First is 49% stake in Yes Network, a new sports network to compete with ESPN
News Corporation is starting to look like its old self again.
The media conglomerate, which had been on its heels for more than a year because of the phone hacking scandal in Britain, is looking to make acquisitions again. First on the list could be a 49% stake in the Yes Network in New York, a purchase that could aid in the formation of a new nationwide sports network to compete with ESPN.
News Corporation?s stock has reached highs as the company prepares to transfer its underperforming publishing assets, including newspapers like The Wall Street Journal and The New York Post, into a separate publicly traded entity.
One of the crucial factors in the decision was that the split would allow Rupert Murdoch, the company?s chairman and chief executive, to buy into the businesses he loves without upsetting investors who are more interested in cable and broadcast. Potential targets include The Los Angeles Times, The Chicago Tribune and more education companies.
?Rupert has his mojo back,? said Todd Juenger, a media analyst at Sanford C Bernstein. ?The stock is up, investors are happy with the company?s recent decisions.?
?He is definitely rubbing his hands together,? a person with knowledge of News Corporation?s deal-making discussions said of Murdoch.
In the last several weeks, Murdoch has exuded a satisfaction and sure-footedness that people close to the company said they had not seen since before Murdoch?s British newspaper unit became embroiled in a phone hacking scandal. That is in part because hacking has been overtaken in the press by an unfolding scandal at the British Broadcasting Corporation.
The BBC, which Murdoch and his son James have frequently criticised, is accused of cancelling a news program?s segment about serial child molesting committed by longtime host Jimmy Savile, and broadcasting false reports of pedophilia about a member of Margaret Thatcher?s administration.
People close to Murdoch said he considered the BBC scandal karmic justice for months of negative coverage of News Corporation, and he has provided almost daily commentary via Twitter. ?BBC getting into deeper mess,? he wrote on November 10.
And the BBC scandal touches another Murdoch rival ? The New York Times, whose parent company?s new chief executive, Mark Thompson, served as director general at the BBC. Thompson?s replacement at the BBC, George Entwistle, resigned on November 11 after just 54 days on the job. ?Look to new CEO to shape up NYT unless recalled to BBC to explain latest scandal,? Murdoch wrote on Twitter last month.
As News Corporation sank into its hacking scandal last year, it delayed new acquisitions. In September, Britain?s Office of Communications, known as Ofcom, said that British Sky Broadcasting, 39.1% owned by News Corporation, was ?fit and proper? to hold a broadcast license. The decision removed a cloud of uncertainty at News Corporation?s Manhattan headquarters and cleared the company to revisit deals, analysts said.
?The internal narrative at the company is that the boss is in shopping mode,? said one person close to News Corporation who could not discuss Murdoch?s thinking publicly.
Dropping its $12-billion bid for the portion of BSkyB that it did not already own gave News Corporation ample cash to complete share buybacks and consider other acquisitions. The company had $9.6 billion in cash at the end of its 2012 fiscal year and in September borrowed another $1 billion.
On a recent earnings call, Chase Carey, News Corporation?s president and COO, said: ?We always seem to be the topic of the day when it comes to a rumour of some transaction.?
Last week News Corporation neared a deal with Yankees Global Enterprises to buy a 49% stake in the Yes Network, a regional New York sports network with a valuation of about $3 billion.
