News Corporation: From the Local to the Global
by: John Sinclair / Victoria University, Melbourne
At the end of last month, October 2004, Rupert Murdoch won shareholder approval to move News Corporation’s domicile and main stock market listing from Australia to the US. Subsequently cleared by the relevant Australian and US authorities, it has become incorporated in Delaware as News Corp US, with its primary listing on the New York stock exchange, and it expects to join the S&P 500 index next year. While the shift brings News into line with the reality that it now generates 75% of its revenue in the US, it was aimed also at gaining better access to Wall Street capital markets and getting closer to institutional fund investors in the US.
With friends like that, who needs enemies?
However, even before the NYSE listing occurred, while many formerly Australian-held shares were in play during the crossover, a large parcel was snatched up by Merrill Lynch, acting on behalf of John Malone, formerly principal of Tele-Communications Inc., and now Liberty Media. Malone had been building up his stake in News for some time, and before the shift already was the second biggest owner of voting stock, with 9.2 per cent. With the latest purchase, he now has 17.3 per cent, which compares to Murdoch’s 29.5 per cent. Malone’s position could strengthen further as he also owns convertible non-voting shares. It is not clear whether his bid is friendly or hostile, or something else again. The financial press is full of speculation. Is Malone actually after control of News, perhaps to merge it with Liberty Media? Or is he just putting pressure on Murdoch to reciprocate by taking up equity in Liberty? Perhaps Malone is not necessarily after control in his own right, but making sure he is in a position to influence who succeeds Murdoch?
Certainly, Murdoch has already shown that he knows how to take care of himself in the bear-pit of the NYSE, but the next few months to April, when Malone has to settle with Merrill Lynch and News becomes listed on the S&P 500, will be a decisive phase for the future direction and control of News.
‘I still call Australia home’
With the last annual shareholders’ meeting at the Adelaide Hilton on October 26, it seems that News Corporation ceased to be an ‘Australian’ company, so as to become an ‘American’ one. It is easy to conclude that there must be some centripetal pull in capitalism, though a harder look at the dynamics shows that, quite apart from the fact that capitalism has more than one centre, decisions like this are motivated by a strategic assessment of comparative advantages. In this case, and regardless of what risks it was taking vis-a-vis Malone, calculated or not, News relocated to be in its largest and most profitable market, and to be closer to sources of capital.
However, this ‘historic’ shift, as Murdoch called it, gives us cause to reflect more deeply on the relationship which global media companies now bear to the nation-states in which they develop, and in which they are domiciled – which is obviously no longer the same thing.
When Rupert Murdoch’s father died, he left him nothing but a newspaper – not a copy of a newspaper, of course, but the whole business, namely the Adelaide News. It was from this asset that the young, Melbourne-born Rupert Murdoch went on to build up media interests progressively in Australia, then the UK, the US, Asia and Latin America, ultimately forming today’s eponymous global media conglomerate.
Rupert Murdoch’s father had been Sir Keith Murdoch, who began his career as a journalist, but became a major figure in the development of the commercial popular press in Australia between the World Wars. Seen as the counterpart to the innovative and interventionist British press baron Lord Northcliffe, Murdoch Senior earned himself the epithet, ‘Lord Southcliffe’. Yet Keith Murdoch’s international outlook went beyond the customary colonial fealty to Britain, which Australians of his generation referred to as ‘Home’: interestingly, he was a founder of the Australian-American Association, created before World War Two to foster ties with the US.
As far as Rupert himself is concerned, he quite famously became an American citizen in 1985, so as to purchase the group of Metromedia television stations in the US which he intended to build into the Fox network. This also was a strategic move, required to comply with FCC restrictions on foreign ownership of US television stations. The subsequent taunts of ‘Citizen Murdoch’ refer to this change of allegiance: not his mythic stature as an aloof and omnipotent Citizen Kane figure.
Although personally an unabashed admirer of the US, and now notorious for the conservative editorial slant of his media properties in the US, Murdoch’s change of citizenship appears to have been utterly pragmatic – just something he had to do to acquire Metromedia. Like News’s shift to the US, it demonstrates the arbitrariness, and many would say, cynicism, with which global media companies now relate to the nation-state, and calls into question the very point of maintaining foreign ownership rules at all, at least within what the conservatives are now calling ‘the Anglosphere’.
News had long since ceased to be ‘Australian’ in any meaningful sense before the shift to the US, although it commands nearly 70% of the daily press, operates Fox Studios, and is a major player in pay-TV and recording in Australia. It will continue to list on the Australian stock exchange, as a secondary listing, and has pledged to maintain and expand its operations in Australia. Ironically, just as in the US, Australia has a newly re-elected conservative government, one that is now in a position to lift the foreign ownership restrictions which it hitherto had been thwarted in doing. This would allow News to acquire a broadcast television network ,but at least for the moment, Murdoch is feigning a total lack of interest in that prospect.
Adelaide, the cradle of News Corporation and home to it for fifty years, with little more than a million people, is one of Australia’s smaller state capitals. Although it has a stylish and cosmopolitan side to it, Adelaide is mostly sedate and a little provincial, in an English kind of way: ‘a city of pubs and churches’. It was not surprising that Murdoch’s ambitions soon outgrew it, but he maintains that it will always have special place in his heart – wherever that is.
Please feel free to comment.