News Corp. Stock Sinks Amid Uncertainty About U.S. TV Challenge
Dec. 07, 1994
SYDNEY, Australia (AP) _ News Corp. Ltd. shares fell to a two-year low Wednesday amid uncertainty raised by a challenge to the media-entertainment company's ownership of TV stations in the United States.
Rival network and station owner NBC has asked regulators in the United States to reexmaine whether News Corp. is violating Federal Communications Commission policy limiting foreign ownership of U.S. TV stations.
FCC rules limit foreign ownership of television stations to 25 percent, and NBC argues that News Corp. is in violation of that because it is based in Australia. Its chief executive, Rupert Murdoch, is a naturalized U.S. citizen.
The FCC had cleared Murdoch's purchase of the stations in 1985 and he has said he expects it will reaffirm the decision.
News Corp. shares fell 13 Australian cents to 4.92 Australian dollars, or about $3.73 in U.S. currecny, in trading on the stock exchange here. That was its lowest level since October 1992.
The stock has fallen just over 22 percent since the company announced a record profit of $1 billion in late August.
Lance Jones analyst Mark Arnold said investors were ruffled by the uncertainty surrounding News Corp.'s ownership of Fox Television.
''There's uncertainty until the FCC makes a decision,'' Arnold said.
Some analysts also cited unconfirmed speculation that the company may issue more stock to raise funds for sports related television rights purchases.
''It's a bigger picture,'' said ANZ McCaughan media analyst Nola Hodgson.
She said there were rumors in the market that News Corp. was considering another major sports rights purchase, following its decision last year to pay $1.6 billion for the right to broadcast U.S. football games on its growing Fox Television network.
Any such deal would likely be funded by a pro-rata rights issue of limited voting participating preference shares, which began trading on the stock exchange last month.
Analysts have said previously the issue of the limited voting shares could pave the way for News Corp. to raise up to $3.8 billion without diluting Murdoch's control of the company.