Tue Apr 06, 2004 9:31 am by Indy11
From todays NY Times:
Murdoch Plans to Move News Corp. to U.S.
By KENNETH N. GILPIN
Published: April 6, 2004
News Corporation, Rupert Murdoch's mammoth global media company, said this morning it intends to reincorporate in the United States from Australia, where it has been domiciled since 1949, when Sir Keith Murdoch, Mr. Murdoch's father, began to buy up interests in Australian newspapers.
As part of the move, the company said it will shift its primary listing to the New York Stock Exchange, while retaining secondary listings in Australia and on the London Stock Exchange.
Two classes of News Corporation stock are currently traded in the United States, but as American depository receipts. Many institutions and pension funds are precluded from owning such shares.
In addition, Fox Entertainment Group, the company's American subsidiary, has traded as a free-standing entity since 1996.
The company said the reorganization will be accomplished under an Australian law that will allow existing holders of News Corporation ordinary and preferred shares, including the A.D.R.'s traded in the United States, to exchange their voting and non-voting common stock in a new corporation based in Delaware that will become the new parent company.
The new shares will have "essentially" the same rights as the company's existing ordinary and preferred shares, News Corporation said. The exchange is expected to be tax-free for the "vast majority" of News Corporation shareholders, the company said.
In many respects, News Corporation's move will catch the company up with reality.
Mr. Murdoch, who is 73 and recently became the father of twin daughters by his third wife, moved to the United States in the 1970's and became an American citizen in 1985. More than 75 percent of News Corporation's revenues and profits are generated in the United States.
Still, the company has retained its links with its Australian heritage. It has continued to hold annual general meetings in Adelaide, the capital of South Australia where News Corporation has its registered office.
Analysts said the timing of the move was not completely clear.
"I don't know why they did this now," said Richard Greenfield, a media analyst at Fulcrum Partners.
"Simplifying Mr. Murdoch's ownership of News Corporation is part of this. And the company and its managers, who are compensated in non-voting shares, have grown increasingly frustrated by the price differential between the voting and non-voting shares," Mr. Greenfield said.
Until this morning, there was a spread, or difference, of about 12 percent between News Corporation's voting NWS shares and the non-voting NWS/A shares. The spread has narrowed in recent weeks, from as high as 22 percent.
And the gap narrowed further after the opening of trading on the New York Stock Exchange.
By late morning, shares of the voting stock were up 34 cents, to $37.22 a share. But the non-voting shares, which are much more frequently traded, jumped by $1.74, to $34.63 a share.
"People are only beginning to figure this out," Mr. Greenfield said. "The spread is beginning to close."
News Corporation is hopeful that the move to the United States will dramatically broaden the potential investor base for the non-voting shares, thereby lifting its price.
"Narrowing the gap between the voting and non-voting shares in the United States," is a big motivating force behind the move, said David Joyce, an analyst at Guzman & Company.
In a conference call, News Corporation executives said the change had been discussed for some time, but that the timing had been delayed by the company's recent purchase of DirecTV, the satellite television company.
Once News Corporation is based in the United States, Mr. Greenfield said, its shares will almost certainly be included in the Standard & Poor's 500 index. And he said he expected that at some point Fox Entertainment will no longer trade independently.
"Now that News Corporation is going to be a U.S.-listed company, the whole basis for Fox to be listed is going away," he said.
Fox Entertainment was offered to the public in 1996 to highlight the value of News Corporation's American-based entertainment businesses and play down the company's international assets, which were seen as both unattractive and confusing to most American investors.
However, the landscape has changed over the last eight years, Mr. Greenfield said.
"International is where the growth is," he said. "The United States is a mature market. Among its media peers, nobody else comes close to being as global as News Corporation."
In addition to its extensive publishing holdings in Britain, News Corporation owns Sky Italia, Sky Latin America and BSkyB, its Asian satellite operation.
In the United States, News Corporation owns The New York Post, the Fox television network and produces movies and television shows like "The Simpsons."
The move "adds another major investment within the media space that people can't look past any more," Mr. Greenfield added.
"This will be a $50 billion media company with faster growth and a cheaper valuation than the others," he said.
As part of the reorganization, the Murdoch family will sell its 58 percent stake in Queensland Press, one of Australia's most profitable newspaper publishing groups, to News Corporation. News Corporation already owned 42 percent of the company.
In addition, the Murdoch family will also sell Cruden Investments, its private holding company, to the new, United States-based News Corporation in exchange for voting stock in the new company.
As a result of these transactions, the Murdoch family's voting rights in News Corporation will be trimmed to 29.45 percent, from 29.87 percent.
The relocation is subject to shareholder approval. News Corporation said it expected the shift to take place by the end of the year.
) and haven't been corrupted by wealth and power. No-one willingly gives up power (except Diocletian) e.g. look at all those ancient Soviet leaders and Politburo who were leftovers from the Revolution and kept artificially alive (almost!) but they clung onto their power right to the bitter end.
