Is News Corp a buy?

The short answer is that I don’t know. But I do think that analysts recommending the stock on t idea that it’s unduly depressed by the current scandal in the UK are premature. I have two observations:

By far the most valuable asset in the News Corp empire is Fox media in the US. Your first question should be whether you really want to own it, even at today’s lower price

I also think that Americans will tend to underestimate how serious the political situation for News Corp in the UK might be.

I think Americans are most influenced by the letter of the law. We have a quiet admiration for a scoundrel who can wriggle out of the onerous terms of a business deal by finding an obscure loophole in the legal documents that govern it. And we approve of an astute lawyer who can win his case on a technicality.

In my experience, the UK is different. There, the spirit of the law is more important than the letter. The intentions of the lawmaker—which it is assumed everyone understands—are sacrosanct. In the cellphone and email hacking case, it seems to me the accepted response is not a sharp legal defense, but rather admission of guilt on all charges, immediate corrective action, and an apology and plea for clemency. Anything short of that—and I don’t perceive this as being News Corp’s response to date—will likely result in severe legal penalties of a type that Americans would never expect.

One must also ask whether what happens in the UK with News Corp will have negative fallout in the US. I don’t expect it, but I don’t see there’s any rush to buy News Corp stock, either.