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Newscorp

By Dan Stratful

Friday 25th November 2011

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Newscorp (ASX: NWS) shares sold-off after the News of the World phone-hacking scandal emerged, as investors feared NWS would face legal action, and the fallout continues to this day.

NWS is a global vertically integrated media company founded by Rupert Murdoch in 1979. NWS is one of the world’s largest conglomerate media companies and its investments include television, cable, magazines, newspapers and publishing.

The company hit the headlines this year after the News of the World phone-hacking scandal emerged, in which it was alleged that employees of the newspaper were involved in phone hacking and bribery, in the pursuit of newspaper stories.

NWS’s first quarter result for the quarter ending 30 September 2011 showed total revenue up 7% to US$7.9 billion, while first quarter net income fell to US$738 million from US$775 million reported in the first quarter of 2010. The first quarter net income result was lower after including charges related to a fair value adjustment on the company’s SKY Deutschland convertible securities and a fee related to the company’s withdrawal of its BSkyB bid, not to mention a $91 million pre-tax restructuring charge primarily related to the company’s U.K. newspaper business. The Publishing segment reported first quarter operating income of US$110 million, a US$68 million or 38% decrease, reflecting the impact from the closure of The News of the World in the U.K., and lower advertising revenues at the Australian newspapers and integrated marketing services business.

The media business is tough enough without scandal and the effects that bad press can bring. However NWS appears to have weathered the storm well and reported a robust first quarter adjusted result. 

Status: HOLD

NWS shares today traded at $16.70

For sharemarket and fixed income trading enquires contact:
Dan Stratful at Investment Research Group (IRG)
Authorised Financial Adviser (AFA)
0800 437 8489, 09 304 0232, dan.stratful@irg.co.nz
**A disclosure statement is available, on request and free of charge.


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