Neil Chenoweth had a fascinating feature in The AFR today
revealing that John Malone’s Liberty Media sought approval from
Treasurer Peter Costello to increase its News Corp voting stake way
back in December 2002.

As ASIC investigates Telstra for supposedly not keeping the market
informed, there’s no doubt that Cossie was sitting on price-sensitive
News Corp information for a couple of years, although he was presumably bound by confidentiality agreements.

Whilst Chenoweth’s story was quite complex today, the key point is
that Malone was seeking approval for the direct foreign ownership of
News Corp’s entire share capital (including non-voting shares) to be
lifted above 38%.

There was plenty of headroom at the time, suggesting he was planning to
spend billions, although he obviously couldn’t go above 20% of the
voting stock without being required to launch a full bid under
Australia’s takeover laws, which certainly don’t apply in Delaware.

It would be fascinating to know who, if anyone, Cossie told about the
Malone plan. Murdoch will presumably be furious that the Treasurer
didn’t give him the tip as he seemed genuinely surprised, shocked and
angry when the two-stage Malone raid came in 2003 and 2004.

Did Cossie tell the PM? What will it all mean in terms of who the
Murdoch press will back if there is a showdown between Howard and
Costello next year? As Mike Mangan noted in his Eureka Report article, “If you are used to changing
governments (just ask Gough Whitlam, John Major and Al Gore/John Kerry),
changing analysts is hardly a challenge.”

Murdoch’s fortress-like takeover defence strategies have previously
been backed up by this Treasurer’s discretion in Australia’s foreign
ownership laws.

Giving that up in the move to America certainly now seems like a major
mistake, especially if the coalition of institutions can force the Sun
King to either abandon the poison pill or at least put it to a
shareholder vote, as he first promised.

All in all, this is just part of the mounting pressure on the world’s
most powerful individual, as opposed to the US President, which is the
world’s most powerful position, to surrender some of that power after
52 years unchallenged at the top of News Corporation.

Peter Fray

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