July 29 (Bloomberg) -- British Sky Broadcasting Group Plc, will buy back 750 million pounds ($1.2 billion) in shares, two weeks after Rupert Murdoch’s News Corp. abandoned its bid for the rest of the pay-television broadcaster.
News Corp.’s current 39 percent holding in BSkyB won’t increase as a result of the buyback, the Isleworth, England- based broadcaster said in a statement today. Full-year earnings before interest, taxes, depreciation and amortization were 1.41 billion pounds, ahead of the 1.39 billion-pound average estimate of 19 analysts compiled by Bloomberg.
News Corp. shelved its 7.8 billion-pound bid for the remaining shares on July 14 after allegations of phone hacking at its now-defunct News of the World tabloid engulfed the media company and prompted an unprecedented political backlash. James Murdoch, the 38-year-old son of Rupert Murdoch, will remain as BSkyB chairman after winning the unanimous support from the 14- person board, a person with knowledge of the matter yesterday. The directors will continue to monitor events, the person said.
BSkyB’s shares have fallen 16 percent from this year’s high of 850 pence before the Guardian reported July 4 that News of the World employees intercepted murder victim Milly Dowler’s voice mails in 2002.
“Shareholders in the round are feeling bruised after the share price collapse over the last two to three weeks,” said Alex de Groote, an analyst at Panmure Gordon in London. “Realistically there’s not going to be a bid for Sky for the foreseeable future so they want to be compensated for that.”
BSkyB’s board had come under pressure to review James Murdoch’s position as non-executive chairman, after his testimony to U.K. lawmakers on July 19 over the phone-hacking scandal was contradicted by two former employees. While the hacking incidents took place before he started News Corp.’s U.K. newspaper publishing unit, Murdoch authorized settlements to hacking victims that are now being questioned.
News Corp. is dealing with three probes by police and regulators into phone hacking at the News of the World. At least 10 people have been arrested, including former News International CEO Rebekah Brooks and ex-News of the World editor Andy Coulson, who was Prime Minister David Cameron’s press chief until January.
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