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Rupert Murdoch said on Wednesday that he believes he can reach an agreement with John Malone over buying back an 18 per cent voting stake in News Corporation in the next few months and indicated that he might help fund the repurchase through the sale of some of News Corp’s local television stations in the US.
Mr Murdoch, whose family controls just over 30 per cent of News Corp’s voting shares, has sought to buy out Mr Malone since his long-time rival accumulated the shares without Mr Murdoch’s knowledge in November 2004.
Mr Malone has repeatedly expressed his support for Mr Murdoch and his News Corp strategy. However, the News Corp chairman and chief executive is believed to be worried that having one shareholder with such a large voting stake could threaten his family’s future control of a media empire that includes newspapers such as The Times, 20th Century Fox studios, Fox television and cable businesses, and MySpace.com, the fast expanding social networking website.
In an interview published on Wednesday by the Australian Financial Review business newspaper, Mr Murdoch said: “The conversations between us have become more substantial and I am hopeful of a resolution in the next few months.”
He added that the deal to remove Mr Malone’s Liberty Media from his company’s share register might involve the sale to Liberty of about half a dozen of News Corp’s 35 US television stations – a move that would enable the deal to be structured as a tax-free transaction.
The US Federal Communications Commision is expected to approve News Corp’s request to take control of 35 US television stations currently licensed to Mr Murdoch shortly, paving the way for such a sale.
The television stations were licensed to Mr Murdoch personally because he has US citizenship. When the stations were acquired, News Corp was an Australian entity. Now that News Corp is domiciled in the US – a switch that allowed Mr Malone to buy the voting shares after Australian investors reduced their stake in the group – it can own the licences directly.
In a separate interview with the Australian newspaper, Mr Murdoch said free-to-air broadcasters were likely to see “shrinkage’’ in revenues because of declining spending by advertisers. “We’re doing very well - we’ve been the number one network the last two years and network revenues are rising strongly. But our local television stations, which are very strong, are increasing their share of the market without increasing their revenue so much,’’ he said.
“In other words revenues in local TV are certainly going down, and we’ll be selling some of those smaller television stations in the next year.”