When your corporation is under attack for being involved in a colossal phone-hacking scandal, what do you do?
Well, Australian-American News Corp. CEO Rupert Murdoch announced a $5 billion stock repurchase plan on Tuesday after the fallout of his now defunct British tabloid News of the World.
The media conglomerate plans to acquire $5 billion in Class A common stock and Class B common stock over the next 12 months through a repurchase program that will begin after August 15.
Following the announcement of a stock repurchase, News Corp. shares gained 5.56 per cent to $16.34 in electronic trading ahead of the opening bell in New York Tuesday morning. This is after the company’s shares plunged to more than 14 per cent on the NYSE over the past week.
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The News of the World scandal has put Murdoch's multibillion-dollar bid to win full control of the British satellite broadcaster BSkyB in jeopardy, especially now that British lawmakers have summoned Murdoch, his son James and UK chief executive Rebekah Brooks to appear next week to be interrogated about their handling of the alleged unlawful activity with News of the World.
The British government has also said it will urge Murdoch to withdraw his bid to take control of satellite broadcaster British Sky Broadcasting Corp. Prime Minister Gordon Brown's spokesman Steven Field said Tuesday the government will back a motion proposed by the opposition Labour party calling on Murdoch and News Corp. to withdraw their bid for BSkyB.
Rupert Murdoch is now in London to take control of a crisis that saw the 168-year-old News of the World close last Sunday.