BSkyB: How Soon Will Murdoch Be Back

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Rupert Murdoch’s News Corp (NYSE: NWS) withdrew its bid for the part of BSkyB that it does not already own. The question is when will News Corp be back with a renewed bid?

News Corp’s 39.9% ownership of BSkyB shares almost certainly makes it impossible for another company to buy the satellite firm. That permits Murdoch to bide his time as the New of the World scandal and any aftershocks fade.

BSkyB shareholders will be desperate for News Corp to return. The stock traded over 850 p just a week ago. The price has dropped to 680 p. That move destroyed $5 billion of value. BSkyB management said it did not need the Murdoch offer to deliver fair value to shareholders. The movement of the stock after the bid was withdrawn says otherwise.

Murdoch’s time problem, if he hopes to return to BSkyB, is how long it will take UK investigators to finish a review of the News of the World scandal. Even if some senior managers lose their jobs in the process, News Corp can claim that legal remedies have been taken. The investigation may spread to the US which could prolong the process and could become another distraction. The chance this would happen is pure speculation.

Wall St. clearly thinks News Corp has a bright future. The stock rose nearly 4% after the BSkyB announcement to $15.90. That is still shy of the $18 mark where it traded five days ago.

And, News Corp received the support of a major Wall St. firm. Citigroup added the stock to its “Top Picks” list and said the value of the firm is “too compelling to ignore.”

Murdoch will be back. His attempt to control BSkyB has not ended

Douglas A. McIntyre