Despite Scandal, Analyst Says Rupert Murdoch Will Control News Corp Destiny

VIDEO: Britains prime minister is new focus after News Corp. CEO testifies.
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A foam pie-slinging Parliament hearing, accusations of nepotism, speculation about a CEO shakeup and a phone hacking scandal won't sink News Corp. stock if the market is any indication.

Rupert Murdoch's testimony to the U.K. parliament Tuesday "clearly saved the stock," wrote David Joyce, a media analyst at Miller Tabak & Co, in a statement to ABC News.

Murdoch told parliament the phone hacking probe was the "most humble day of my life." But he also said that the scandal was not his fault -- he placed the blame on people within the company that he trusted, and the people they hired.

"We have broken our trust with our readers," Murdoch said during his morning testimony.

The patriarch of the Murdoch family ran an ad over the weekend apologizing for "serious wrongdoing." The 80-year-old promised to take "concrete steps to resolve these issues and make amends for the damage they have caused."

Will that be enough?

"By Rupert not taking responsibility per se but offering harsh words for the activism and vigilance against any further," Joyce said. "Also, his age showed, and a succession plan with Chase Carey possibly becoming CEO helped the stock."

According to media reports, there is speculation that COO Chasey Carey could take the reins from Murdoch as chief executive officer at the media company. But Thomas Perkins, a News Corp. board member, told The Associated Press that Murdoch and top management had the board's full support.

"People expect that this might give shareholders that are not Rupert Murdoch the ability to have some say in the company or the ability to change things or that the stock performance is going to have any say in the way Murdoch runs the company. People are fooling themselves," said Malcolm Polley of Stewart Capital. "Even if he gives up the CEO position, the reality is Rupert Murdoch is still going to control the destiny of News Corp."

In a turnaround, the company's stock price regained some of its value, closing at $15.94 Tuesday. The stock has fallen nearly 11 percent since the end of June, compared with a decline of less than 0.5 percent for the S&P 500 index in the same period, according to the AP.

The "recent developments materially increase the reputational, management, litigation, and other risks currently faced by News Corp. and its subsidiaries" led the S&P to place the company on CreditWatch for negative implications, according to an S&P analyst.

"We see the risk that, if evidence arises sufficient to bring a criminal charge against the company or any current or former employee of the company, then prosecuting authorities in the U.S. could proceed with those charges," Standard & Poors' Michael Altberg said.

The company is considered undervalued by Morningstar, an investment research firm, which rates the media conglomerate three out of five stars.

"Based on all these headlines, it's no surprise the shares are bouncing around more than normal, just given the headlines and hearings in the UK," said Michael Corty, an analyst for the research company. "We think the shares are worth $17.

"Our investment view is that News Corp. has competitive advantages due to two very strong businesses: cable networks and film/entertainment studio, which generate 75 percent of the cash flow," he said. "The strength of those businesses makes us think News Corp. has a competitive advantage in media and the stock is slightly undervalued."

The media company rallied today following a downward spiral that began after the closure of the 168-year-old publication News of the World following scandal.

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