Murdoch May Consider Selling Asset to Liberty Media

Feb 2, 2005  •  Post A Comment

News Corp. Chairman Rupert Murdoch on Wednesday said he might consider selling an asset as a way to buy back shares purchased last year by Liberty Media and reduce Liberty’s stake in News Corp.

“We are very confident we can come to a friendly and fair resolution,” Mr. Murdoch told investors and analysts during a discussion of the company’s fiscal second-quarter results. “We may be able to take back and cancel some of their shares in return for some asset that they value more than we value.”

He added that News Corp. would not give up what he described as “big assets” to reduce Liberty’s stake in News Corp, nor will News Corp.’s “cupboards be cleaned up of all our cash,” he said.

Liberty last November doubled its stake in News Corp. to 18 percent from around 9 percent, triggering News Corp. to adopt a poison-pill strategy, which allows remaining shareholders to increase their stakes in the company when an individual shareholder scoops up a large number of shares in the company. Liberty is now the second-largest shareholder in News Corp. behind Mr. Murdoch and his family.

Observers have speculated on what was behind Liberty’s move, suggesting it was a way to pressure News Corp. into giving up media assets to Liberty, which is in the throes of reinventing itself and becoming more of an operating company than a holding company. Liberty officials, for their part, have said the increased stake reflects their liking of News Corp. and they repeatedly have said they are pleased with how Mr. Murdoch and his team are running the company.

Mr. Murdoch’s comments came as Fox Entertainment Group, the 82 percent News Corp.-controlled company that holds News Corp.’s U.S.-based entertainment assets, reported a 30 percent rise in fiscal second-quarter profit to $431 million, or 44 cents a share, compared with a year-ago figure of $330 million, or 36 cents a share. Revenue rose 17 percent to $3.9 billion.

News Corp. reported an 80 percent surge in fiscal second-quarter profit to $386 million, or 14 cents a share, compared with a year-earlier profit of $215 million, or 8 cents a share. Revenue for the three months ended Dec. 31 rose 18 percent to $6.6 billion.

Fueling most of Fox Entertainment’s growth in the quarter were robust DVD sales and strong performances at the company’s cable properties.

The DVD sales strength was bolstered by both film titles and releases of several television series, including “The Simpsons,” “Family Guy” and “24.”

At the cable networks, Fox News Channel continued to be a major driver of growth, benefiting from increased ratings, higher advertising rates and higher affiliate fees as cable operators begin to pay up in renewed carriage agreements. The same factors helped FX produce robust results as well.

The broadcast network was the laggard in the Fox Entertainment Group stable during the fiscal second-quarter, with its weak ratings and softness in advertising revenue leading to disappointing results for both the network and Fox owned-and-operated television stations.

However, News Corp. officials also said they expect the Fox Broadcasting network to end the current television season as either No. 1 or a close No. 2 behind CBS, as “American Idol,” “24” and “Simple Life 3” turn in strong ratings performances in the current quarter.

The company provided few details of its plans to launch new channels this year, though executives did say that the new reality channel they are planning should have one of the largest subscriber bases of any newly launched channel when it goes live later this year. The company has a similar expectation for a business-themed channel the company is considering rolling out sometime in 2005.