Reinhard

Ron Paul Supporters Claim Hand in News Corp 'Rout'

When dealing with punitive actions in a free market, one should be careful, since after all the product is fungible, and the value will still be the present value of all future cash flows. Short-selling the stock will hardly drive it down much, since someone else will just buy more. But there is something to say about the price multiple one puts on a stock, and about possible lower future earnings due to a damaged reputation. The first is equivalent to avoiding Phillip Morris, if one is against smoking. You will still pay a 7x multiple to earn money, but you might not pay 10x because you don't feel good for holding them as an investment. If many people won't touch NWS stock for the next ten years, it will dent slightly the marginal buyer.

The second is more important. If Ron Paul supporters are among sponsors of FOX, they will be reluctant to pay as much as on other channels. Same, if they get bombarded by supporters. Also, all FOX related companies will be bogged down by complaints which will disrupt their business.

The main impact will be how long supporters will keep up the continuous e-mailing and calling. If they can keep this up continuously for a year, NWS' earnings will be affected at the end of the year.