Shares in News Corp jumped three percent Monday, as fund managers continued to speculate that media mogul Rupert Murdoch could take control of US satellite television provider DirecTV.
News Corp is in talks with General Motors on joining its Sky Global satellite arm to DirecTV, which is housed in the US auto maker's subsidiary Hughes Electronic.
An industry source told Reuters on Friday that News Corp and General Motors had "shaken hands on the deal" but legal documents were not expected to be signed for another two of three weeks.
But General Motors said it was still in talks with more than one party and continued to deny reports it was close to sealing a deal with the world's fifth-largest media conglomerate.
Fund managers say News Corp, which captures 70 percent of its revenue in the United States, was benefiting from funds lifting their weightings in the stock.
"People will be reining in their risks and moving closer to index weighting," said John Whiteman, portfolio manager at AMP Henderson Global, Australia's largest fund manager with more than AU$270 billion in assets under management worldwide.
"And I think in the Australian context, fund managers are generally underweight and have been closing those positions up. That's the way I'm reading it ... because this stock can move dramatically on announcements."
By lunchtime, shares in News Corp were up 52 cents or 2.9 percent to AU$18.42, off a high of AU$18.47, on modest turnover. Its share price has risen about 37 percent since hitting a 12-month low of AU$13.51 on December 28 last year.
The shares had suffered on delays in its mooted Sky Global float, a negative credit ratings outlook, a slowing US economy, company comments on slower advertising revenue, and the April correction on the technology-laden Nasdaq index.
The inclusion of DirecTV in Sky Global would create a US$70 billion global satellite TV network and plug a hole in Murdoch's satellite interests by providing a US arm.
Fund managers said the market was speculating that News Corp would have the cash component of a DirecTV deal funded by Microsoft, which said last year in Australia it was talking to News Corp on acquiring interests in US satellite TV.
