Friday 26 May 2017

Reaching for the Sky

He will turn 80 in the coming week, but the media mogul's proposed takeover of BSkyB shows he still loves the big deal

THE decision by the British government to wave through his takeover of BSkyB clears the way for Rupert Murdoch's biggest-ever deal. With just days to go until his 80th birthday, the world's most visible media proprietor has lost none of his appetite for the deal.

Next Friday, Rupert Murdoch will celebrate his 80th birthday. While most men of his age would be content to don their slippers and reach for a cup of Complan, Murdoch shows no sign of wanting to retire. Instead, he keeps up a punishing schedule that would exhaust a man half his age.

News Corporation, the $32bn newspapers-to-TV-to-film conglomerate which he founded and still chairs, has operations on four continents and is the third most valuable global media group.

Unlike its two larger rivals, Disney and Time Warner, News Corporation is still controlled by its founder, who retains a 28.5pc stake in the company.

As Murdoch has approached octogenarian status, not alone have the deals kept flowing, they have got bigger.

In 2007, he outwitted the Bancroft family, who had controlled Dow Jones for almost a century, and seized control of the company, paying almost $6bn for the publisher of the 'Wall Street Journal'.

Dow Jones

Anyone who thought that the acquisition of Dow Jones by the then 76-year old was the crowning glory of Murdoch's career has been proved wrong by his dogged struggle to acquire the 61pc of broadcaster BSkyB not already owned by News Corporation.

This epic takeover battle, which has already dragged on for almost nine months, looks like it will throw up a few more twists and turns before it finally draws to a conclusion.

When News Corporation first offered 700p per share -- which would have valued the remaining 61pc of BSkyB at about £7.7bn in June 2010 -- the bid was fronted by James Murdoch, Rupert Murdoch's second-eldest son and the chairman of BSKyB. That bid was rejected by the independent BSkyB directors, who were holding out for at least 800p per share.

In the intervening nine months, there were several occasions when the bid seemed to go very badly awry. Given his existing dominance of the UK print media -- News Corporation already owns the best-selling daily the 'Sun', the best-selling Sunday newspaper the 'News of the World', the best-selling 'quality' Sunday newspaper, 'The Sunday Times', and 'The Times', any British takeover involving Rupert Murdoch was bound to be intensely controversial.

Matters weren't helped when the 'News Of The World' phone hacking scandal -- which led to the jailing of the newspaper's royal correspondent Clive Goodman in 2007 for illegally hacking into mobile phone message -- erupted once again. This led to the resignation, as David Cameron's director of communications, of Andy Coulson, who had already resigned as editor of the 'News Of The World' following the jailing of Goodman.

By late last year, it looked as if the British government would have no choice but to refer the BSkyB takeover bid to the UK Competition Commission, an outcome that Rupert Murdoch was desperate to avoid.

Commission

Not alone would this have further delayed any News Corporation takeover of BSkyB, there was also the not insignificant possibility that the commission would block the bid.

In December 2010, Rupert Murdoch enjoyed an unexpected stroke of good luck when Vince Cable, the UK business secretary and an implacable foe of all things Murdoch, was recorded in a "sting" conducted by journalists from the rival 'Daily Telegraph' newspaper, saying: "I have declared war on Mr Murdoch and I think we are going to win".

Following this outburst, the Liberal Democrat was stripped of responsibility for adjudicating on media matters -- including the News Corporation bid for BSkyB -- and the role was transferred to the Tory media secretary Jeremy Hunt instead.

While Cable's foot in mouth was an unexpected bonus, Rupert Murdoch moved quickly to exploit his good fortune.

His son James was ruthlessly sidelined as his father conducted an intensive lobbying campaign, seeking to persuade Hunt not to refer the bid to the Commission.

Murdoch promised to spin off BSkyB's rolling news channel Sky News into a separate company, which would be 61pc owned by outside investors. He also promised that Sky News would have an "independent" board and that no News Corporation employee could be chairperson of Sky News.

The battle for control of BSkyB has provided a rare glimpse of the sometimes Darwinian struggle between the three children of Rupert Murdoch second marriage --sons James and Lachlan and daughter Elisabeth --to succeed him.

Lachlan was the early front-runner until he suddenly quit News Corporation and returned to his native Australia in 2005. James then took on the role of heir apparent when he was appointed head of News Corporation's European and Asian operations in 2007. Will his less-than-assured handling of the BSkyB bid see him cast aside also?

Long-time Murdoch-watchers have always reckoned that the most talented of the trio is Elisabeth. After working with various News Corporation businesses, she struck out on her own and founded Shine Productions in 2001.

It has since grown to become the largest independent TV production company in the UK, producing such shows as 'Spooks' and 'Masterchef'.

Last month, Elisabeth returned to the family fold when News Corporation agreed to pay £415m for Shine.

Not alone will Elisabeth receive almost £220m for her 53pc stake and report directly to her father, she also joins the News Corporation board. Coincidence or what?

Further complicating matters are the terms of Murdoch's 1999 divorce from his second wife Anna. While the reputed $1.2bn of assets that she received under the divorce settlement was relatively modest, the deal also effectively excluded the children of Rupert Murdoch's third marriage from any control over News Corporation.

Instead, the family's 28.5pc stake is jointly controlled by Rupert Murdoch, Anna's three children and Prudence, from his short-lived first marriage.

Whatever their differences, the four eldest Murdoch children have thus far successfully resisted efforts by their father to transfer any voting rights to Grace and Chloe, his two daughters by third wife Wendi Deng.

EVEN if Elisabeth is now the favoured one, she could be a long time waiting. Rupert Murdoch's mother, Dame Elisabeth, celebrated her 102nd birthday last month. However, even if Elisabeth does inherit her father's crown, how long would News Corporation survive the departure of its founder?

Ever since he inherited a newspaper in the southern Australian city of Adelaide from his father Sir Keith in 1953, News Corporation has been synonymous with Rupert Murdoch.

Far more likely is that the company would be quickly broken up into its constituent parts after his death or retirement.

In the meantime, non-Murdoch News Corporation shareholders have good reason to fear that he will overpay for BskyB. Four years later, it is clear that the price News Corporation paid for Dow Jones was too generous. Will something similar happen with BskyB?

One consequence of the delay has been to push up the likely price that Murdoch will have to pay. Most analysts now reckon he will have to pay at least 900p per share, which would value the outstanding 61pc of BskyB at just under £10bn.

Sky Sports will have to sell a lot more football subscriptions if Rupert Murdoch is ever to recoup such a price.

Irish Independent

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