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News Corp, the global media group run by Rupert Murdoch, could spend up to $2bn on internet acquisitions in efforts to transform the company into a “dominant player on the web”.
The media company, which this year embraced internet growth opportunities following years of sidelining the medium, has already spent nearly $650m on purchases, including its recent $580m offer for Intermix Media, owner of MySpace.com.
Mr Murdoch said on Wednesday he did not expect to spend more than $1bn in total at the moment, but if opportunities came up could allocate a further $1bn. He said he was in “very advanced negotiations to buy a controlling interest in a wonderful search engine,” but did not elaborate.
News Corp, which on Wednesday reported strong growth in its filmed entertainment, television, cable, satellite broadcast, newspapers and book publishing businesses, expects the internet to be an engine of future growth. To this end, Mr Murdoch said the recently established Fox Interactive Media division would become a stand-alone unit.
Mr Murdoch, who has a reputation for accurately spotting future media growth trends although has in the past made losses on internet ventures, has visions of using the extensive content from his studios and television businesses to build a “distinctive interactive network” that will “redefine the portal”.
In addition, the News Corp board on Wednesday extended its “poison pill” provisions for a further two years to prevent John Malone's Liberty Media Corp from increasing its voting stake beyond its current 18 per cent.
The move signals that no deal is imminent between Mr Malone and Mr Murdoch, who has wanted to try and gain back some of the voting shares in order to secure his family's control over the media group. The family currently has 29.5 per cent of the vote in News Corp.
News Corp has been in the limelight in recent weeks following the unexpected resignation of Lachlan Murdoch, Mr Murdoch's eldest son, from his executive duties at the company. Lachlan had often been identified by Mr Murdoch as his potential successor at the media empire he built up.
James Murdoch, who runs the BSkyB satellite business in Britain, is now the only one of Mr Murdoch's adult children with an executive role in the company. Mr Murdoch said yesterday succession planning was up to the board to decide.
News Corp, which implemented a one-year poison pill provision last November, had at the time said it was the board's policy to seek shareholder approval of any extension of the poison pill. Mr Murdoch said yesterday the “board has changed its policy”.
The media group reiterated its intention to buy back $3bn of shares and yesterday increased its dividend. Investors such as Mr Malone have been calling on the group to increase leverage and buy back more shares.