Shares in Rupert Murdochs News Corporation have fallen as more allegations emerge in the phone hacking scandal engulfing its British newspaper empire.
The widening crisis has prompted Macquarie Bank analysts to slap an underperform, or sell, rating on News Corp, warning the company faces regulatory risks in both the UK and US.
News Corp sharesshed 73 cents, or 4.6 per cent, to close at $15.19, following a 5 per cent fall yesterday.
In a note to clients, Macquarie analyst Alex Pollak cut his valuation of News Corp by 18 per cent, on the basis of high level regulatory uncertainty in the UK and US.
The company may face the risk of an investigation into whether it is a fit and proper person to hold US TV licenses, Mr Pollak said.
This would be in addition to investigations already underway by regulators and police in the UK into phone hacking at weekly tabloid News of the World, which printed its last edition on Sunday as Mr Murdoch scrambled to limit fallout from the crisis.
The possibility of class actions by the estimated 4000 victims of phone hacking, along with News of the World journalists not involved in hacking, is real, Mr Pollak said.
He said the companys proposed mop-up takeover of British broadcaster BSkyB has become a political hot potato for the minority government in the UK and is off the agenda until at least September.
All of these have the potential to impact earnings and valuation in 2012, he said.
bbutler@theage.com.au
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