The UK telephone hacking scandal that closed the News of the World newspaper and put News Corp's
News Corp may really tank businesswise, but I wouldn't put a high probability on it, said Donald Yacktman, chief investment officer of Yacktman Asset Management Co of Austin, Texas, the ninth-largest shareholder in News Corp.
The market has a central tendency to overact, Yacktman said. It does slightly reduce the predictability of the cash flows, but the impact on the cash flows is minimal at best.
Yacktman, who was nominated for fund manager of the decade by Morningstar in 2010, said News Corp's shares are still undervalued. Yacktman began buying the company's stock in the mid-single digit range in early 2009.
News Corp shares closed down about 7.58 percent at $15.48 in U.S. trading on Monday, and are off almost 15 percent over the past four days.
StarMine, a Thomson Reuters investment research firm, puts an intrinsic value of $22.16 a share on News Corp's stock, on the assumption it will post a cumulative annual growth rate of 9 percent on its earnings over the next 10 years.
Murdoch and the British government on Monday tried to draw the sting from a newspaper phone-hacking scandal by referring his $14-billion media takeover bid for the rest of BSkyB to regulators.
This happened even as police said former prime minister Gordon Brown appeared to have been a hacking target.
By referring News Corp's bid for the highly profitable pay-TV operator BSkyB to a lengthy competition probe, the government hoped to shield it from a tide of outrage over allegations that News of the World reporters accessed the voicemails of murder and bomb victims, among others.
(Reporting by Herbert Lash. Editing by Robert MacMillan)