Rupert Murdoch's News Corp. Shares Dip 7.6% as Phone Hacking Scandal Deepens
UPDATE: BSkyB's shares dropped 4.6% as News Corp.'s takeover looks unlikely; U.K. Culture Secretary Jeremy Hunt may re-open the antitrust inquiry into the deal.
LONDON -- News Corp. shares were hit hard in Monday trading. Right after the market open, they were down 5.3 percent, and they finished the day 7.6 percent lower at $15.48.
BSkyB shares crashed in early trading Monday, falling 7.3 percent - after a 12 percent fall last week - wiping billions off the stock and temporarily going below News Corp.'s 700 pence offer price as investors abandoned hope that the conglomerate's takeover of BSkyB will now go ahead. The stock closed down 4.6 percent at 715.50 pence.
The collapse in confidence comes as Culture Secretary Jeremy Hunt is seeking to re-open the antitrust inquiry into the deal on the basis of evidence emerging from the deepening scandal around phone-hacking and other illegal activities at the News of The World.
Investors may also be reacting to a new fear, namely that if the government concludes that the extent of the wrongdoing means that News Corp. doesn't pass the "fit and proper" test to acquire the additional 69 percent of the BSkyB that it doesn't already own - then its current holding of 31 percent in the pay TV powerhouse would also be in jeopardy.
Shares in the satellite operator which has 10 million U.K. homes and has the rights to shows like Mad Men, Game of Thrones and House, have fallen from 850 pence at the beginning of last week to around 700 pence, the price intitially offered by News Corp.'s directors last June when it made it's original bid.
Georg Szalai contributed to this report from New York.