See how the commentators lined up following Standard and Poor’s decision and why Terry McCrann has gone it alone.
From the July 1 subscriber-only sealed section
Rupert is certainly getting good value from his highly paid corporate lobbyist Terry McCrann this week. Yesterday he devoted his entire column to destroying Elizabeth Knight’s column from last Friday’s SMH – Rupert mocks our anti-foreigner rule
Knight stated that “The rule as it stands is that foreigners are allowed to own no more than 15 per cent of an Australian media company.”
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But as McCrann was only too happy to inform us, those laws only apply to broadcast media – “there is no specific law against foreign ownership of print media.” Only FIRB approval is needed for print.
But McCrann made a clanger of his own, writing that in 1987 Murdoch got his approval to take over the Herald and Weekly Times “not from Peter Costello who was still running around Monash University with rather long hair, but a young and ambitious Paul Keating.”
Well, we’ve check out Cozzie’s profile on the Monash alumni website and it seems the Treasurer finished up his BA back in 1982 (his LLB in 1980) and though he did return as a part-time tutor from 1984 to 1986 we very much doubt he was still running around with long hair because he was a young barrister on the make, following a period at Mallesons. Oh well, McCrann was only five years out.
Today McCrann praised Costello’s decision to wave though News Corp’s move – “It would have been utterly absurd for him to anything else. Far less ‘demand’ some sort of artificial and utterly pointless structure to keep some part of News Corp ‘Australian'”.
“Yes, if the shift is approved, the ASX and brokers will lose revenue as trading in the stock shifts to the US. But trying to ‘force’ it to keep that trading here, as some of the more crazied (sic) ‘commentators’ have shrieked (not us, surely), would be like trying to ‘order’ a company to build a factory here, rather than say, Thailand.”
“The best way of maximising News Corp’s contribution to the Australian economy, to jobs and investment here, is to allow it to maximise its growth opportunities in the US, and indeed the world.”
News Corp dives as McCrann makes a fool of himself
Subscriber email – June 24
We all know that Terry McCrann is the most blatant mouth-piece for Rupert Murdoch’s interests in the News Ltd empire but today’s effort – as News Corp’s market value was plummeting by $4.3 billion – was above and beyond his usual sycophancy.
Whilst virtually every other commentator accepted the logic of S&P’s decision, McCrann described the rationale as “ridiculous” and “inexplicable nonsense”.
But he then moved on to begin the campaign to heavy institutions into supporting the change of domicile with lines like the following:
“There is one absolute bottom line that all those instos will have to think about. First, they are actually News shareholders, and what’s good for News is good for its shareholders. There can be absolutely no argument that the shift to the US is good for News. Even accepting index issues, it would be ludicrous for a major shareholder to vote for less value for the company and thus for its investment. And to specifically send the share price down, by say $2. What it’s risen since the move was announced. Can a fund manager seriously vote to deliberately lose money for those on whose behalf it invests?”
Let’s demolish this rubbish limb by limb. Firstly, News Corp ordinary shares slumped 65c to $12.51 today whilst the preferred stock dived 66c to $11.54 as News Corp’s market value dived by $4.1 billion to $70.6 billion – a loss of 5.6 per cent.
The change of domicile was announced on April 6 and before the news hit the market the ordinaries were at $12.16 and the prefs at $10.91.
On the US market, the prefs were at $US32.62 and the ordinary ADRs at $US36.88 on April 5. So where are they today? The US prefs closed this morning at $US32.52 and the US ordinaries finished at $US35.60. McCrann’s fictional $2 boost from the domicile change is actually a small fall.
It is completely misleading for McCrann to quote the $A News Corp share price when the only reason this has risen since April 6 is because the Australian dollar has slumped from US76.15c on April 6 to US69c today.
The index decision is a major reason for Australian instos to reject the deal.
News Corp reached a peak of $28 in 1999-2000 and it did that whilst being domiciled in Australia. It is complete rubbish for McCrann to say “there is absolutely no argument against the shift”. And it is also a croc to claim “what’s good for News Corp is good for shareholders”. If a News Corp shareholders suffers tax disadvantages from this move to the US then they should vote against it.
Then again, you can hardly expect balance from McCrann when this is what appeared under his by-line on April 7: “It’s a great and exciting day for Rupert Murdoch and all the family – the culmination of one 50-year journey and the start of another. It’s a huge day for all shareholders in The News Corporation. It’s also an important day for Australia, for all Australians, securing one of our two key links to the dynamic growth industries of the 21st century.”
This deal is bad for Australia, bad for the ASX and bad for many News Corp shareholders. It is partly motivated by Rupert Murdoch’s desires to be less accountable and to lock in his family’s succession.
Finally, you would think that McCrann had realised by now that Murdoch is no longer the largest economic shareholder in News Corp. Instead, he claimed the likely “free float” of News Corp shares in th S&P500 index was “essentially all the non-Murdoch shares”. In reality, the free float also excludes the $10 billion-plus worth of News Corp shares controlled by John Malone’s Liberty Media group.
Meantime, The Australian Bryan Frith had a slightly different perspective observating that Standard & Poor’s decision is a bigger blow for the ASX than it was for News Corp.
At The Age, Alan Kohler focused on the affect the move will have on Australian super funds.
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