Murdoch’s talks with Malone at crucial stage

Listen to this article

00:00
00:00

Rupert Murdoch’s negotiations with John Malone over buying back an 18 per cent voting stake in News Corporation are reaching a decisive stage. US regulators are set to approve a long-standing request for ownership changes to News Corp television stations that could pave the way towards fresh talks between the media moguls.

Mr Murdoch, whose family controls just over 30 per cent of News Corp’s voting shares, has wanted to buy out Mr Malone since his long-time sparring partner accumulated the shares without Mr Murdoch’s knowledge in November 2004.

Although Mr Malone has expressed his support for Mr Murdoch and his News Corp strategy, Mr Murdoch is believed to be worried that having one shareholder with such a large voting stake could threaten his family’s future control of the media empire, which includes newspapers such as The Times, 20th Century Fox studios, Fox television and cable businesses, and MySpace.com.

News Corp introduced “poison pill” measures to ensure Mr Malone’s Liberty Media could not increase its $10bn stake. Several institutional shareholders have persuaded News Corp to allow them to vote on the poison pill in October. Mr Malone has said that Liberty Media would vote against the measures.

Although News Corp is confident it would win the vote, Mr Murdoch is likely to want to avoid a shareholder dispute if possible. In addition, the sharp rise in value in News Corp shares, up more than 20 per cent this year, has made Mr Malone’s stake worth more.

“We have had discussions with News Corp about them selling an asset to Liberty [in exchange for News Corp shares], which is more attractive for Liberty following the recent rise in News Corp’s share price,” Greg Maffei, chief executive of Liberty Media, told the Financial Times. “There are no guarantees a deal will get done this time, but there appears to be a confluence of events which could make it happen.”

The Federal Communications Commision is expected to approve in the coming weeks News Corp’s request to take control of 35 US television stations currently licensed to Mr Murdoch. Some of the television stations could be exchanged for a part of Liberty’s News Corp stake to allow the deal to be tax-free.

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.

The FCC has had a request for transfer of control pending from News Corp, and its appointment last month of a fifth commissioner is expected to mean this will be approved within the next few weeks.

Copyright The Financial Times Limited 2017. All rights reserved. You may share using our article tools. Please don't copy articles from FT.com and redistribute by email or post to the web.