Sydney: Shares in Rupert Murdoch's News Corp Ltd plunged on June 11, in a savage market backlash to its 1.5 billion Euro ($ 1.41 billion) bid to take control of Italy's pay-TV industry.

Already down by 11 cents in the last fortnight, the global media giant tumbled another 81 cents or 6.4 per cent to close at $ 11.44, dragging the entire Australian share market down with it.

As the market heavyweight, News was blamed for pushing the key index, the SP/ASX 200, down 14.3 points or 0.4 per cent to 3,328.5.

The drop followed Murdoch's announcement in London on June 8 of plans to buy Italy's major pay-TV operator, Telepiu, from embattled French media group Vivendi Universal in a deal that would bring him control of the Italian pay-TV industry.

The deal, comprising half cash and half assumed debt, was unveiled just three weeks after the US-based Australian-born media magnate said he was walking away from any major investment in Europe.

A week before that, News had posted a net loss of US $ 3.99 billion, the biggest quarterly loss in Australian corporate history because of a write down of $ 2.0 billion on its investment in Gemstar-TV Guide.

News Corp shares fell from a high of Australian $12.90 on April 22 to around $11.80, a month ago, largely because of the Gemstar issue, but recovered somewhat in the following two weeks.

ABN Amro head of global sales David Ledger said the market was concerned about News Corp's announcement that its Stream Italian pay TV venture was buying Telepiu, the only other Italian pay-TV operator.

"The market's obviously not enamoured with it," he said. "Murdoch's been advocating that they'll be taking a stricter approach to acquisitions, with more consolidation going on, so this has caught the market a little unawares."

Macquarie Equities said it had downgraded its short-term recommendation for News Corp to 'under perform' from 'outperform' and will look to downgrade profits for the year to June 2003 by 20 per cent and for the following year by 12 per cent.