News Corp boosts buyback plan to $5bn - Financial Times

News Corp will use $3.2bn of the cash it had stored up(router,verizon wireless,wireless network,wireless internet,i phone,i phone verizon,my verizon wireless,wireless adapter,att wireless)
 for the acquisition of British Sky Broadcasting to boost its share buyback programme from $1.8bn to $5bn, in Rupert Murdoch’s latest dramatic response to a crisis that has weighed heavily on the media group’s shares.
The unexpected Tuesday morning announcement is likely to be welcomed by investors and analysts who have long argued for larger buybacks, but is unlikely to dent News Corp’s ability to afford the 61 per cent of BSkyB it does not already own.
On Monday, News Corp opted for a longer review of that deal at the hands of the UK Competition Commission, rather than face a hostile political climate in which ministers were coming under growing pressure to intervene in the deal and other regulators were being asked whether News Corp was a “fit and proper” media owner.
The expanded buyback programme, which will be made over the coming 12 months, is News Corp’s latest tactical response to a spreading legal, political and corporate crisis emanating from allegations of phone hacking on its News of the World tabloid Sunday newspaper.
Last week, James Murdoch, head of News Corp Europe and Asia, announced that it would close the London title, and, on Monday, News Corp withdrew the concessions that would have averted a Competition Commission investigation that could take six months to a year.
News Corp can easily afford the buyback, analysts said, with annual free cashflow of about $1.3bn, and net debt at just 0.3 times estimated 2012 earnings before interest, tax, depreciation and amortisation (ebitda).
One analyst estimated that its planned purchase of BSkyB would have taken net debt to just 2.3 times ebitda, and that the multiple would rise to a still manageable three times with the larger buyback.
The likely delay left News Corp facing the prospect of having more than $10bn of unused cash on its balance sheet for another year. The buyback may aso have the effect of shoring up the Murdoch family’s control of the company, if they tender none of their own shares to the programme.
News Corp’s dual class stock gives Murdoch family trusts control of just under 40 per cent of the voting rights with a far smaller equity stake.
News Corp shares, which suffered their biggest daily loss since April 2009 on Monday, opened up as much as 3.5 per cent in New York on Tuesday to $16.57.
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