July 7th, 2011
08:42 PM GMT
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London (CNN) – As the grave is dug for the world’s most widely read English newspaper, News of the World, focus is turning to how much of a role financial pragmatism played in its demise.

While the headline was its closure in response to the avalanche of hacking allegations, including accessing the phones of murder and terror attack victims, politicians and celebrities, the move could also prove a financial win for its parent, News Corporation.

Observers point to Rupert Murdoch, the brains behind the empire, and the bid to take full control of satellite television broadcaster British Sky Broadcasting or BSkyB. His son James's influence is also being felt: As chairman of News International, he closed the paper.

As investors absorbed news of the tabloid’s demise, focus quickly turning to its impact on News Corp.’s pitch for the 61% of BSkyB it doesn’t already own.

Collins Stewart estimates the News of the World’s closure will hurt News Corp.’s valuation by $0.25 a share. The Nasdaq listed stock is currently priced at just under $18. Collins Stewart analysts said in a note the move is: “an important sacrifice in an effort to reduce additional delay to the (BSkyB deal) approval process.”

Finalizing the deal will extend News Corp.’s footprint into a more lucrative market than the troubled newspaper industry, Charles Bedouelle, media equity research analyst at Exane BNP Paribas, said. The decision would "take away the problem" hanging over the bid for BSkyB and is an "extreme but pragmatic decision to get the problem out of the way," Bedouelle said.

Murdoch propelled himself into the international media arena with the purchase of Fleet Street’s News of the World in 1969. News International also owns The Sun, the Times and the Sunday Times in Britain. News Corp. also encompasses Fox News, the Wall Street Journal, the New York Post and Harper Collins publishers.

According to Murdoch, writing in News Corp.’s annual report, pay-TV is “an incredibly important business for us - as evidenced in our support over the years of BSkyB.”

Steven Barnett, professor of communications at the University of Westminster, noted in an CNN opinion piece: "It's worth emphasizing just how lucrative this deal, should it be approved, will be. This year, BSkyB will make an operating profit of £1 billion, roughly $1.5 billion."

Any approval of the BSkyB deal is now expected to delayed as the decision makers deal with the deluge of objections which have been lodged since the phone hacking scandal shifted from one which involved only celebrities to one which allegedly preyed on those who were vulnerable.

Media lawyer Geoffrey Robertson said the paper’s closure was “a master stroke which took everyone by surprise." But the move shows an element of remorse which may assist in Murdoch's bid for BSkyB, he added.

And the country may yet see a replacement paper, with speculation centred on a Sunday Sun paper. Or, News of the World could return, Robertson said. "British people will miss it."

soundoff (38 Responses)
  1. JJ

    Somebody ought to put this chump out of his hypocritical misery.

    July 8, 2011 at 2:21 am |
  2. John Q. Public

    I don't think foreigners like Murdoch should be allowed to own broadcasting rights and ownership in the USA. We can see that Murdoch is a political animal who courts the Right wing in this nation with his ownership of Fox News Broadcasting and the Wall Street Journal. The quality of Fox News journalism is not much better than the supermarket tabloids like the National Enquirer or the now defunct British News of the World. I think it behooves us to investigate Murdoch and I certainly support that he should be forced to sell off his ownership of media in this country. Let him go back to Australia and ruin their country, not ours!!! We get all worried about illegal immigrants in this nation and Fox News certainly plays up that line of propaganda. Murdoch's influence (or rather interference in our domestic concerns) is a far more dangerous problem than illegal immigrants.

    July 8, 2011 at 2:23 am |
  3. KellyinCA

    Can we all just agree here that Rupert Murdoch is a rotten, greedy. fascist p***k who deserves to lose his entire empire for this? If it happened at NOTW, it was also happening at the Sun and all his other papers; at the very least, all of News Corp. benefited from the information gleaned from these tactics. How soon would Fox News scream it over the airwaves if Prince William was caught on his cell phone expressing cold feet? News Corp has become a journalistic trainwreck from which we can't really turn away; perhaps, though, for the sake of NOTW's history and its bastardised future, we should start trying and stop giving this neo-Nazi geezer or his supporters or advertisers any more money.

    July 8, 2011 at 2:24 am |
  4. Khopdi

    The decision by Mr.Murdoch wasn't unexpected. After all he's a shrewd businessman.

