By Stephen Mayne

“The reincorporation is expected to benefit all shareholders, by
increasing the scope and depth of the shareholder base, improving
trading liquidity, enhancing access to the capital markets and making
the company’s shares eligible for inclusion in a variety of US-based

So said News Corporation on April 6, 2004, the day it first unveiled
the controversial move to America. That prediction was a long way from
being fulfilled on Friday night when the ordinary voting shares tumbled
45c to a two-year low of $19.71.

The stock has since recovered marginally but it is worth remembering
they were trading at the equivalent of $24.32 on April 6 last year and
non-voting stock was at $21.82. Yesterday they closed at $19.91 and
$18.80 respectively.
Therefore, the voting shares have slumped 18.13% and the non-voters are
down 8.75% since the move was announced amidst claims of an
impending re-rating as American funds soaked up the stock once it
joined the S&P 500.

It’s not as if the Australian market has gone backwards over that
period. On April 6, 2004, the S&P/ASX 200 was at 3452.2, so it has
rocketed more than 1000 points to 4459.7 since then, a rise of 29.2%.
News Corp clearly volunteered out of a booming Australian market and
the faster Australian funds sold the better off they’ve been.

This means that News Corp voting shares have underperformed the broader
Australian market by almost 50% since revealing plans to leave. What
was it that Terry McCrann said on April 7, 2004?

“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.”

We all know that News Corp is mainly an American business, but
since April 6 last year the Dow Jones has risen from 10,243 to 10,440
and the broader
broader S&P 500 is also up marginally from 1181 to 1207.

Given these undeniable statistics, shareholders must surely regret embracing the move. October
26 was the anniversary of the vote taking place and November 12 is the
anniversary of the move formally coming into effect, so Rupert will
have a lot to reflect on when he gathers before the Adelaide faithful
at The Advertiser building on November 16 for what will probably be the first and last News Corp “shareholder information meeting”.

This notion of returning to Adelaide each year was pushed by
Murdoch who was dead against the reincorporation, but with the heir
apparent now forging his own career in Sydney, don’t expect a similar
gathering in 2006. And nor should Rupert bother – the Adelaide
shareholders asked one question in seven years during the 1990s, so
they aren’t exactly passionate.