Accompanying a story about Seven’s battle for West Australian Newspapers on the front of The Australian‘s Media section today are a quartet of graphs illustrating the recent drop in the share prices of Australia’s major media groups: Seven Network, down 25% since mid-Feb; Ten Network down 16% since mid-Jan; Cons Media, down 20% since mid-Feb and Fairfax, down 23% since mid-Jan.  

Missing was the graph for News Corp voting shares, which have also fallen by around 18% since January, a strange omission for a paper that prides itself for being so upright.

As you can see it’s probably good thing that News Corp’s share price graph wasn’t included. It only confirms the strategic error Rupert made in offering cash to Dow Jones shareholders.

Offering shares would have been smarter, but rather than dilute his own holdings in the company, Rupert offered cash and is now paying for it as the market goes off media companies with US exposure (the recession will cut ad revenues) and companies with big debt bills, which News now has after buying Dow Jones.

Cash is king and Murdoch has given the best part of $6 billion of it to the families who controlled Dow Jones and other shareholders.

Peter Fray

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