Murdoch May Have to Sell More Assets

By JOHN LIPPMAN

April 27, 1991 12 AM PT

TIMES STAFF WRITER

News Corp., a global media empire that Rupert Murdoch built in the 1980s on a mountain of debt, became a notch smaller this week when he agreed to sell nine of his U.S. publications for more than $600 million.

The Australian-born publisher and broadcaster had to sell the eight magazines and one newspaper as part of a $7.6-billion refinancing agreement reached with his lenders earlier this year. But analysts said Murdoch will have to sell off at least another $400 million in assets as he approaches deadlines to repay his debt.

“While the sale of the magazines is timely,” said Craig Fitt, an analyst with Moody’s Investors Service in New York, “it still doesn’t get him out of the woods entirely. This is just the first step in shoring up his capital structure.”

Like a bad hangover, Murdoch is now paying the price for more than a decade of heady expansion.

His debt soared to $8.7 billion last year from less than $1 billion in 1985, thanks to a rapid-fire series of mega-deals that included the 20th Century Fox film studio, a group of six TV stations and, fatefully, the $2.8-billion purchase of Triangle Publications, owner of TV Guide and other titles.

The result of all those acquisitions--which included the publications he is now selling--was that Murdoch had an uncomfortable brush with financial ruin before his bankers agreed to a debt restructuring.

After three months of tense negotiations, Murdoch announced in late January that the banks had granted him a short-term $600-million credit line but also required him to repay $800 million by next February, followed by three $400-million payments every six months thereafter.

News Corp. said it would attempt to refinance the remaining $5.6-billion in debt by early 1994. Fitt said the proceeds from the publications’ sale would essentially go to paying off the short-term credit line.

Murdoch, who previously had ruled out the sale of “major magazines” to help pare down his debt, has steadfastly maintained that he would not sell any of his newspapers, book publishing operations or film and TV interests. Beyond that, he said in an interview earlier this year, “we expect to earn our way out of this.”

The U.S. magazines that Murdoch has agreed to sell to K-III Holdings, an investment partnership led by Kohlberg Kravis Roberts & Co., are highly visible but do not represent a major share of News Corp.’s annual revenue. They include the highly profitable New York and Seventeen. But others, such as Automobile and European Travel & Life, reportedly are losing money.

Murdoch’s other media properties in the United States include the 20th Century Fox film studio (which includes the Fox TV network), six TV stations, newspapers in Boston and San Antonio, Harper Collins book publishers and TV Guide.

Aside from the emerging Fox TV network, Murdoch’s other big project--and ongoing capital drain--has been the satellite pay-TV venture British Sky Broadcasting. BSB, which was created last December by merging Murdoch’s Sky TV with its rival British Satellite Broadcasting, is losing about $10.3 million a week.

Despite those sizable losses, some analysts maintain that BSB will become one of Murdoch’s most brilliant moves once the difficult start-up period is surmounted.

“If he rides it out, BSB is going to be a very profitable pay-TV service,” said Jessica Josephson, publisher of the London-based newsletter European Media Business & Finance. “His partners know he’s the only one here who understands the commercial TV business.”

Analysts believe that likely assets to be sold next are a 50% stake in the Australian airline Ansett as well as some commercial printing operations in Australia. Although Murdoch is known for his glamorous media properties, analysts note that he also owns a 300,000-acre sheep ranch in New South Wales, Australia, that “primarily breeds stud rams and ewes for commercial sale.”

MURDOCH RACKS UP SALESRupert Murdoch sold these nine publications to a New York buyout group for about $650 million:

* Daily Racing Form

Newspaper covering thoroughbred racing

Acquired: August, 1988

Circulation: weekdays,

70,000 to 90,000;

Saturday, 150,000;

Sunday, 127,000

* Soap Opera Digest

Magazine covering

daytime TV dramas

Acquired: June, 1989