Is he on his last legs? Murdoch in meltdown as shares plummet, BSkyB deal is shelved, and shareholders sue

News Corp launches $5billion share buyback to stabilise value of company

Only 173 of the 4,000 named in hacker files so far contacted by police

MPs to vote on Miliband motion urging News Corp to withdraw BSkyB bid

Murdoch-owned Times reports that tycoon 'could walk away' from UK titles

Domain name The Sun On Sunday transfers to News International ownership



BSkyB shares down 3.3% at close of trading



News Corps shareholders sue company for 'failing to properly investigate'

Rupert Murdoch’s media empire today risked implosion amid claims he could abandon his British newspapers over the phone hacking scandal.

The embattled News Corp boss may sell his three remaining national titles after accusations were made against The Sun and the Sunday Times.

Lending weight to the claim, Mr Murdoch’s other tightly-controlled paper, The Times, reported that ‘City analysts asked whether News Corps could walk away’.

This afternoon News Corp launched a $5billion shares buyback, artificially bolstering the value of the company after days of losses.



Struggling: Rupert Murdoch with his personal trainer, left, and bodyguard in Kensington Gardens in London today

Bad news: Mr Murdoch with his daughter Elizabeth yesterday

BSKYB INVESTORS CONFRONT FALLOUT FROM DEAL DELAY

BSkyB shares have taken a further 3.3 per cent hit today as investors face up to the diminishing likelihood of its buyout by crisis-stricken News Corp. Rupert Murdoch's News Corp effectively triggered the referral of the deal to the Competition Commission yesterday by withdrawing its undertaking to spin off Sky News. Culture Secretary Jeremy Hunt swiftly handed it over to the watchdog, which will take at least six months to make a decision on 'media plurality' grounds. But Ofcom could still weigh in on the issue too as it is responsible for deciding whether the bosses of News Corp are 'fit and proper' to run a broadcaster. Political pressure is mounting on the deal, with Labour calling a vote in the House of Commons tomorrow urging Mr Murdoch to withdraw the bid - a motion the Tories and Liberal Democrats have said they will support. And Mr Murdoch, his son James and News International boss Rebekah Brooks have been asked to appear before the Culture, Media and Sport (CMS) Committee next week to give evidence about the hacking and police bribery accusations. Shares in BSkyB closed down 23.5p at 692p today, on top of a 5 per cent drop yesterday.

But News Corp shares are trading up 1% at $15.67 on the Nasdaq in New York this afternoon after it launched a $5billion share buyback in an effort to stabilise the value of the company. The embattled media giant has been hit with a class action lawsuit by shareholders over claims bosses failed to properly investigate phone hacking at the killed-off News of the World (above). Speculation is now growing that Mr Murdoch may sell his three remaining UK national newspapers after fresh allegations emerged about News International activities involving the private information of ex-Prime Minister Gordon Brown and the Royal family. City commentators are doubtful that News Corp will be permitted to buy the 61 per cent of BSkyB it doesn't already own following the furore, and have reassessed their positions on the UK pay-TV company. Credit Suisse slashed its target price from 850p to 650p, predicting BSkyB would move to trading on standalone fundamentals. 'We now believe there is only a 10 per cent chance News Corp's attempt to take full control of Sky will eventually be successful,' it said.

'As well as a potentially significant delay for a Competition Commission review, we believe Ofcom has the power to use its "fit and proper" test to erect an insurmountable barrier to the deal; and that the worst case scenario is News Corp is asked to divest part of its existing 39 per cent stake.' The bank noted that Sky had just decided to freeze its TV packages in the next financial year, which suggested it anticipated tougher trading conditions in the coming year as UK household budgets come under continued pressure. Royal Bank of Scotland said it believed News Corp had engineered a delay by getting the BSkyB deal referred to the Competition Commission 'presumably so that opinion cools, and perhaps with a mind to exploring an exit of UK newspapers to focus on BSkyB'.

'NewsCorp’s move keeps the approval process alive, but only just,' it said, but in the meantime investors focusing on the fundamentals at BSkyB would find it in robust shape.

'We forecast 8 per cent revenue growth in 2011/12 despite the (one-year) freeze in subscription prices from September 2011 as the rising penetration of HD, broadband and talk continues to drive average revenue per user (albeit at a slower pace than in 2010/11) and as the subscriber base continues to grow (we forecast it reaching 10.5million by June 2012).'

RBS also floated the idea of a BSkyB special dividend of £2 a share, saying: 'If plan A was the NewsCorp deal, plan B may be a capital return.' Broker Numis Securities took a more optimistic view of the prospects for the BSKyB deal still going ahead. 'We expect a lengthy regulatory process lasting into 2012, however we believe that, on the basis of media plurality, it will be cleared and remain of the view that a price of 800p-850p is likely,' it said. 'Although we believe the deal will complete, we recognise that the situation with respect to News International and (perhaps more importantly) political expediency remains fluid.'

Numis cut its target price for BSkyB from 825p to 800p and said it viewed 700p as 'a very attractive entry point for the business on fundamentals'.

The figure is just a fraction of the $12billion in cash Murdoch has at his disposal. Some analysts believe more of this money should have been used to stabilise the company.

The share buyback comes as BSkyB shares fell 2 per cent this morning after the tycoon delayed his controversial bid to take control of the satellite giant by submitting it to a competition inquiry.

Yesterday, News Corps shares fell 7 per cent on the New York Stock Exchange, while Sky’s fell 5 per cent in London.

Ministers are understood to be desperate to find a way to block his bid while trying not to offend the powerful tycoon, who was pictured with his personal trainer in a London park this morning.

His business has also been hit by a class action lawsuit by News Corps shareholders over claims bosses failed to properly investigate phone hacking taking place at the News of the World, which was shut down on Sunday.

