Wall Street Chimes in on James Murdoch's Departure From News International

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NEW YORK - News Corp.'s stock set a new 52-week high in early Wednesday trading after the entertainment conglomerate run by Rupert Murdoch said that his son and deputy COO James Murdoch has dropped the title of executive chairman, News International, the U.K. newspaper unit embroiled in the phone hacking scandal.

The stock, which has been hitting year-highs as of late, hit a new high of $20.26 early in the day. As of 10:05am ET, it was up 1.9 percent at $20.18.

News Corp. stock should be "mildly positive" on the news "as it was already known he was coming to New York to take on more of an over-arching corporate role," and this has finally happened after some delays, explained Miller Tabak analyst David Joyce.

RBC Capital Markets analyst David Bank said the move doesn't change much and doesn't really amount to a demotion. "James remains deputy COO, and he is running the international TV business etc," he said. "[This] just separates him a bit from the hacking headlines, in theory."

But Wells Fargo analyst Marci Ryvicker also suggested that the move could be "one sign that some or all of News Corp.'s publishing unit may be spun, sold or otherwise shed," something that many on Wall Street have long suggested given the lower growth profile of newspapers. News Corp. president, COO and deputy chairman Chase Carey told an investor conference the other day that the company was aware that a spin-off would be popular, but said management is currently focused on running the newspaper business well and as profitably as possible.

Larry Haverty, portfolio manager at Gamco Investors, which owns News Corp. stock, told THR that he feels "someone needed to be responsible" for the U.K. problems, but said, "I have the highest respect for James. He is a very, very capable executive who did great job at BSkyB, which may be the single best pay TV business in the world."

Joyce said, "I don't think the phone hacking scandal is a driver, it is more of Rupert's succession planning." Observers have said that if Rupert Murdoch ever dropped his CEO title in the coming years, Carey, who has strong support on Wall Street, or James Murdoch are possible successors. Carey has had a higher profile at the conglomerate in the wake of the phone hacking scandal.

Haverty said Carey has "great financial skills," among other things, and News Corp. has strong divisional managers, which have kept the conglomerate's performance strong despite the hacking scandal.

Asked about his thoughts on the succession issue, Haverty said: "I don't know. In the interim, the leadership and strategy are pretty well established." He added: "As a shareholder of the company, I feel badly that all these things happened [in the hacking scandal], but I feel very comfortable" about where the company stands.

"There has been no change to his corporate title of deputy chief operating officer of News Corporation," echoed Evercore Partners analyst Alan Gould when asked about the younger Murdoch. "James did a great job at BSkyB, but to the degree that there is any continuing power shift from James to Chase that should be perceived positively by the Street."

Email: Georg.Szalai@thr.com

Twitter: @georgszalai

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