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NEW YORK (
News Corp. (NWSA - Get Report) is pulling its
British Sky Media(BSY), leaving Wall Street worried over the future of Rupert Murdoch's media empire.
The British parliament had been urging Murdoch to drop his $12 billion buyout offer for the 61% of BSkyB it doesn't own, amid its phone-hacking scandal, which has resulted in the closure of its tabloid
News of the World.
The U.K. tabloid published its final edition on Sunday after coming under a firestorm of allegations regarding telephone hacking, which included breaking into the phone of a murdered 13-year-old girl and deleting messages.
Other allegations include hacking phones of slained troops, politicians and celebrities. There is also an investigation into the newspaper allegedly paying police officers for information.
London police have made several arrests in the case, including Andy Coulson, a former editor of
News of the World and former communications chief for Prime Minister David Cameron.
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But despite the calamity surrounding the company, Citi added News Corp. to its Top Picks, saying the stock is "too compelling to ignore."
Citi analysts say they "see few (if any) scenarios that would result in permanent damage of News Corp.'s existing assets."
"At current valuations, investors should be indifferent whether BSkyB closes or not," Citi noted. "Either scenario would represent significant upside from current levels."
Citi held its buy rating on the stock and $21 price target.
Shares of News Corp. are relatively flat in morning trading, but have given up more than 14% since the scandal surfaced.
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