Top > Business > 2007 > January > 2007-01-02

Murdoch family tightening grip on News Corporation

The Rupert Murdoch legacy to his family in the form of the media group News Corporation is more firmly secured than ever. In a coup that ended months of tough negotiations, Murdoch has agreed to exchange a $1 billion of assets, including local sports channels FSN Northwest, Pittsburgh and Rocky Mountain, $550 million cash and his 38.5 per cent stake in US broadcaster DirecTV for Liberty Media Chairman John Malone`s 16.3 per cent stake in Murdoch`s own News Corporation.

Mr. Malone had been increasing his stake in News Corporation for years and held 513 million class A and B shares in the company, thereby acquiring an almost controlling influence on the company, compared with Murdoch`s current stake of 31 percent. In this, Mr. Malone had become a very real threat to the Murdoch family`s control over the company, so much so, that Mr. Murdoch implemented measures to keep Mr. Malone from purchasing more stock.

The generous asset swap with Liberty Media would increase Murdoch`s stake at News Corporation to 38 percent, by effectively buying Malone`s shares back into the company. Some analysts believe that this is too high a price to pay for prolonged family control, but a News Corp spokesman highlighted the tax free gains and increased earnings resulting from the deal. The final decision lies with the shareholders though, which will vote on the approval of the deal without Mr. Murdoch or Mr. Malone being able to vote.