News Corp. is due to report earnings for its fiscal second quarter after the market closes Wednesday. Investors are looking for indications that Rupert Murdoch's company will continue to buy back shares with cash it saved by abandoning its bid for full control of British Sky Broadcasting amid a phone hacking scandal in the U.K.
WHAT TO WATCH FOR: The New York-based company's updated guidance on what it intends to do with cash that continues to be generated by its media properties, including the Fox broadcast network and TV channels such as FX, Fox News Channel and Fox Sports.
Revelations in July of phone hacking by its now-shuttered British tabloid, News of the World, proved to be a seminal moment for the company, leading it to abandon its bid to buy the 61 percent of BSkyB it doesn't own and approve $5 billion in new share buybacks.
For many analysts, that was a favorable outcome because it tamped down concerns that Murdoch would use the resources to make expensive acquisitions.
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Analysts also said the incident has pushed the company to accept an increased management role for Wall Street-favorite Chase Carey, the chief operating officer, and a lesser role for deputy COO James Murdoch, who made key decisions in how the company handled the crisis in its early stages. The younger Murdoch's decisions have since come under fire and his role at the company has been criticized.
The company has spent $2.7 billion of its $5 billion authorization buying back shares, which are now trading at 14.2 times expected earnings in the fiscal year through June 2012. That's even higher than the 13.9 times earnings that Disney shares are trading at for its fiscal 2012. Disney shares normally garner a premium over its media peers, but News' share buybacks have provided a reversal of fortune.
WHY IT MATTERS: News Corp. operates a range of media properties being buffeted by technological change, including the 20th Century Fox movie studio and newspapers including The Wall Street Journal. Its dual-class share structure and Murdoch, its 80-year-old CEO, also make the company an important case study in corporate governance for companies controlled by the head of a family trust.
WHAT'S EXPECTED: Analysts, on average, expect adjusted earnings of 34 cents per share on revenue of $8.94 billion, according to data provided by FactSet.
LAST YEAR'S QUARTER: News Corp. posted adjusted earnings of 29 cents per share on revenue of $8.76 billion.