By Stephen Mayne, failed board candidate at Fairfax, News Corp, Southern Cross Broadcasting and WA News

The stock market clearly believes that greater media ownership
concentration and foreign investment is now a strong chance of getting
through the Senate. Because share prices in the target companies have
all risen during
morning trade after yesterday’s Cabinet decision to clear the way for
the Murdoch and Packer families to further increase their power in
Australia.

However, risks remain and most of the share prices are still well
below the takeover speculation peaks reached in the aftermath
of the 2004 federal election, when investors were salivating at the
prospects of mega-mergers courtesy of the Howard Government’s Senate control.

For instance, Southern Cross Broadcasting has jumped 50c to $11.15
today, but it soared from $12.40 to $16.30 in the four months after the
2004 Federal election.

Seven Network shares are up 21c to $8.55 today but they rocketed from $5 to $8 between October 2004 and May 2005.

John Fairfax is up 10c to $3.90 but it leapt from $3.70 to $4.50 after the election in anticipation of a PBL takeover bid.

Network Ten is regarded as a possible target for News Corp and it rose
9c to $2.89 today but rocketed from $3.50 to $4.40 in the two months
after the Federal election.

As usual in Australia, this decision has been driven by the competing
interests of the powerful Murdoch and Packer families. John Howard has
maintained his ten-year favouritism towards the Packers, but PBL shares
have fallen 5c to $18.18 today on fears they will overpay for Fairfax
or Southern Cross Broadcasting.

Similarly, News Corp is down 22c to $26.63 and despite seemingly having
a lobbying loss, Rupert’s 50-year obsession with expansion and
takeovers will probably see him pull out the chequebook to snap up a
free-to-air network that would complement his dominant 70% share of the
newspaper market.

Meanwhile, it’s no secret that Rupert Murdoch doesn’t take corporate
governance seriously, but never did we think News Corp would produce a web page
which so obviously demonstrates the point. However, at least company
secretary Laura O’Leary has been good enough to email through
the four page legal letter to the SEC rejecting the latest board tilt. Have a read, as it is quite entertaining.

Peter Fray

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