Lachlan Murdoch’s shock resignation from News Corp might at last bring
a little more transparency to the financial performance of ventures
the lad was responsible for. The AFR has today produced the most definitive piece on the
Super League fiasco that we’ve seen so far. The paper puts the losses
at $560 million and goes into enormous detail about all the funny
money structuring which News has used to blur the picture over the past
decade.

With Lachlan soon to be off the scene, it will be interesting to see whether
the financial hard heads in New York continue to support the venture at
its current level. Maybe News will actually come clean with a much
bigger write-down, as its 50% stake in the NRL still sits on the books
unchanged at $160 million and it has only ever claimed a $100 million
write-down.

It seems tax changes after the move to America was what finally forced News to come clean, as The AFR explains:

Last November, a week after reincorporating in the US, News
began the process of converting $560.2 million in loans to Super League
Pty Ltd into shares – this finally was a more realistic measure of how
much the rugby league wars had cost News.

News Corp spokesman Greg Baxter confirmed that the changes were loans
that had been capitalised. “The changes occurred in order for the
entities to conform with the new requirements of the consolidated tax
regime whereby in order for the accounts to be consolidated each had to
be assigned a cost base, based on its assets,” he said.

With Rupert no longer needing to talk up Lachlan’s performance, maybe
he’ll come clean in next week’s results about the Super League.
Similarly, all this big talk about how wonderful the New York Post has done under Lachlan won’t be needed either.

Given that Fox News and The Weekly Standard give Rupert the voice he craves in America, maybe the New York Post could be sold or pared back to an operation that actually makes money.

In assessing Lachlan’s performance, you have to look at what he
inherited in Australia. The new ventures such as Super League and
One.Tel did cost the company about $1 billion, but he did exit some
companies particularly well, most notably AAPT, PMP, Ansett and
Vodafone, where the buyers all took a haircut.

The only exiting mistake was the Seven Network which has almost doubled
since and it remains to be seen whether the sale of News Corp’s New
Zealand operations to Fairfax was a mistake, although it certainly
booked a big profit at the time.

Peter Fray

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