    July 8, 2011 at 2:25 am |
  5. Raj

    If he is contrite, he would not have the news empire of the world....ruthless, cut throat, calculating, devious...that sounds more like what he is doing.

    July 8, 2011 at 2:30 am |
  6. Bob Lovell

    Closing a business making (30 million dollars in profit), for any reason other than hiding the files from authorities and allowing him to skulk out of town untouched, clearly shows just how evil Murdock and his twisted quest for perverting the truth has become.(Fair and Balanced, yeah right).

    July 8, 2011 at 2:30 am |
  7. John N Florida

    If he gets BSkyB he'll just move the 'hacking' operations there.

    July 8, 2011 at 2:31 am |
  8. Kerry M. Berger

    Along the same lines as the previous note, I feel that it is in our national interest to limit foreign ownership of media corporations to a minority share, and ultimately eliminate the strong probability that firms like Murdoch's empire or even the Sony Corporation (unless it establishes itself as an American enterprise) ought to be eliminated. I think this is worth considering as targets for boycotts as well as petitioning our Federal Legislators as a test to see where their loyalties exist - USA first or in the pockets of special interests and greedy manipulative non-residents.....

    July 8, 2011 at 2:33 am |
  9. Alicia Ghani

    So there won't be a tabloid to sue for damages, and there will be some kind of legal firewall to protect the rest of the Murdoch empire, and the only question is whether the British government is spineless enough to give Rupert his BSkyB approval.
    This was a cold move, almost as cold as hacking into the phones of victims and their families.

    July 8, 2011 at 2:36 am |
  10. James

    A completely cynical move by News International. Thank goodness for the internet and the opportunity for the general public to do their own research on the things they really care about. The amount of influence the media has on the Western world is, if you pause to think about it, frightening. For instance, I notice this story is not even reported on certain other "news" websites.

    July 8, 2011 at 2:39 am |
  11. lordpet

    clearly trying to save the BSB deal. However, the top heads should roll, not the rank and file. So f him and his deal.

    July 8, 2011 at 2:40 am |
  12. El Kababa

    So all this time Conservatives were telling us that government would be peeping into our private lives. It turns out that we should have been frightened of Rupert Murdoch and Fox News.

    July 8, 2011 at 2:45 am |
  13. rob

    Fox channels should be banned from every cable system. They cost too much to the viewers and Rupert Murdoch is a bigoted Nazi.

    July 8, 2011 at 2:45 am |
  14. Lewis R. Luchs

    Showing Elliot Spitzer the door? Big mistake. I served as a US diplomat for 30 years. Spitzer's program was one of the view TV current events programs I enjoyed. Ah, the glory days of CNN in the l980s and into the 90s! CNN has since come down far.....very far. .

    July 8, 2011 at 2:46 am |
  15. Catdog

    I'm sure Murdoch had this, like everything he does well planed, Murdoch is so slimy he doesn't walk he glides.

    July 8, 2011 at 2:48 am |
  16. Art

    No ethical considerations involved. Murdoch is an immoral weasel motivated by greed in everything he does. Although I should probably apologize to weasels for the comparison.

    July 8, 2011 at 2:53 am |
  17. Larry L

    Mr. Murdock used the same ethical standards we've come to expect from ultra-conservatives ererywhere. He's positioning himself for a special place in hell. Why not go now?

    July 8, 2011 at 2:53 am |
  18. realist

    Shell game

    July 8, 2011 at 2:53 am |
  19. Luis H. Hernandez

    This guy is training all the repugs from fux news, what do you expect. Shut the news paper down get rid of hundreds of job but make millions in an other hostile takeover. Can you say Republican!

    July 8, 2011 at 2:54 am |
  20. dinesh

    The news that we want to present and what we want to present at any cost. That has been the model of every outlet that Rupert Murdoch has created. Poll after poll, people who follow his networks are most uninformed and biased. Look at FOX example in the USA.

    July 8, 2011 at 2:57 am |
  21. independent

    When it comes to Murdoch, I guess the buck doesn't stop with him. Scumbag.

    July 8, 2011 at 2:57 am |
  22. T40G

    You don't need to be an analyst to figure out this move by Murdoch. Keep an eye on his other stuff though – and see if there isn't another shoe to fall.

