News Corp backs away from future BSkyB bid

News Corp looks to have distanced itself from taking full control of BSkyB, following the phone hacking scandal at its newspaper division that caused it to withdraw its initial bid.

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Rupert Murdoch, News Corp chairman, said in an investors call that the company is “reassessing” the company’s expenditure in the wake of the scandal, that resulted in the closure of the News of the World Sunday tabloid.

News Corp’s president and chief operating officer, Chase Carey, added that acquisition targets will now be in the “tens or hundreds of millions”, rather than the billions the company would need to pay to take full control of Sky. Carey also added the company would prefer to “build rather than buy businesses”.

Murdoch added he was “disappointed” the company had to abandon its bid to take control of the 61% of BSkyB it does not already own. The bid freed up around $5bn (£3.1bn) for the company to buy back stock.

Carey was backed by Rupert Murdoch in the call to become News Corp’s next chairman, rather than his son James, although he quipped that “the job won’t be open in the near future”, suggesting he has received backing from the board to continue to remain at the helm of the company.

“The board and I believe I should continue in my current role of chairman and CEO, but make no mistake, Chase Carey and I run this company as a team,” Murdoch said.

News Corp finished its financial year with operating profits of $2.74bn (£1.64bn), up 7.9% on 2010. The increase came despite net profit dropping 22% year on year to $683m (£422m) in the final quarter, due to losses attributed to the sale of social network MySpace.

For the full year to 30 June, operating income rose 12% to $4.98bn (£3.08bn).

The company’s first quarter results, due to be reported in November, will be the first indication as to how the closure of the News of the World and the phone hacking scandal surrounding its newspaper division has affected News Corp financially.

News International only produces a small fraction of News Corp’s overall revenue. Its main properties are US film house 20th Century Fox, Harper Collins and Fox Broadcasting.

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