- Senior executive Les Hinton jets into London to join Murdochs
- U.S. Senator Jay Rockefeller calls for probe into whether American citizens have been hacked by Mordoch's companies
- News Corp has had £4.3bn wiped off its value in a week
- Speculation mounts that Murdoch will relinquish control of the company
- City sources say James Murdoch will not take the top job
By Daily Mail Reporter
Last updated at 8:48 AM on 13th July 2011
Senior News Corp executive Les Hinton jetted into London yesterday as the scandal rages. Here he is pictured leaving his apartment in Mayfair
Rupert Murdoch is preparing to spend a staggering £3billion in a desperate bid to prop up his scandal-hit media empire.
He will use the cash to buy back hundreds of millions of News Corporation shares, which have fallen sharply in value amid the escalating crisis at his British newspaper division.
More than £4.3billion has been wiped off the value of News Corp since last week due to fears that fallout from the phone-hacking investigation at News International will infect other parts of Mr Murdoch's business.
Les Hinton, the chief executive of Dow Jones and one of Mr Murdoch's most trusted aides jetted into London yesterday as the phone hacking fallout continues.
He was at the tycoon's Mayfair home yesterday along with Elisabeth Murdoch and Rebekah Brooks.
As the pressure was piled on News Corp, U.S. Senator John Rockefeller suggested phone hacking could have extended to 9/11 victims amid signs that the scandal could sp read across the Atlantic.
He said the closure of the News of the World raised 'serious questions' about whether the newspaper's parent company had broken U.S. law.
'I am concerned that the admitted phone hacking in London by the News Corp may have extended to 9/11 victims or other Americans,' he said. 'If they did, the consequences will be severe.'
However, the Senator did not provide any evidence to back up claims that the hacking scandal may have spread to the U.S.
News Corp is based in New York, and owns the Wall Street Journal, New York Post, and Fox Broadcasting.
Yesterday news of the £3billion share buy-back provided a temporary prop for the sagging News Corp share price, which rose for the first time in five days.
But the ploy is unlikely to placate shareholders, who have become increasingly alarmed at Mr Murdoch's lax stewardship of the company, in the longer term.
Ministers are also understood to be desperate to find a way to block his bid while trying not to offend the powerful tycoon, who was pictured with his personal trainer in a London park yesterday morning.
His business has also been hit by a class action lawsuit by News Corps shareholders over claims bosses failed to properly investigate phone hacking taking place at the News of the World, which was shut down on Sunday.
Rupert Murdoch, left, and Elisabeth Murdoch, right, leave a restaurant in Notting Hill last night on the day the media mogul was ordered to appear before a powerful committee of MPs
Senator Jay Rockefeller said he was 'concerned' that phone-hacking may have extended to 9/11 victims or other Americans
However, Culture Secretary Jeremy Hunt's move to delay the Sky bid on Monday afternoon could potentially salvage the deal, which had looked on the brink of collapse in the morning, according to City analysts.
Speculation is mounting that the tycoon may have to relinquish day-to-day control of the company in a bid to draw a line under the crisis – and his son James, who runs all of News Corp's businesses outside the US, could also come under pressure to stand down as chairman of satellite giant BSkyB.
The past week has severely damaged News Corp's bid to gain full control of Sky, and may see the media giant forced to sell off part of its stake in the satellite firm.
If it fails Ofcom's 'fit and proper' test, the media regulator could order News Corp to reduce its slice from 39 per cent to 29 per cent.
City sources said James Murdoch's handling of the crisis has all but shattered his hopes of succeeding his father.
Analysts also said it frees Mr Hunt from a politically explosive conundrum.
If he had blocked the deal, or called in the Competition Commission himself, he could have faced a legal challenge from News Corp.
But if he had waved the takeover through, he risked triggering a wave of public fury.
The investigation will take at least six months.
Senior Lib Dem MP Don Foster, the party's former culture spokesman, described the move as a 'ruse' designed to buy 'breathing space'.
He added: 'This is the best Murdoch can do to keep the possibility of the merger on the table.
'By dropping the News of the World, he can say his involvement in news and current affairs in Britain has actually diminished and argue that the issue of media plurality has disappeared.
'There is nothing to prevent Ofcom, however, from investigating whether or not the Murdoch empire is fit and proper to own even the 39 per cent of BSkyB it already owns.'
Mark Kelly, at stockbroker Olivetree Securities, said: 'News Corp is smoothing the way for the Government here – keeping friends in power by making the decision for them.'
Jeremy Hunt, right, was left with no choice to refer the case to the Competition Commission following the decision, and ends Ed Miliband's threat to call for a vote of confidence if the Government did not call time on the takeover
Louise Cooper, of City broking firm BGC Partners, said Murdoch had given Hunt 'some wriggle room' and avoided a 'potentially damaging' confidence vote in the House of Commons tomorrow.