    July 8, 2011 at 3:00 am |
  23. rexedie

    regardless of how established any firm is..... if the current work force has no integrity.....the point is moot
    unfortunately..... news and information are now nothing more than empty shallow reporting of the generally useless kind

    murdoch is an ego maniac....who's addiction to power and manipulation will one day be his downfall.... in the meantime he makes sure that his information outlets provide only that which he feels is the truth.... and the public is so brainwashed with garbage.....they dont know the difference

    July 8, 2011 at 3:06 am |
  24. jim atmadison

    The notion that Rupert Murdoch shut down the rag because he wanted to do the right thing or has a sense of shame is beyond laughable.

    July 8, 2011 at 3:08 am |
  25. Susan Pound

    I do not buy papers that are owned by Murdoch. He is a symbol of yellow journalism and I thought that died with the death of WR Hearst. If a reporter can not generate a news article without hacking into a personal telephone, he or she is no reporter. I expected better from the British.

    July 8, 2011 at 3:11 am |
  26. Blake

    Rupert Murdoch is one of the savviest business men of all time. That anyone would question whether this move has a positive NPV is absurd. It just happens to also be the right move from a corporate social responsibility standpoint, but that is just a coincidence.

    July 8, 2011 at 3:18 am |
  27. Big_D

    This man hired part of the Watergate break-in crew and part of the Iran Contra crew. What do you think? He is a dirty tricks master. They probably sent him from down south as revenge for the 69 election. Everything about this man stinks.

    July 8, 2011 at 3:23 am |
  28. Kevin

    And of course, with it shut down and it's staff scattered around the globe at other News Corp jobs, this effectively kills any official investigation into their criminal wrong-doings.
    Well played, Mr Murdoch, quite evil, but well played none the less.

    July 8, 2011 at 3:28 am |
  29. Big_D

    This man hired part of the Watergate break-in crew and part of the Iran Contra crew. What do you think? He is a dirty tricks master.

    July 8, 2011 at 3:59 am |
  30. Oliver Chettle

    It does take away the problem with the BSkyB bid at all. It actually reinforces the impression that David Cameron is under the undue influence of despicable people. If he approves the deal (no nonsense about junior ministers and civil servants going through reams of paperwork please, Cameron is really making the decision) it shows that he has no independence from the Murdochs, which means he is unfit to be Prime Minister.

    July 8, 2011 at 4:46 pm |
  31. Oliver Chettle

    I do wish people wouldn't accuse Rupert Murdoch of being motivated by greed. By misunderstanding the type of man he is, people fail to focus on the real issue. Men like him are actually motivated by power, and media moguls motivated by power are more dangerous than businessmen in any other industry motivated by power due to their unique ability to influence the political process.

    July 8, 2011 at 4:49 pm |
  32. Simon Foston

    I'm a bit surprised by people who say that Rupert Murdoch shouldn't be allowed to own US media outlets because he's a foreigner. He's vile and so is everything connected with him, but he's also been a US citizen since the 1980s – he gave up his Australian nationality to get round American laws forbidding foreign nationals from owning American TV channels.

    July 9, 2011 at 1:36 pm |
  33. get off of oil NOW

    who gives a crap. The CIA is listening to every fart you break in your own home as you live and breathe.

    July 10, 2011 at 4:02 am |
  34. Matthew Steeples

    Today is a sad day for investigative journalism. Not all journalists at the NOTW were bad apples, just like not all MPs were not expense fiddlers and not all bankers were fat cats.

    Check out my view at http://dasteepsspeaks.blogspot.com/2011/07/news-is-screwed.html

    You might also be interested in my view on the disgrace that is the PCC: http://dasteepsspeaks.blogspot.com/2011/07/fall-of-another-flop.html

    July 10, 2011 at 7:18 pm |
  35. Paul

    If Rupert Murdoch would only sell the News of the World to its journalists, I will have nothing but fulsome praise for him. He could sell it to them for just One Pound. And lend each of them 3 years' pay each. A paper that sells 2,600,000 has a lot to say for it. And at least 5 people read each copy. Its success is almost riotous. Its journalists have not committed murder, have they now ? They have merely pandered to the reading public's morbid and insatiable lust for trivia. As for Murdoch, nobody forces anybody to buy his papers. FoxNews is not meant to be taken seriously. It is there for comic relief. There are hordes of newspapers who take a contrary view to Murdoch's. Let him and his media be. Mercifully, a man is still free to be different. Does anyone want to live in a country where the government controls the media ?

    July 10, 2011 at 8:25 pm |
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