News Corp. No Likely Target

Cable television mogul John Malone’s plan to grab a bigger chunk of Rupert Murdoch’s media empire might have less to do with buying in and more to do with cashing out.

Malone’s Liberty Media Corp. last week announced that it had purchased the right to increase its voting stake in Murdoch’s News Corp. to as much as 17% from 9%. That would cost Liberty up to $1.5 billion. News Corp. responded late Sunday by saying that its board had adopted a so-called poison pill, which would block a hostile takeover attempt by Liberty or any other unwanted suitor.

But analysts and others suggested that for all the palace intrigue, it was unlikely that Liberty had any real interest in making a bid for control of News Corp. Such a deal, after all, would be enormously expensive.

Rather, some observers believe that Malone is intent on beefing up Liberty’s holdings in News Corp. so that he could then force Murdoch either to buy back those shares at a premium or to acquire other assets such as Liberty’s piece of the Discovery cable channels.

News Corp., it seems, has no desire to play along.

“Rupert Murdoch and News Corp. are not particularly interested in helping Liberty unwind its assets,” said Richard Greenfield, an analyst with Fulcrum Global Partners. The adoption of the poison pill, or shareholder-rights plan, shows that relations between the two companies “are relatively icy.”

Julie Ballantine, Liberty spokeswoman, said her company did not consider its potential voting-stake increase to be antagonistic -- even if News Corp. sees things differently -- and was not attempting to wrest corporate control from Murdoch and his family.

“We’ve always viewed ourselves as allies,” Ballantine said.

Ballantine also downplayed the notion that Liberty was trying to leverage its voting stake in News Corp. to prod Murdoch to buy company assets.

“You never say never,” she said. “At Liberty, we take it one step at a time. But if an opportunity comes up, we’ll look into it to see if it makes sense for the company and its shareholders.”

Murdoch and his clan control 29.5% of News Corp., which includes the Twentieth Century Fox film studio, Fox Broadcasting television network, cable channels, newspapers, book publisher HarperCollins and a controlling interest in satellite television service DirecTV.

News Corp. said its plan -- which will be reviewed again by its board within a month -- would go into effect if any party accumulated a 15% voting stake in the company. Were that to happen, all other stockholders would then receive the right to buy new shares in the company at half price, thereby diluting the position of the 15% acquirer.

In a statement, News Corp. noted that it went forward with the poison pill partly because Liberty had proceeded without “any discussion with or prior notice to” the company.

Indeed, one News Corp. executive said Liberty announced its plan while Murdoch was on a conference call with Wall Street analysts discussing quarterly earnings, catching him off guard.

New Corp.’s swift reaction triggered speculation around the globe Monday over just what the two media titans were up to. Some believe that Murdoch and Malone, strong allies in the past, may one day decide to merge their operations in spite of the latest dust-up. Others think they are now firmly at odds.

“Sometimes it’s your old friends who hurt you the most,” said Matthew Harrigan of Janco Partners, an investment banking firm near Denver.

Still, analysts said Monday that they didn’t think Malone was vying to unseat Murdoch or his sons Lachlan and James, whom the 73-year-old has been grooming to run the corporation.

Instead, some said, Malone was simply taking advantage of News Corp.’s decision to exit its native Australia and reincorporate this month in the United States. That prompted investors Down Under to put thousands of shares onto the market. “This,” said Harrigan, “was a one-time shot for Malone to increase his voting shares in News Corp.”

News Corp. shares closed Monday at $17.58, down 62 cents, on the New York Stock Exchange. Liberty stock closed at $9.51, down 12 cents on the NYSE.