By Michael Collins
Rupert Murdoch’s reign over the $33 billion News Corporation hinges on events surrounding the company’s ownership share of Britain’s dominant pay TV network, BSkyB (Sky). As Business Insider said, “it’s the only asset that really matters” in the News Corp collection of media properties.
As a result of Murdoch scandals, News Corp lost the chance to buy 100% of Sky’s shares. More troubling for the media monarch, the company may lose the 39% interest it already holds if British regulators determine that Murdoch is not a fit and proper owner. This would fuel the major News Corp shareholder suits in Delaware and New York that seek to remove Murdoch as board chairman and vastly diminish his power and that of his family and cronies.
Sky reaches 25 million viewers in 10 million homes. Revenues are growing at 10% a year with adjusted operating profit growth averaging around 16% of revenues (see 2009 through 2011). Revenues from 2012 through 2016 should top $70 billion total with adjusted operating profits around $11 billion. What happens with Sky really matters. Continue reading