“Most people who have been prepared to take a long term view on this
company have done brilliantly, and more than any other company in
Australia, I think.”

So said Rupert Murdoch at last week’s shareholder information meeting in Adelaide.

When Sir Keith Murdoch died in October 1952, his estate was estimated
to be worth about $9 million in today’s dollars. The Murdoch family is
today worth about $9 billion, so that’s one hell of a return for those
who were on the register of News Ltd when young Rupert took the reins.
However, we should not ignore the fact that News Corp has been a
chronic underperformer for most of the past two decades.

When former Deutsche Bank media analyst Mike Mangan did his swansong report in April, he calculated that you had to have bought News Corp before August 1992 to have outperformed
the All Ords. But in April News Corp was $22.60 not the $21.18 of
this morning. And the ASX 200 was 4120 not 4621 today. So even since April it’s
underperformed the ASX200 by another 17%!

Last month Mangan wrote in Eureka Report that a shareholder would have had to
have bought News Corp before 1998 to have even seen absolute performance let alone
relative performance.

Rupert was even slagging off at Fairfax during his current Australian
visit, yet the much-maligned Fairfax has outperformed News Corp over
every time period in at least the last decade. The largest
outperformance is over five years where it’s a massive 30%.

Therefore, just how far back do we have to go to make News Corp the
best performing stock on the market? Frank Lowy’s Westfield has clearly
been the best performed stock since it floated because $1,000 invested
in 1961 was by 30 June worth $167 million, assuming all dividends were
reinvested. Before 1961, it would be interesting to compare BHP and the
banks, especially when you consider the many more dividends they have paid
than News Corp over the years. If anyone can crunch those numbers,
please email [email protected]

However, there have been great trading opportunities in News Corp over the last two decades. The lowest
recent point came on January 19, 1991, when the stock
hit $3.19 ($1.06 in today’s terms adjusting for various
share splits, bonus issues and consolidations over the years) which
capitalised the company at just $850 million. Here are some key dates
and events in News Corp’s share trading history:

October 1987: crash from $20 to as low as $10 in the days after
the crash as Rupert dumps more than $600 million worth of shares on
Queensland Press at $16 a share
Jan 19, 1991: hit record low of $3.19
Feb 1, 1991: debt relief deal with bankers announced
Aug 1991: back through $10
February 1993: reach record $31.20 as four-for-one share split announced
October 1994: one-for-two non-voting bonus issue announced, stock falls 6% in 2 days to $8
November 3, 1994: Non-voting shares debut at 12% discount, ordinary shares fall from $8.14 to $5.85
March 3, 2000: ordinary shares surge $1.65 to a record closing high of $27.50 after touching $28
April 17, 2000: ordinaries plunge 14% to $17.75 after dotcom crash and Rupert’s cancer scare
November 2004: one-for-two share consolidation as part of move to America

Now
that’s quite a complicated series of shares changes to contemplate but
from bottom to top the performance was certainly staggering. If you had
bought 1,000 shares for $3,190 on January 19, 1991, you would have owned
$157,500 worth of shares by the time they peaked on March 3, 2000.

Adjusting
for various share splits and bonus issues, your 1,000 shares would have
become 4,000 voting shares and 2,000 non-voting shares which closed at
$27.50 and $23.75 respectively at their peaks. However, the same shares
today are back to the equivalent of $10.58 and $10.11 today and would be worth $62,540.