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July 22, 2011, 12:01 a.m. EDT
By Jon Friedman, MarketWatch
NEW YORK (MarketWatch) "” In the wake of the News Corp. phone-hacking furor, current and prospective shareholders have some pressing questions about the company's strategy and its overall prospects.
Shares of News Corp. /quotes/zigman/94823/quotes/nls/nws NWS +3.35% /quotes/zigman/94858/quotes/nls/nwsa NWSA +3.45% rebounded this week following the testimony given on Tuesday by Chairman Rupert Murdoch and his son James, also a high-ranking executive, before a British parliamentary committee.
Investors have been relieved that the crisis wasn't seen as likely to spread to the United States. However, The Wall Street Journal now reports the Justice Dept. is readying subpoenas in a preliminary News. Corp. probe. Read report on possible News Corp. inquiry subpoenas.
/quotes/zigman/94823/quotes/nls/nws NWS 16.97, +0.55, +3.35% News Corp. shares
What's next? Can News Corp. continue the momentum in both the short term and later on, when things return to normal?
To that end, here are the five biggest questions that investors should be asking:
1) Will Rupert Murdoch remain as chief executive?
Much the way that the Steve Jobs question looms over Apple Inc., the succession issue is paramount at News Corp. According to swirling media speculation, Chief Operating Officer Chase Carey might succeed Murdoch, if the 80-year-old patriarch decided to hand over the reins.
Investors will have to determine whether the company is more or less valuable with Murdoch in charge.
It's a highly sensitive point. At what point does a thoroughly self-made CEO decide that the time has come to let a successor run the company? Also, it's possible that the louder the clamor for a change, the more reluctant someone as proud as Murdoch might be to bend to the whims of outsiders. After all, he apologized publicly and profusely during his testimony Tuesday, and he may feel, ultimately, that he has said his piece.
Reuters News Corp. Chief Executive and Chairman Rupert Murdoch apologizes to the Parliament on Tuesday.2) Has News Corp. controlled the damage?
For now, evidently. The stock rose more than 5% on Tuesday, when the Murdochs were at Parliament, after it had tumbled 18% in the previous two weeks.
The best measure for a company's prospects is in its stock price. No doubt, money managers had been bracing for the possibility of getting more bad news, and they feared the worst: that the public's shaken confidence in News Corp. would affect the company's earnings potential.
But the comeback of the News Corp. shares also tells a story. It shows that the investors have been reassured by management that the damage has been contained.
Now, Wall Street will probably get back to judging News Corp. on its financial merits and not factor in the effects of a scandal.
/quotes/zigman/94823/quotes/nls/nws Add NWS to portfolio NWS News Corp. Cl B $ 16.97 +0.55 +3.35% Volume: 11.09M July 21, 2011 4:00p var embeddedchart278552174Chart = new EmbeddedChart('#embeddedchart278552174', NormalChartStyleNoDecimals, 240, 80, '1dy', '5mi', null, null, null, 'US:NWS'); jQuery.data($('#embeddedchart278552174').get(0), 'embeddedchart', embeddedchart278552174Chart); /quotes/zigman/94858/quotes/nls/nwsa Add NWSA to portfolio NWSA News Corp. Cl A $ 16.48 +0.55 +3.45% Volume: 52.58M July 21, 2011 4:00p var embeddedchart2073635465Chart = new EmbeddedChart('#embeddedchart2073635465', NormalChartStyleNoDecimals, 240, 80, '1dy', '5mi', null, null, null, 'US:NWSA'); jQuery.data($('#embeddedchart2073635465').get(0), 'embeddedchart', embeddedchart2073635465Chart); //$(document).ready(function() { var storywidth = $('#mainstory').width(); var maxwidth = storywidth; $('#maincontent pre').each(function (index, value) { var thiswidth = $(value).width(); if (thiswidth > maxwidth) maxwidth = thiswidth; }); var offset = maxwidth - storywidth; if (offset > 0) { var margin = 13; var blanketwidth = $('#blanket').width(); var contentwidth = $('#maincontent').width(); $('#blanket').width(blanketwidth + offset + margin); $('#maincontent').width(contentwidth + offset + margin); $('#mainstory').width(storywidth + offset + margin); } //}); Page 1 Page 2 var OB_permalink= 'http://www.marketwatch.com/story/5-questions-dogging-news-corp-investors-2011-07-22'; var OB_Template="marketwatch"; var OB_widgetId= 'AR_1'; var OB_langJS ='http://widgets.outbrain.com/lang_en.js'; if ( typeof(OB_Script)!