A sort of real-life Citizen Kane, the 80-year-old CEO has amassed dozens of newspapers and TV businesses around the world. To politicians and pundits, the power of his media holdings elicits a mix of awe and fear.
But on Wall Street, the response is mostly fear -fear that Murdoch is going to orchestrate another dubious deal that weighs on the company's stock. Indeed, Murdoch's critics say he has focused too much attention on expanding his empire with little regard for Wall Street's chief measure of success: a rising stock price.
The concern is well-founded. His empire building has included several clunker deals - a hefty $5.6 billion for Dow Jones & Co, for instance - that have hurt News Corp. Including dividends, the company returned just 13 per cent to holders of its widely held class A stock the past 10 years. The safest, most boring securities around - short-term Treasury bills - returned 42 per cent.
``If Murdoch were to leave, the first thing that would happen is that the stock would go up,'' says Donald Yacktman, president of Yacktman Asset Management, a money manager in Austin, Texas, whose 53 million class A shares is its largest holding. He calls Murdoch a ``kingdom builder,'' and suggests the scandal might be a ``blessing in disguise'' - even if Murdoch doesn't depart - if it dampens his appetite to buy more.
Starting with one newspaper in Australia, Murdoch built News Corp. into a global powerhouse with stakes in media businesses that include broadcast and satellite TV, cable programming, books and films. News Corp. owns the Fox TV network, along with 27 local Fox stations.
Its 20th Century Fox studio is behind blockbusters such as Avatar, which brought in a record $2.78 billion worldwide. In Britain, it has a 39 per cent stake in British Sky Broadcasting, the country's biggest commercial TV company. News Corp. also owns 146 newspapers in Australia and three in Britain. In the US, it publishes The Wall Street Journal and New York Post and 23 smaller newspapers from Maine to California.
In its fiscal year ended June 2010, the last one for which figures are available, News Corp.'s 52,000 employees generated $33 billion in revenue. Its net income was $2.5 billion.
That is both impressive and disappointing. Most investors in News Corp. focus on its 1.8 billion shares of class A stock. Though they've risen 25 per cent in the past twelve months on strength of the company's cable network business, they've lagged the broader market and rival media companies for years. News Corp. has a second class of stock, known as B shares, which confer voting rights and are tightly held by select groups. Murdoch and his family control nearly 40 per cent of the Class B stock.
``Murdoch has been more focused on growing the size of the company than maximizing returns for the company,'' says Christopher Marangi, an associate portfolio manager at Gabelli Funds, which owns 5 million class A shares.
News Corp. declined to comment for this story.
Even before the scandal broke, analysts complained that Murdoch's love of newspapers was dragging down the company. In its last fiscal year, the company's newspapers generated $530 million in operating profits on $6.1 billion in revenue. But that was less than a quarter of the $2.3 billion operating profit generated by News Corp.'s cable network business, which had slightly higher revenue of $7 billion.
Cable is growing operating profits faster, too - up 36 per cent last fiscal year versus 14 per cent for newspapers. Cable gems include Fox News, basic cable mainstay FX and regional sports networks that carry Major League Baseball and college football games.
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