News Corp. Move to USA Looks Certain

By: Mark Fitzgerald First, Australian native Rupert Murdoch became a U.S. citizen. Now, he wants to formally domicile his News Corp. media empire in America, too.

Last week, Chairman and CEO Murdoch, his son New York Post Publisher Lachlan Murdoch and other key executives barnstormed Australia in what the nation's press called a "charm offensive" to sell stockholders on a plan to reorganize News Corp. and transfer its primary stock market listing from the Australian Stock Exchange to the New York Stock Exchange's Big Board. News Corp., of course, is already listed on the NYSE, but as a secondary listing. Under a plan unanimously passed by News Corp.'s board Aug. 10, the Australian and London exchanges would become secondary listings.

By Australian and British press accounts, the Murdoch presentations went very well. Certainly, News Corp. is happy, spokesman Andrew Butcher told E&P Wednesday. "The plan has been pretty well received down there by what we think is a large majority of shareholders," he said. "There are pretty compelling reasons for doing this, and most shareholders see that it would be an advantage to the vast majority of shareholders."

News Corp. argues the switch will help shareholders by lowering the cost and improving the access to capital. News Corp. would also begin reporting in the same manner as its media peers. In his presentations, Murdoch suggested moving to New York would also correct the market valuations of the company, which he said was trading between 10% and 20% below industry peers such as Viacom, Disney and Time Warner.

"Further, what a range of analysts were saying about us as a company, how well placed we were, that we should indeed be selling on a premium, to those companies," Murdoch told a shareholders meeting in Melbourne last week, according to an account in The Daily Telegraph, a News Corp. paper in Sydney.

This discount could hold the company back, he added: "If we wanted to do anything -- and we don't, particularly urgently, we don't want to buy something -- such expansion through issuing stock would be at a much higher cost to us than our competitors."

A primary Big Board listing of non-voting shares could potentially narrow the trading discount relative to voting shares with increased demand for the stock, News Corp. executives also say.

Murdoch also held out the prospect of higher dividends or stock repurchases, according to the Daily Telegraph: "When we get our shares priced properly, we'd no longer need to hoard capital ... There's no doubt, without being specific, that over the next few years we could be more generous to shareholders."

A main concern of some shareholders about the effects the transfer would have on Australia's benchmark stock index was assuaged even before Murdoch's arrival. News Corp. accounts for about 8% of the Standard & Poor's S&P/ASX index, and some were concerned about the fallout from an abrupt pullout of the stock. With a primary listing in New York, News Corp. is almost certain to become part of the S&P 500 index.

S&P, however, said that if and when the stock is added to the S&P 500, it would be removed gradually from the Australian index over a nine-month period in four phases. Investors would also be given a minimum three weeks notice, S&P said.

News Corp. was also at pains to assure Down Under shareholders that it will retain its Aussie soul even with a primary listing in the Big Apple. "News Corporation's commitment to its Australian operations will not be diminished following the reorganization, and in fact they will be considerably expanded through the 100% ownership of (Australian publisher Queensland Press Pty. Ltd.)," the company said in a statement. "In addition, the company plans to hold annual information meetings for the shareholders in Australia after the reorganization."

Under the plan, News Corp. shareholders and options holders will receive shares and options in News Corp. US at a one-for-two ratio, an exchange the company says is designed to ensure that shares trade at "prices regarded as appropriate in both the U.S. and Australian markets."

In September, News Corp. will be sending out a detailed information memorandum to shareholders. The plan comes up for a shareholder vote in Australia in late October.