Murdoch May Be No. 1 Media Mogul With Triangle Deal

In science fiction books, a handful of global corporations whose pursuits transcend any nation’s interests or borders emerge to control modern society’s most prized and powerful resource. The resource is information.

This week, Rupert Murdoch took what many consider another step, whether intentionally or not, into that science fiction fantasy.

With the proposed acquisition for $3 billion of Triangle Publications Inc., publisher of TV Guide, Murdoch’s News Corp. agreed to acquire America’s biggest selling magazine.

And his corporation became, industry analysts say, the furthest-reaching global media company in the English-speaking world--and maybe the biggest, exceeding Gannett Co., with estimated assets last year of $10 billion.

The theory goes that different branches of the media build on each other--the phenomenon business people like to call synergy. If one owns a movie studio (Murdoch now owns 20th Century Fox), one can make programs for a TV network (Fox network here and Sky Channel in Europe). If one owns TV stations, too (Murdoch now owns seven in the United States), one then has a base to sell the programs.

If one owns magazines and newspapers (they are too numerous to name), one could produce versions of those for television. Gannett, for instance, is now trying to produce a television version of its newspaper USA Today.

And in the world of synergistic logic, size is the best defense. “You’ve got to be bigger or be swallowed up yourself,” said Paine Webber media industry analyst J. Kendrick Noble Jr., explaining the theory in which “the world is headed toward a half-dozen or so media empires.”

Now, “Rupert is by far and away already the only identifiable global media company,” said Richard McDonald, media analyst for the investment house First Boston.

Some analysts even said the Triangle deal might make other companies worry about global empires. “I wouldn’t be surprised to see this set off a number of acquisitions by companies who see this and start to wonder about the scenario,” said Lauren Rich Fine, an industry analyst with Merrill Lynch.

The limit on global empire building, of course, is how to keep raising the money to keep buying new properties. Before the Triangle deal, Murdoch already carried debts estimated at $5.6 billion.

The financial fine print of the Triangle deal has not been made public yet, so it is unclear how much debt this could add. Speculation on Wall Street was that Murdoch might have to sell something, such as his 20% stake in Pearson PLC, the company that publishes the Financial Times of London, a holding worth roughly $760 million.

Murdoch spokesman Howard Rubenstein said Monday that Murdoch will be meeting shortly with financial advisers and attorneys to discuss “all aspects of a $3-billion deal,” the biggest publishing acquisition ever, but “he reiterates his position that the deal is well within his financial capacity.”

“Despite all appearances, the man is a financial mortal, so there is a point where he can get over-leveraged,” said McDonald of First Boston. But that probably won’t come unless he buys things that lose money and hence “don’t finance themselves.”

If one buys a company as successful as Triangle, which has revenue estimated at $700 million, it is difficult to go wrong, McDonald said, unless the price is much too high. Analysts figure Murdoch paid roughly 14 times cash flow, which is not out of line with recent magazine purchases.

If so, that would mean TV Guide makes roughly $220 million a year in cash flow, which is after-tax profits plus depreciation.

But those who follow Murdoch closely believe that he operates more like an inveterate deal maker than a global strategist. If somebody comes to him with a good deal, he will check his senses to see if the deal smells good, check his bankers to see if he has the money and then buy.

In the case of Triangle, indeed, Murdoch did not seek out pieces to fit a science fiction model. Rather, magazine broker John J. Veronis, who knew that 80-year-old Triangle owner Walter Annenberg might want to sell, thought Murdoch might buy.

But the synergies of global media empire making also are there.

For one, Murdoch can immediately do things to Annenberg’s magazines--which, along with TV Guide, include the Daily Racing Form and Seventeen magazine--to make them more profitable, analysts said.

TV Guide and the Racing Form, for instance, also can be sold on a computer database. Analysts also believe that Murdoch may explore transferring some of the Triangle magazines into television.

His Fox network has enjoyed its greatest financial success, for instance, syndicating “info-tainment” programs such as “Current Affairs,” a sort of National Enquirer of the airwaves, and “America’s Most Wanted,” a crime show based on actual unsolved cases.

Similarly, TV Guide could be transferred to television as a kind of “Entertainment Tonight,” said Merrill Brown, editor of Channels magazine, a monthly television business journal. TV Guide was attempted as a TV program once before, unsuccessfully.