UK woes fail to trouble News Corp investors

Charges against Rebekah Brooks and testimony from her and other former senior figures in Rupert Murdoch’s UK newspaper empire have kept the British media and political establishment glued again to investigations into the press over the past week. Yet investors in Murdoch’s $50 billion television, film and publishing group, have paid little attention, instead sending News Corp shares to their highest levels since 2008.

Last week’s 5 per cent jump was a reaction to news that the company was doubling the $5bn share buyback program it unveiled last July as the scandal forced it to shut the News of the World and abandon its $12bn-plus pursuit of British Sky Broadcasting. It was also a reminder that, whatever happens next in the unfolding drama, Murdoch has two important points in his favor. The first is that the cable TV networks that provide 60 per cent of News Corp’s operating income are growing even faster than the costs associated with UK investigations. The second is the cash those operations are producing – a net $2.7 billion in the last quarter alone. Even after spending $3.3 billion buying back shares, it ended the period with $10.7bn of cash on a balance sheet with $15.2 billion of borrowings.