the British parliament is linking the two and making a lot of noise about it,” Mr Fraser said.
Some advertisers have decided to pull ads from News of the World.
The Halifax bank, Virgin Holidays, The Co-operative Group, Vauxhall and Mitsubishi cancelled advertising deals at the newspaper in response to the scandal, the UK’s Press Association news agency reported.