However, Culture Secretary Jeremy Hunt's move to delay the Sky bid yesterday afternoon could potentially salvage the deal, which had looked on the brink of collapse in the morning, according to City analysts.



It is thought that Mr Murdoch is willing to try anything to ensure his bid succeeds - even ditching his famous newspaper stable, which earn considerably less than Sky, which last year made a £1billion profit.



Analysts also said it frees Mr Hunt from a politically explosive conundrum.

If he had blocked the deal, or called in the Competition Commission himself, he could have faced a legal challenge from News Corp.

But if he had waved the takeover through, he risked triggering a wave of public fury.

The investigation will take at least six months.

Senior Lib Dem MP Don Foster, the party’s former culture spokesman, described the move as a ‘ruse’ designed to buy ‘breathing space’.

He added: ‘This is the best Murdoch can do to keep the possibility of the merger on the table.

‘By dropping the News of the World, he can say his involvement in news and current affairs in Britain has actually diminished and argue that the issue of media plurality has disappeared.

‘There is nothing to prevent Ofcom, however, from investigating whether or not the Murdoch empire is fit and proper to own even the 39 per cent of BSkyB it already owns.’

Mark Kelly, at stockbroker Olivetree Securities, said: ‘News Corp is smoothing the way for the Government here – keeping friends in power by making the decision for them.’

Louise Cooper, of City broking firm BGC Partners, said Murdoch had given Hunt ‘some wriggle room’ and avoided a ‘potentially damaging’ confidence vote in the House of Commons tomorrow.

Labour leader Ed Miliband had threatened to force a vote if the Government did not call time on the proposed takeover.

Preventing a parliamentary debate where fresh attacks could have been levelled against his papers was a ‘smart move by an operator who is rapidly taking back control of the situation’, she added.



However, the chances of News Corp buying the 61 per cent of Sky it does not already own have tumbled with each new startling revelation.



Sky shares plunged 5 per cent yesterday and a staggering £2.4billion has been wiped off the value of the satellite giant over the past week.

Alex DeGroote, at stockbroker Panmure Gordon, said the likelihood of the deal going ahead had reduced.



He said: ‘On Friday we cut our probability of the deal going ahead to 50:50 from 90:10 in favour. This seems very optimistic now. Our new assessment is 10:90 in favour. In other words, we believe the deal is all but dead.’

He also raised the possibility of a forced divestiture – sale, liquidation or spin off – of News Corp’s 39 per cent shareholding in BSkyB.

He added: ‘If the “fit and proper” test is applied rigidly by Ofcom and events elsewhere worsen, it could become a factor.’

It is now alleged that as many as 4,000 people had their phones hacked by private investigators working for the News Of The World.

Speculation grew today that the red top would be replaced by The Sun On Sunday after the domain name was transferred to News International from the company who bought it last week.

In a further development this afternoon MPs will vote on a Labour motion urging News Corporation boss Rupert Murdoch to withdraw his bid to take over the whole of BSkyB.

Tomorrow's motion tabled by Labour leader Ed Miliband, who today met the family of murdered schoolgirl Milly Dowler, states that 'this House believes that it is in the public interest for Rupert Murdoch and News Corporation to withdraw their bid for BSkyB'.



News International also said today it would co-operate after Rebekah Brooks, Rupert Murdoch and his son James were asked to appear before a committee of MPs.

The Culture, Media and Sport (CMS) Committee asked the trio to give evidence about the phone hacking and police payments scandals at a hearing next week.

A spokeswoman for News International, publisher of the News of the World, the Sun, the Times and the Sunday Times, could not confirm whether all three would attend the hearing.

But the company said in a statement: "We have been made aware of the request from the CMS committee to interview senior executives and will co-operate. We await the formal invitation."



D'oh! Shares in the satellite giant, which screens The Simpsons on Sky One, plunged 5pc yesterday

Jeremy Hunt was left with no choice to refer the case to the Competition Commission following the decision, and ends Ed Miliband's threat to call for a vote of confidence if the Government did not call time on the takeover



CofE WARNED SALE OF £3.76M SHARES FROM 'REBEKAH WOTSIT'S' ORGANISATION 'PREMATURE' The head of the Church of England's £5.3billion investment fund today warned against a 'premature' sale of shares in News Corp and BSkyB in the face of the phone hacking scandal.

Andreas Whittam Smith (pictured), First Church Estates Commissioner, said it was possible that Rupert Murdoch could sell his British newspapers in the future.

'I feel that a premature sale of News Corp and BSkyB might just be simply very bad timing,' he told members of the Church of England's national assembly meeting in York. 'I don't argue with anything that anybody is saying about them but I think it must be possible that News Corp will get rid of its entire British holdings, of newspapers that is, and that if it is to do so, first of all the problem would have vanished if you like from the point of view of the parent company and for us as investors, and the shares will certainly bounce up again, and so it is a ticklish area.'

Mr Whittam Smith's remarks came after the Church of England's Ethical Investment Advisory Group (EIAG) warned it could pull £3.76million in shares out of News Corp if it fails to hold senior executives to account over the phone hacking scandal.

The EIAG said it had written to News Corp describing the behaviour of the News of the World as 'utterly reprehensible and unethical'.

The Church of England holds a further £5.3million in shares in BSkyB, which is currently the subject of a take-over bid by News Corp.

Mr Whittam Smith, a former Daily Telegraph City editor and founding editor of the Independent newspaper, said he wished the EIAG 'best of luck' in talking to News Corp about their response to the phone-hacking scandal. 'I do wish them the best of luck in talking to Rupert Murdoch and James Murdoch and Rebekah wotsit, it won't be easy, and I do not volunteer to be part of the team,' he told the General Synod.