Murdoch splits News Corp
News Corp chief executive Rupert Murdoch split his corporate empire into two parts on Friday under a long-promised plan to “unlock value” by separating its high-flying entertainment operations from struggling publishing activities. The split became effective at the close of trade in New York, creating a new group called 21st Century Fox, while retaining the name News Corp for the publishing group. Murdoch remains in charge of both. The split of the company, with about US$34 billion in revenue worldwide, is seen partly as a nod to shareholders angered by the damage and costs inflicted by a cellphone hacking scandal in Britain, and partly because of troubles within the group’s publishing arm. Murdoch says he remains committed to his newspaper roots.
S&P cuts credit rating
Standard & Poor’s (S&P) lowered its credit rating on the debt-stricken island country on Friday, knocking it into “selective default” because of a “distressed” debt exchange. The government is swapping some local bonds for longer-term bonds. Though that eases some of the immediate liquidity pressure on the country, S&P analysts said they thought the new bonds were on “less favorable terms” for the country than the existing bonds. They called it a distressed exchange, implying that the government had to swap its debt because it had few other financing options. The country’s long-term rating was already in “junk” status, but Friday’s move pushed it down three levels, from “CCC” to “SD,” or selective default. A straight default would mean the country was not meeting any of its obligations.
UK Starbucks paid no tax
Starbucks, whose thin tax payments in Britain provoked a backlash against corporate tax avoidance, paid no tax for the year to Sept. 30 last year. The coffee giant’s main UK subsidiary reported its 15th straight annual loss at its UK stores in accounts filed on Friday. Reuters revealed in October last year that Starbucks reported consistent UK losses, while telling investors the British unit was profitable and promoting managers of the unit within the group. Friday’s accounts showed a UK loss of ￡30 million (US$46 million), down from the ￡32 million loss it reported for the previous year, helped by a 4 percent rise in turnover to ￡413 million.
Lending to builders pledged
The government promised to help increase lending to homebuilders to sustain construction as the industry’s biggest companies slash output and move to restructure debt. Deputy Finance Minister Fernando Aportela said development banks would provide at least 5 billion pesos (US$387 million) of syndicated credit lines. The lines, issued through Sociedad Hipotecaria Federal and Nacional Financiera, will produce about 50,000 homes, he told reporters in Mexico City. The government will also offer guarantees for debt sales of about 5 billion pesos so that issuances can get higher credit ratings and attract institutional investors such as pension funds, he said. The financing announcement was part of the government’s retooled housing plan, which aims to arrest urban sprawl without prompting further contraction in the industry.