FIN 423 Case #2 - News Corp. Poison Pill

Liberty Media Team

Study the information from the Wall Street Journal in Appendix A, below, about the poison pill that was recently supported by the shareholders of News Corp. John Malone, the largest blockholder of Liberty Media, has requested your analysis and recommendations concerning the large position held by Liberty Media.

Among the issues your report should cover include:

  1. the viability of simply retaining Liberty's large minority position if News Corp. maintains its the poison pill and the status quo;

  2. the desirability of Liberty to pursuing a premium takeover bid for News Corp.;

  3. the desirability of negotiating a disengagement, where Liberty sells its stock back to News Corp. for either cash or for some asset owned by News Corp. that it values.

The case web page contains a spreadsheet (NWS.XLS) that contains the daily closing prices and volumes for the two classes of News Corp. stock from January 2001 through October 20, 2006. It also contains closing prices and volumes for Liberty Media from May 15-October 20, 2006 (under the symbol LCAPA) and from January 2001 through December 31, 2005 (under the symbol LMC). The spreadsheet also contains the S&P 500 index.

You may use any information available before October 21, 2006, but nothing that occurs after that date. Your report is due in class on Wednesday November 29.

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Last Updated on 10/24/2006