News Corp. CEO Rupert Murdoch faces “powerful enemies” that intend to use the company's phone hacking scandal to bring the Australia-born media baron to his knees, according to Needham & Co analysts Laura Martina and Dan Medina. That impending “witch hunt” is why the duo downgraded News Corp. stock from a “buy” to “hold.”
They have got to be kidding.
Murdoch won’t lose any sleep over the Needham & Co. warning. News Corp.’s Fox News and Wall Street Journal are not exactly shrinking violets in the rough and tumble media world.
Fox, in fact, is more likely to flip the “powerful enemies” line to go after adversaries such as the New York Times, Britain’s Guardian, Media Matters for America, Keith Olbermann, Al Gore and the Obama administration, which has been the conservative outlet’s prime target since it set up shop in Washington.
A shareholder uprising isn’t in the cards. The Murdoch family controls 40 percent of voting shares of News Corp., ownership that has shielded it from criticism of its costly acquisition strategy. With Rupe at the helm, News Corp paid $580M for MySpace and unloaded it for $35M. It took a $2.8B write-off for its $5.7B Dow Jones acquisition.
The only slap of Rupert: postponing the elevation of Elisabeth Murdoch to the News Corp.’s board of directors to join brothers Lachlan and James.
Age and public sentiment are the biggest problems for Murdoch, who turned 80 in March. Murdoch wasn't exactly a ball of fire during the parlimentary probe of the scandal. Some cynics say Murdoch's stumbling testimony was a play for support. The CEO says he has no plans to retire, noting that his mother is still going strong at the tender age of 102.
Public disgust however could do News Corp in, especially if there is any truth to reports that the media giant sought to hack the phones of families of 9/11 victims. Those family members went to Washington today to meet with Attorney General Eric Holder. They are represented by media savvy attorney Norman Siegel, former director of the New York chapter of the American Civil Liberties Union. News Corp. dismisses the 9/11 allegations.
Stay tuned. A new hacking scandal during the tenth anniversary of the terror attacks would be a blockbuster story even too big for Team Murdoch to handle.
Wall Street isn’t putting too much stock into the Martina/Medina recommendation. News Corp. stock is up 2.5 percent to $16.78 today. That’s near its $18.35 52-week high.