News Corp. Shares Drop Amid Phone-Hacking Scandal Investigation

Strategic Insights -

The phone-hacking scandal plaguing British newspaper News of the World has taken a toll on its parent company, News Corp. Shares of News Corp. fell 4% during afternoon trading on Wednesday, according to CNNMoney, as the company faces mounting allegations of hacking into the voicemails of celebrities, politicians, and a murdered teenager. The scandal has already resulted in a loss of advertising revenue, with car manufacturers Ford and Renault announcing they will no longer advertise with the newspaper, and consumer product maker Procter & Gamble reviewing its options.

Key Takeaways:

  • News Corp. shares dropped 4% during afternoon trading on Wednesday, following allegations of phone hacking by journalists at the company's British newspaper, News of the World.
  • The phone-hacking scandal has resulted in a loss of advertising revenue, with car manufacturers Ford and Renault announcing they will no longer advertise with News of the World, and consumer product maker Procter & Gamble reviewing its options.
  • British Prime Minister David Cameron has supported calls for public inquiries into the reporting practices of News of the World journalists and the previous police investigation that failed to uncover the allegations.
  • News Corp. chairman Rupert Murdoch has issued a statement condemning the allegations as "deplorable and unacceptable" and pledged to cooperate fully with police investigations.
  • Murdoch has also taken steps to address the issue, appointing Joel Klein to provide oversight and guidance, and Viet Dinh, an independent director, to work with Klein to keep the News Corp. Board fully advised.
  • Rebekah Brooks, a former editor at News of the World, will continue to lead the newspaper despite allegations of phone hacking and police payments.

Statistics:

  • News Corp. shares dropped 4% during afternoon trading on Wednesday.
  • Total assets of News Corp. as of March 31: approximately $60 billion.
  • Total annual revenues of News Corp. as of March 31: approximately $33 billion.
  • Number of car manufacturers that have announced they will no longer advertise with News of the World: at least 2 (Ford and Renault).
  • Number of consumer product makers reviewing their options to advertise with News of the World: at least 1 (Procter & Gamble).

Sources:

  • CNNMoney
  • Los Angeles Times
  • News Corp. website (for asset and revenue information)
  • News Corp. press release (for details of internal actions taken by the company)
  • BBC News (for additional context and quotes)