Listen to this article
Rupert Murdoch, News Corporation chairman, said Australia’s Macquarie might lose a takeover battle for the core assets of Hong Kong telecom company PCCW because it failed to communicate properly with Beijing.
In an interview published on Thursday in The Australian newspaper, which is owned by News Corp, Mr Murdoch accused China of “treating Macquarie as hostile invaders”.
He said Australia’s largest investment bank might have had been encouraged to pursue its proposed deal by a middle-level Chinese official “with a very large title”. But higher authorities appeared to take a different view on the transaction and did not want to see Hong Kong’s biggest fixed-line company to fall into foreign hands.
The comments from Mr Murdoch, who has become one of the world’s most outspoken business leaders on the difficulties of doing business in China, come despite the fact News Corp is in talks with Macquarie about joining its $7.3bn bid for PCCW.
Although Mr Murdoch is not himself directly involved in the negotiations, he has been trying to gain access to China’s media market for more than a decade.
Last year, Mr Murdoch admitted that News Corp’s attempts to develop its business in China had “hit a brick wall” and accused the Chinese authorities of being paranoid about foreign media.
This month, he sold 20 per cent of its minority stake in Phoenix Satellite Television, a Hong Kong-based Chinese language channel, to China Mobile, the country’s leading wireless operator, in a move that appeared to confirm his growing frustration with Beijing’s controls on the sector.
“Something clearly went wrong in Beijing, which is very easy to happen,” Mr Murdoch said of the Macquarie offer for PCCW. “It would be an amazing achievement if Macquarie managed to turn the situation around.”
He also said Richard Li, PCCW chairman, had rebuffed an offer from his father, Asia’s richest tycoon Li Ka-shing, for the company’s telecom and media assets, The Australian reported.
PCCW on Thursday would not confirm or deny Mr Murdoch’s comments, saying only that it had two offers on the table.
Macquarie and US-based private equity group Newbridge have been locked in a bidding war for PCCW’s media and telecommunications assets.
However, the deal became a political issue after state-controlled China Netcom, PCCW’s second largest shareholder with a 20 per cent stake, said it did not want to see any changes in the Hong Kong company.
Mr Murdoch told the Australian that News Corp is interested in PCCW because of its broadband television business, known as Now.
Star TV, News Corp’s regional unit, is a major programme supplier to Now.
“PCCW are a very big client of ours. They take all our channels and have done very well in Hong Kong. It would be a very interesting experience operating that – the video side of the business,” Mr Murdoch said.
Macquarie declined to comment on Thursday. But a person close to the company said Mr Murdoch was not personally familiar with the negotiations and Macquarie did not agree with his comments.