News Corp. Still Plans Fox IPO

Despite worldwide market turmoil, media and entertainment giant News Corp. plans to go ahead with a public offering of stock in its Fox Entertainment Group Inc., although Chairman Rupert Murdoch said he wants to see markets settle down first.

Some investors have begun to doubt News Corp. will go ahead with plans to offer to the public a stake of about 13% in Fox, whose assets include the 20th Century Fox studio, Fox television network and the Los Angeles Dodgers.

News Corp. has indicated that, barring another major drop in stock prices, it plans to go forward after receiving regulatory approval.

When asked at a news conference at News Corp.’s annual meeting this week about exactly when stock would be issued in an initial public offering, Murdoch said, “As soon as the markets settle down.”

He would not give a more definite time for the IPO, nor would he say even whether it might occur before the end of the year. Some investors believe that if News Corp. went ahead with its plans, November would be the likely month.

“We don’t have to do it. We don’t need the money,” Murdoch said during the news conference.

News Corp. said in June that it would sell as much as 20% of Fox Entertainment to the public to bolster the company’s balance sheet and put it in a prime position to make acquisitions. In addition, News Corp. executives hope that an offering will unlock the value of the company’s vast entertainment assets, helping to boost News Corp.’s lagging stock price to levels executives believe are more in line with the company’s value.

The company last week filed documents saying it plans to sell 85 million Class A common shares, or 13.43% of its common stock, a smaller offering than some investors had expected.

News Corp. will hold all 547.5 million Class B shares, with 10 votes each, giving the company control of Fox Entertainment’s voting rights.

News Corp.’s stock closed unchanged Tuesday at $23.13 on the New York Stock Exchange. The price is off about 30% from a 52-week high of $33.50 as investors fret over the current market turmoil as it relates to the offering plans, and also over disappointment that the offering would be smaller than first planned.

At News Corp.’s annual meeting, Murdoch said Tuesday that he is worried about a worldwide recession.

“We seem to be moving to a period of deflation, but there is no doubt that we have seen great shocks and we may see more shocks yet,” he said.

The usually acquisitive Murdoch also said he is happy to sit on the company’s substantial cash pile until the market turmoil ends. Underlining this more cautious approach, Murdoch played down any suggestions that he was on the verge of a deal to create a Pan-European pay television venture with Italian tycoon Silvio Berlusconi’s Mediaset and Germany’s Kirch.

“We don’t have big plans for big acquisitions at the moment at all,” he told the news conference. “We are very much concentrating on organic growth.”

In other matters, Murdoch said advertising revenue at News Corp.’s key U.S. television units, the Fox Network and the Fox local stations, had started the 1998-99 fiscal year, which began July 1, slowly.

Analysts have cited fears of a U.S. slowdown in the recent sharp fall in News Corp.’s share price.

“I would have to say there was a slightly slow start,” Murdoch said.

“The General Motors strike hurt. Automobile advertising is very important, but it dried up in the first few months of this fiscal year,” he said.

Murdoch said he will watch the performance of the stations carefully.

“If current predictions for this month and next month come to fruition, we will be in very good shape with the stations,” he said, noting, however, that advertisers were more nervous than a year ago.