='undefined' ) OutbrainStart(); else { var OB_Script = true; var str = ""; document.write(str); } Comments on this story 3 Comments Most Popular Jeff Reeves Why we'll have 10% unemployment soon 1. Slide Show The world's 10 most expensive cities 2. Realty Q&A Mortgage on rental property comes with big penalty 3. Slide Show Top 3 most walkable, 3 least walkable U.S. cities 4. Commodities Corner Silver's a worthy gold rival 5. Join the Conversation 3 Comments 1,000 characters My comments... Community guidelines » Add Comment Breaking Insight Jon Friedman's Media Web 5 questions dogging News Corp. investors Robert Powell's Your Portfolio Insurance stocks may get hit by Europe crisis Mark Hulbert Transports' weakness as a leading indicator Thomas Kostigen's Impact Investor World's smallest stock exchanges can only go up Find a Broker Partner Center » Video Travelzoo, On Cloud Nine, Suddenly Loses Altitude WebMD Catches Flu from Bears Pandora's Challenger: Spotify Launches Attack Rex On Techs: Is F5 Networks Keeping Its Balance? About Jon Friedman RSS News feedJon Friedman, MarketWatch's media columnist based in New York, writes the Media Web column. Before joining MarketWatch in 1999, Friedman was a reporter for... Expand
Jon Friedman, MarketWatch's media columnist based in New York, writes the Media Web column. Before joining MarketWatch in 1999, Friedman was a reporter for USA Today, BusinessWeek, Bloomberg News and Investors Business Daily. He is the co-author of the expose "House of Cards: Inside the Troubled Empire of American Express" (1992, Putnam). His freelance pieces have appeared in the New York Times, the American Banker and other publications. He appears frequently on television and radio programs to discuss news issues, and in 2010 he launched the Web TV show, "Media Matters with Jon Friedman." Collapse
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To that end, here are the five biggest questions that investors should be asking:
1) Will Rupert Murdoch remain as chief executive?
Much the way that the Steve Jobs question looms over Apple Inc., the succession issue is paramount at News Corp. According to swirling media speculation, Chief Operating Officer Chase Carey might succeed Murdoch, if the 80-year-old patriarch decided to hand over the reins.
Investors will have to determine whether the company is more or less valuable with Murdoch in charge.
It's a highly sensitive point. At what point does a thoroughly self-made CEO decide that the time has come to let a successor run the company? Also, it's possible that the louder the clamor for a change, the more reluctant someone as proud as Murdoch might be to bend to the whims of outsiders. After all, he apologized publicly and profusely during his testimony Tuesday, and he may feel, ultimately, that he has said his piece.
2) Has News Corp. controlled the damage?
For now, evidently. The stock rose more than 5% on Tuesday, when the Murdochs were at Parliament, after it had tumbled 18% in the previous two weeks.
The best measure for a company's prospects is in its stock price. No doubt, money managers had been bracing for the possibility of getting more bad news, and they feared the worst: that the public's shaken confidence in News Corp. would affect the company's earnings potential.
But the comeback of the News Corp. shares also tells a story. It shows that the investors have been reassured by management that the damage has been contained.
Now, Wall Street will probably get back to judging News Corp. on its financial merits and not factor in the effects of a scandal.
Jon Friedman, MarketWatch's media columnist based in New York, writes the Media Web column. Before joining MarketWatch in 1999, Friedman was a reporter for... Expand
Jon Friedman, MarketWatch's media columnist based in New York, writes the Media Web column. Before joining MarketWatch in 1999, Friedman was a reporter for USA Today, BusinessWeek, Bloomberg News and Investors Business Daily. He is the co-author of the expose "House of Cards: Inside the Troubled Empire of American Express" (1992, Putnam). His freelance pieces have appeared in the New York Times, the American Banker and other publications. He appears frequently on television and radio programs to discuss news issues, and in 2010 he launched the Web TV show, "Media Matters with Jon Friedman." Collapse
Media Web
5 questions dogging News Corp. investors
On the Markets
Transports' weakness as a leading indicator
Your Portfolio
Insurance stocks may get hit by Europe crisis
On Personal Finance
5 ways to save big on wedding costs
Commodities Corner
Silver's a worthy gold rival
Impact Investor
Smallest stock markets can only go up
Vital Signs
Ice cream is good for you (with 7 caveats)
Wall Street Irregulars
Happy Birthday, Richard Russell
Strength in Numbers
Why we'll have 10% unemployment soon
Tech Tales
Read Full Article »