Labour leader Ed Miliband had threatened to force a vote if the Government did not call time on the proposed takeover.
Preventing a parliamentary debate where fresh attacks could have been levelled against his papers was a 'smart move by an operator who is rapidly taking back control of the situation', she added.
However, the chances of News Corp buying the 61 per cent of Sky it does not already own have tumbled with each new startling revelation.
Sky shares plunged 5 per cent yesterday and a staggering £2.4billion has been wiped off the value of the satellite giant over the past week.
Alex DeGroote, at stockbroker Panmure Gordon, said the likelihood of the deal going ahead had reduced. Enlarge 
D'oh! Shares in the satellite giant, which screens The Simpsons on Sky One, plunged 5pc yesterday
He said: 'On Friday we cut our probability of the deal going ahead to 50:50 from 90:10 in favour. This seems very optimistic now. Our new assessment is 10:90 in favour. In other words, we believe the deal is all but dead.'
He also raised the possibility of a forced divestiture – sale, liquidation or spin off – of News Corp's 39 per cent shareholding in BSkyB.
He added: 'If the "fit and proper" test is applied rigidly by Ofcom and events elsewhere worsen, it could become a factor.'
It is now alleged that as many as 4,000 people had their phones hacked by private investigators working for the News Of The World.
Speculation grew today that the red top would be replaced by The Sun On Sunday after the domain name was transferred to News International from the company who bought it last week.
In a further development this afternoon MPs will vote on a Labour motion urging News Corporation boss Rupert Murdoch to withdraw his bid to take over the whole of BSkyB.
Tomorrow's motion tabled by Labour leader Ed Miliband, who today met the family of murdered schoolgirl Milly Dowler, states that 'this House believes that it is in the public interest for Rupert Murdoch and News Corporation to withdraw their bid for BSkyB'.
News International also said today it would co-operate after Rebekah Brooks, Rupert Murdoch and his son James were asked to appear before a committee of MPs.
The Culture, Media and Sport (CMS) Committee asked the trio to give evidence about the phone hacking and police payments scandals at a hearing next week.
A spokeswoman for News International, publisher of the News of the World, the Sun, the Times and the Sunday Times, could not confirm whether all three would attend the hearing.
But the company said in a statement: 'We have been made aware of the request from the CMS committee to interview senior executives and will co-operate. We await the formal invitation.
BSKYB INVESTORS CONFRONT FALLOUT FROM DEAL DELAY
Copies of the final edition of the News of the World
BSkyB shares have taken a further 3.3 per cent hit today as investors face up to the diminishing likelihood of its buyout by crisis-stricken News Corp. Rupert Murdoch's News Corp effectively triggered the referral of the deal to the Competition Commission yesterday by withdrawing its undertaking to spin off Sky News.
Culture Secretary Jeremy Hunt swiftly handed it over to the watchdog, which will take at least six months to make a decision on 'media plurality' grounds. But Ofcom could still weigh in on the issue too as it is responsible for deciding whether the bosses of News Corp are 'fit and proper' to run a broadcaster.
Political pressure is mounting on the deal, with Labour calling a vote in the House of Commons tomorrow urging Mr Murdoch to withdraw the bid - a motion the Tories and Liberal Democrats have said they will support.
And Mr Murdoch, his son James and News International boss Rebekah Brooks have been asked to appear before the Culture, Media and Sport (CMS) Committee next week to give evidence about the hacking and police bribery accusations. Shares in BSkyB closed down 23.5p at 692p today, on top of a 5 per cent drop yesterday.
But News Corp shares are trading up 1% at $15.67 on the Nasdaq in New York this afternoon after it launched a $5billion share buyback in an effort to stabilise the value of the company.
The embattled media giant has been hit with a class action lawsuit by shareholders over claims bosses failed to properly investigate phone hacking at the killed-off News of the World (above).
Speculation is now growing that Mr Murdoch may sell his three remaining UK national newspapers after fresh allegations emerged about News International activities involving the private information of ex-Prime Minister Gordon Brown and the Royal family.
City commentators are doubtful that News Corp will be permitted to buy the 61 per cent of BSkyB it doesn't already own following the furore, and have reassessed their positions on the UK pay-TV company.
Credit Suisse slashed its target price from 850p to 650p, predicting BSkyB would move to trading on standalone fundamentals.
'We now believe there is only a 10 per cent chance News Corp's attempt to take full control of Sky will eventually be successful,' it said.
'As well as a potentially significant delay for a Competition Commission review, we believe Ofcom has the power to use its "fit and proper" test to erect an insurmountable barrier to the deal; and that the worst case scenario is News Corp is asked to divest part of its existing 39 per cent stake.'
The bank noted that Sky had just decided to freeze its TV packages in the next financial year, which suggested it anticipated tougher trading conditions in the coming year as UK household budgets come under continued pressure.
