News Corp has filed the documentation for its $15.436 billion peace deal with John Malone and the full document is well worth a read, even though for some strange reason the Fairfax press largely missed the story (AFR had a brief story).

Unlike equivalent Australian takeover documents, the Americans actually give you a detailed chronological rundown on how negotiations panned out.

For instance, John Malone initially demanded a $US1 billion termination fee if News Corp shareholders voted against the proposal to cancel Liberty Media’s 188 million voting shares and 324.6 million non-voting shares in exchange for control of DirecTV, $US550 million in cash and three regional US pay-TV networks.

The News Corp board eventually negotiated this down to the “relatively minimal sum” of $US100 million which is still quite outrageous because neither the Malone or Murdoch interests are allowed to vote on the deal in a few weeks’ time.

The Australian had the best coverage today, even highlighting some hardly flattering commentary in the document about what the cancellation of Liberty Media’s stock will mean for News Corp and Murdoch family control.

Try this interesting comment for size:

The board concluded that the fact that the Exchange would increase the public stockholders’ aggregate voting power to well over a majority of the Company’s total voting power was a substantial positive. In this regard, the board noted that the Exchange would enable the public stockholders, by virtue of their collective majority voting power, both in the context of electing directors at Annual Meetings of the Company and in voting upon the approval of specific transactions submitted to stockholders, to function as a potential voting counterweight to future actions by large stockholders, including the Murdoch Interests, which might be harmful to the Company and its other stockholders

Given that the Malone peace deal will lift Rupert’s voting stake from 31% to 38%, surely it is time to unwind the grotesque gerrymander which sees about 60% of all shares on issue not carry a vote. A basic principle of one vote one value would bring Rupert back to about 18%, which is still worth more than $12 billion after the recent rally in News Corp shares which has effectively silenced critics of both the move to America and the Malone peace deal.

Finally, it is worth pointing out these deals don’t come cheap. News Corp is paying Goldman Sachs $US20 million and JP Morgan $US5 million for their advice.

Peter Fray

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