News Corp's Australian shares sank to a two-year low on Monday as the UK phone hacking scandal fallout worsened, raising concerns that a $2 billion bid for an Australian pay-tv firm involving News Corp could be derailed by political intervention.
Investors sent News Corp shares down as much as 7 per cent in heavy volume after Rebekah Brooks, the former head of the company's UK paper business, was arrested on Sunday and top policeman Paul Stephenson quit over the scandal.
'I think people would rather be cautious and mark it down rather than find a reason to defend it,' said Invesco senior investment manager Jackson Leung in Melbourne. Invesco is News Corp's second-largest institutional shareholder with a 1.68 per cent stake, according to Thomson Reuters data.
News Corp shares ended down 4.1 per cent at A$14.16 after touching a low of A$13.65.
Shares in a News Corp takeover target, pay-tv firm Austar, also fell on worries the deal may not proceed after the furore in Britain forced News to drop a $12 billion plan to buy all of highly profitable broadcaster BSkyB.
Austar has agreed to a $2 billion-plus takeover offer from its bigger rival Foxtel, which is owned by News Corp's News Ltd division, billionaire James Packer's Consolidated Media Holdings, and telecoms firm Telstra.
The Australian government last week said it may review media laws and ownership, following pressure from the influential Greens party.
Rupert Murdoch's News Ltd dominates the Australian newspaper industry, commanding nearly three-quarters of daily metropolitan newspaper circulation, and the UK scandal has riveted attention in his homeland.
Source : New Age
