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Report: News Corp. eyeing BSkyB buy

Looking to purchase full ownership of British satellite TV giant

NEW YORK -- Will Rupert Murdoch's News Corp. spend billions to acquire full ownership of British satellite TV giant BSkyB, which it already controls?

According to a report in the Daily Telegraph, the entertainment conglomerate is indeed attempting to buy the 61% of BSkyB that it does not currently own. Recent Wall Street chatter has focused on this possibility, which has repeatedly popped up in the past.

Owning full control would give News Corp. a cleaner ownership structure (something Wall Street has preferred in recent years) and full reign over BSkyB's cash.
But it would be an expensive move.

"Our fear of investor reaction to this potential transaction is a core driver of our 'neutral' rating on News Corp. shares," BTIG analyst Richard Greenfield said in a first reaction Monday night, even though he said a buy-in would add to News Corp.'s earnings. "Investor hopes for a meaningful share repurchase at News Corp. are diminishing, especially if News Corp. has to pay a substantially higher price than the 735 pence offer" that the Daily Telegraph said was in recent days rejected by BSkyB as "deeply undervaluing" the company.

That offer would imply a price tag of $11.5 billion, and so Greenfield said he "would not be surprised to see a portion of the deal in stock (25% or less), which could upset investors based on how inexpensive they perceive News Corp. shares to be today."

A News Corp. spokesman declined comment.