From the June 29 sealed section
Since when does Peter Costello’s Foreign Investment Review Board approve a controversial move before the formal documentation has been publicly released? When an election is looming and Rupert Murdoch is involved, it seems.
Craven Cozzie has offered no explanation for his decision not to object to News Corp’s proposed move, instead he has published a dismal two sentence press release on his website with a vague reference to the Foreign Acquisitions and Takeovers Act 1975.
Is this really all Australian investors are to expect of their Treasurer? Surely there must be more justification for such a decision which will probably cause the sale of about $15 billion worth of News Corp shares by Australian funds, lower the national tax take, increase the cost of capital for the remaining Australian companies, reduce ASX profits by 5 per cent and reduce Australia’s share of global stockmarkets from 2 per cent to 1.8 per cent?
And has anyone thought about the issue of having an American company controlling 70 per cent of our newspapers and ramming a Republican political message down the throats of Australians. Perhaps this is just further demonstration of the Howard vision for a subservient relationship with America?
See the Treasurer’s pathetic press release here: http://www.treasurer.gov.au/tsr/content/pressreleases/2004/056.asp
Meanwhile, whenever Bryan Frith or Terry McCrann comment on the affairs of News Corp you wonder if they are speaking on behalf of a Murdoch after receiving a timely briefing from senior management. Most of the time they haven’t but the move to America is complicated and sensitive so we take extra special note of columns at the moment. It was Bryan Frith’s turn today with this column in The Oz.
It would be really nice to get some agreed facts in this debate. For instance, Frith wrote the following today:
“News accounts for 7 per cent of the benchmark S&P/ASX200 and its removal will lead to heavy selling of the stock by Australian index funds. That will be more than offset by heavy buying of News by foreign index funds to reflect its weighting on the S&P500 – but it will be buying on the NYSE not the ASX.”
But just last week Frith’s colleague on The Oz, Jane Schulze, quoted an analyst from News Corp’s house broker, JB Were-Goldman Sachs, saying the following:
“I think everyone has just about fallen off their chairs,” said Goldman Sachs JB Were media analyst Brendan Lyons, who downgraded his News recommendation to “market-perform”. He estimated that the company’s exclusion from the S&P/ASX 200 would prompt the sale of about $US12 billion ($17.25 billion) of News Corp shares, and another $US5 billion as News would also depart the MSCI Asian index. If News joined the S&P 500 in the US, it could generate about $US8 billion in demand – not enough to cover the selling in Australia.”
We responded by asking: “Why would you do something that triggers $US17 billion in selling and only $US8 billion in buying. Of course it will drive the share price down?”
But now Frith is telling us the index changes will cause more buying than selling. So which is it folks?