Royal Bank of Scotland said it believed News Corp had engineered a delay by getting the BSkyB deal referred to the Competition Commission 'presumably so that opinion cools, and perhaps with a mind to exploring an exit of UK newspapers to focus on BSkyB'.
'NewsCorp's move keeps the approval process alive, but only just,' it said, but in the meantime investors focusing on the fundamentals at BSkyB would find it in robust shape.
'We forecast 8 per cent revenue growth in 2011/12 despite the (one-year) freeze in subscription prices from September 2011 as the rising penetration of HD, broadband and talk continues to drive average revenue per user (albeit at a slower pace than in 2010/11) and as the subscriber base continues to grow (we forecast it reaching 10.5million by June 2012).'
RBS also floated the idea of a BSkyB special dividend of £2 a share, saying: 'If plan A was the NewsCorp deal, plan B may be a capital return.'
Broker Numis Securities took a more optimistic view of the prospects for the BSKyB deal still going ahead.
'We expect a lengthy regulatory process lasting into 2012, however we believe that, on the basis of media plurality, it will be cleared and remain of the view that a price of 800p-850p is likely,' it said.
'Although we believe the deal will complete, we recognise that the situation with respect to News International and (perhaps more importantly) political expediency remains fluid.'
Numis cut its target price for BSkyB from 825p to 800p and said it viewed 700p as 'a very attractive entry point for the business on fundamentals'.
Struggling: Rupert Murdoch with his personal trainer, left, and bodyguard in Kensington Gardens in London today
CofE WARNED SALE OF £3.76M SHARES FROM 'REBEKAH WOTSIT'S' ORGANISATION 'PREMATURE'
The head of the Church of England's £5.3billion investment fund today warned against a 'premature' sale of shares in News Corp and BSkyB in the face of the phone hacking scandal.
Andreas Whittam Smith (pictured), First Church Estates Commissioner, said it was possible that Rupert Murdoch could sell his British newspapers in the future.
'I feel that a premature sale of News Corp and BSkyB might just be simply very bad timing,' he told members of the Church of England's national assembly meeting in York.
'I don't argue with anything that anybody is saying about them but I think it must be possible that News Corp will get rid of its entire British holdings, of newspapers that is, and that if it is to do so, first of all the problem would have vanished if you like from the point of view of the parent company and for us as investors, and the shares will certainly bounce up again, and so it is a ticklish area.'
Mr Whittam Smith's remarks came after the Church of England's Ethical Investment Advisory Group (EIAG) warned it could pull £3.76million in shares out of News Corp if it fails to hold senior executives to account over the phone hacking scandal.
The EIAG said it had written to News Corp describing the behaviour of the News of the World as 'utterly reprehensible and unethical'.
The Church of England holds a further £5.3million in shares in BSkyB, which is currently the subject of a take-over bid by News Corp.
Mr Whittam Smith, a former Daily Telegraph City editor and founding editor of the Independent newspaper, said he wished the EIAG 'best of luck' in talking to News Corp about their response to the phone-hacking scandal. 'I do wish them the best of luck in talking to Rupert Murdoch and James Murdoch and Rebekah wotsit, it won't be easy, and I do not volunteer to be part of the team,' he told the General Synod.
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People: Mark Kelly, Milly Dowler, Rupert Murdoch, Jeremy Hunt, Rebekah Brooks, James Murdoch, Ed Miliband, Gordon Brown Places: York, London, New York, United Kingdom Organisations: House of Commons, Anglican Church
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Its all shouts of hang them and stop bskyb,all parties come together to defend the national intrest well how brave and noble of them,pity there not so brave and noble by giving what people really want and what was promised.no votes of no confidence in a government which has failed to give what it was elected for.Were is the eu referendum,wheres the bill of rights, no so far all talk and retreat yet not a word from any parties.this all goes to show with how much comtempt these MPs hold the people.,all they want to do is protect themselves for being caught out time and time again.
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He´s the worlds greatest survivor, watch him come out of this looking so good.
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BSkyB - I bet Vince Cable is chuckling to himself. Right on the money, Vince!
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If there is any justice left in the world, his whole, corrupt Empire should vanish without trace ! Will we have the guts to really open this vile can of worms ? Or are there too many of our own big-wigs involved ?
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Ministers are also understood to be desperate to find a way to block his bid while trying not to offend the powerful tycoon................ Murdoch has offended thousands of people - just block his bid - end of, and think of the people in this country who all you ministers represent for a change
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I just heard a politician on TV saying that the public were upset about the phone hacking so the bid for BskyB must be withdrawn. What a load of bull, the public doesn't care a damn about it, the media care, they can take a poke at the man they fear, the politicians care, they are in the hacking firing line and may have said something the regret, but the public don't realy care, it pays no bills and puts no food on the table. So drop the rubbish for more concentration on the cost to the public of the energy generation in the future. That is going to cost all the people money and cutting down only goes so far.
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