News Corp. stock slips

Wall Street investors tackled News Corp. shares Monday after the media titan’s Fox Broadcasting unit said it would pay a whopping $ 1.58 billion for the right to televise NFL National Football Conference games for four years.

Although the Fox press release praised the little network that could, traders speculated about the losses in store for Fox if it suffers the same pricey fate as its peers have with sports broadcast rights.

News Corp. ADRs dropped $ 2.13 to $ 52.25 on concern that the expensive deal would hurt earnings. But shares in CBS — which dropped the ball after 38 years — also fell. They lost $ 3.13 to $ 296.88 as people wondered how CBS would fill the slot.

NBC moves in

CBS may see further selling today. News came after the bell that NBC had made a successful $ 880 million play for four years of AFC rights, including the 1996 and 1998 Super Bowl games.

“Clearly it’s disappointing that they (CBS) won’t have the football contract anymore,” said one analyst. “But they’ve said for some time that they didn’t want to lose that much money. I would rather see them put it (the money) into programming.”

While initial market reaction to News Corp.’s news was somewhat bearish, several analysts called the NFC move a very bullish game plan for long-term growth.

“They are no longer interested in being the fourth network, the baby on the street,” said Michael Mangan at Prudential-Bache Securities Australia. “The thing about Murdoch is that he always pays too much. But as long as he’s buying quality assets, in the long-term it doesn’t matter too much.”

He and others, however, expect the stock to remain under pressure in the short run — the next month or so — as earnings estimates are lowered to factor in possible losses.

CBS wrote off $ 604 million pre-tax in 1990 and 1991 for losses related to the NFL and Major League Baseball rights.

Several pundits pointed out that even if the rumored NFC loss forecast of $ 150 million per year going forward is accurate, it is a loss News Corp. can better afford than CBS.

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