Cost of hacking to Murdoch's empire so far: £239,000,000
Friday 06 April 2012
Rupert Murdoch has run up losses of almost a quarter of a billion pounds from the closure of the News of the World, and costs from the hacking scandal are set to soar further.
Annual accounts for News Group Newspapers (NGN), which owns The Sun and the News of the World, showed that Mr Murdoch has taken a £239m financial hit and it could "be significantly higher" in future.
NGN spent £23.7m to cover legal costs associated with phone hacking and £55.5m in redundancy and restructuring after the closure of the Sunday newspaper in July 2011.
The firm has also taken a £160m write-off on the value of News of the World following its closure, though a spokesman pointed out this is an accounting "paper" loss and not a "cash" item.
NGN continues to face a string of legal and criminal investigations, including the Leveson Inquiry and multiple police inquiries into alleged corrupt payments by journalists at both the News of the World and The Sun. Some Wall Street analysts have estimated the final bill could be as high as $1bn.
The NGN accounts cover the financial year to 3 July, just before the closure of the News of the World, which meant it did not have to include all the costs of the subsequent hacking scandal.
NGN managed to increase pre-tax profits to £104m against £88.6m a year earlier. Turnover held steady at £653m.
Times Newspapers Limited (TNL), owner of The Times and The Sunday Times, also published separate accounts that showed it has sharply reduced pre-tax losses to £11.6m from £45m a year earlier.
TNL credited a rise in advertising revenues and the introduction of a pay wall for its websites and iPad apps for boosting turnover by more than £10m to £402m.
News International, the UK parent company of NGN and TNL, has always said that the UK newspapers are not for sale. But in a sign that a sale could be possible in future, the accounts for NGN said it bought the "publishing rights" of both The Sun and the News of the World for £720m from another News Corp subsidiary in June 2011. The company subsequently wrote off £160m associated with the News of the World after its closure, which means The Sun's publishing rights are worth £560m, according to the accounts.
However, it is likely that any would-be buyer would be expected to pay more for such a trophy asset, particularly as The Sun has launched a Sunday edition.
Mr Murdoch's deputy, chief operating officer Chase Carey, told US investors last month that "there is certainly an awareness" that News Corp would be worth more without the UK newspapers.
James Murdoch, who resigned as BSkyB chairman on Tuesday, remains under pressure. US shareholder group Christian Brothers Investment Services has called for him to quit the board of News Corp.
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