At the 2007 News Corporation AGM in New York, Rupert Murdoch proudly declared the market capitalisation of his conglomerate had exceeded all of its traditional old media rivals for the first time.
The subsequent destruction of about $US4 billion on Dow Jones, the silly decision to cede control of DirecTV to John Malone and the collapsing share price during the peak of the phone-hacking frenzy caused the value of the Murdoch family’s stake in News Corp to fall to below $US5 billion in mid-2011. Indeed, at the 2011 AGM in Los Angeles, I quoted a piece of Commsec research at Murdoch that showed News Corp had been one of the worst-performing ASX50 shares over the previous 20 years.
The story for investors has been much better over the past year, although assessing the relativities is getting increasingly complex during the current demerger process. Bizarrely, the demerger has taken place in Australia before the US, and it has caused wild gyrations that don’t reflect well on anyone in terms of market integrity.
After US shares tumbled again overnight, here is a comparative league ladder of market capitalisations useful for assessing the media/internet/communications state-of-play before US investors get an opportunity to directly trade in the separate News Corp businesses next week:
- Apple: $US391 billion
- Google: $US294 billion
- Microsoft: $US280 billion
- AT&T: $US185 billion
- Samsung: $US170 billion
- Disney: $US112 billion
- Comcast: $US102 billion
- News Corp (still together): $US73 billion
- