News Corp. hacking bill exceeds $370 million

The cost to News International of the phone-hacking scandal has soared to $377 million as writedowns, legal claims and severance payments have punched a hole in the accounts of Rupert Murdoch’s newspaper empire.

The closing of The News of the World led to an immediate $250-million writedown for News Group Newspapers, which also owns The Sun.

Settling claims for hacking the phones of celebrities such as Sienna Miller resulted in the company’s being forced to put aside a further $35 million.

The provision relates only to those claims where formal proceedings have been issued. The company admitted in its accounts: “The final cost (of claims) may or may not be significantly higher than the amounts recognized.”

No provision has been made against potential costs relating to criminal investigations.

However, the massive costs racked up so far could have little bearing on the final bill. Both the company and its auditors, Ernst & Young, point out it is almost impossible to know what the final bill will be.

Shareholders reacted with unease to the disclosures.

“It’s a significant number,” said Julie Tanner, of Christian Brothers Investment Services. “Shareholders need to be concerned.”