Saudi Prince Alwaleed bin Talal Al Saud is a business journalist’s dream because he is really rich – Forbes estimates his net worth at $20.3 billion – and loves to talk. And right now, his views on the News Corp. (NYSE:NWS) phone hacking scandal are especially prescient because he is the second-largest shareholder in the media conglomerate behind the Murdoch family.
In an interview with Bloomberg, the Prince gave embattled News Corp. CEO Rupert Murdoch an “attaboy” for his performance this week when he was grilled by members of the British Parliament about the News of the World saga. Alwaleed told Bloomberg he was “both supportive and confident in the leadership of Rupert and James Murdoch.”
The prince went on to say the Murdochs answered all questions at the hearing with “full honesty and integrity,” according to Bloomberg News.
Alwaleed and the Murdochs obviously have been tight for years. But what investors in the New York-based media conglomerate might not realize – and what Bloomberg didn’t mention – was how tight.
Last year, the two joined forces to launch a 24-hour Arabic language version of Fox News Channel. In May, News Corp. agreed to increase its stake in Alwaleed’s Rotana Media Group, Murdoch’s largest investment in the Middle East. In addition to hosting Fox channels in Saudi Arabia, Rotana is the world’s largest producer of Arabic language music and is a major distributor of Arabic language movies.
The relationship has had its ups and downs. Murdoch’s pro-Israel editorial slant has annoyed Arabs for years. Some Jewish leaders are worried Murdoch’s woes will cost them an ally in the media. Alwaleed, for his part, pressured News Corp. on the issue. NWS in turn pressured Rebekah Brooks to resign as head of News International, the parent company of the firm’s British papers.
Alwaleed and other major News Corp. shareholders have a vested interest in toeing the Murdoch party line because any negative comments would cost them money and drive down the share price. If things don’t go right, it’s much easier for them to cut their losses and sell.
Bloomberg also failed to ask Alwaleed the most relevant question of all: Is he buying shares of News Corp., which have fallen almost 6% during the past three months? The Prince owns big holdings in other big U.S. companies, including Walt Disney (NYSE:DIS), eBay (NASDAQ:EBAY) and Apple (NASDAQ:AAPL), so his answer would be of keen interest.
Shareholders and Murdoch himself have repeatedly stressed that U.K. papers are a tiny part of News Corp., accounting for less than 1% of the company’s revenue. That‘s technically true, but stocks in the midst of scandals trade on emotion rather than logic.
It also is a good reason for News Corp. to unload the business, as the papers are requiring an inordinate amount of management’s attention.
Jonathan Berr is a former Bloomberg reporter. He has no shares of the companies that are listed.
