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com LSE: IIR

Traded on AIM, London Stock Exchange

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News Corporation Company News Alert News Corp to reduce stake in NDS and take the company private

30 June 2008

NYSE Class BUY B Common Stock
Ticker: Target price: NWS US$22.87 Current price: US$15.73 Price change since (17.2%) last report:

We believe the company’s proposed sale of approximately 68% of its Class-B shares in NDS Group PLC (NDS), a majority-owned subsidiary of News Corporation (News Corp), and subsequent privatization of the company will have an insignificant material impact on its operations. Although the News Corp common stock has declined 17.2% from our last update, we believe this fall in prices is primarily a reflection of weak global markets due to concerns over a slowdown in the global economy. At current levels we do not anticipate a change in our current NYSE Class B common stock rating.

We will reassess the NYSE Class B Common Stock rating for News Corp in the coming weeks. Although we now anticipate a significant negative currency impact on the Australian Class B stock in the short to medium term, which will reduce our target price when we revalue the stock, we do not anticipate a change in our current Australian Class B stock rating based on our strong fundamental outlook.

Australian BUY Class B Stock
Ticker: Target price: Current price: Price change since last report: NWS.AX A$25.98 A$17.18 (18.2%)

We will reassess the Australian Class B stock rating for News Corp in the coming weeks.

Supervisor: Meera Patil Analyst: Sumit Jain Editor: Heloise Capon Global Research Director: Satish Betadpur, CFA Next news due: 4Q 08 and FY 08 results, August 2008

Investment horizon- short term actionable trading strategies
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On 27 June 2008, News Corp along with Permira Advisers LLP (an European private equity firm), announced a proposal to privatize NDS, indicating that the company’s Class A ordinary shares, represented by ADS’ listed on the NASDAQ, will be bought out for US$60 each and subsequently cancelled. News Corp will also reduce its equity stake in NDS from the current 72% to 49% with the sale of approximately 68% of its series B ordinary shares to Permira, for a consideration of US$60 per Class B share. This is expected to be payable through a mix of approximately US$1.5 bn cash and US$200 mn in vendor notes, taking News Corp’s effective total consideration for the sale of its Class B shares to US$1.7 bn. Following the transaction Permira will hold a 51% stake in NDS and the remaining 49% will be held by News Corp. The transaction is subject to shareholder and regulatory approval. We believe that the proposed 68% stake sale in NDS at US$60 per class B share will have insignificant impact on News Corp’s operations. The proposed per share consideration is at a premium of approximately 20.7% over the NDS ADS (class A shares) closing price of US$49.70 as of 27 June 2008.

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Refer to page 3 for footnotes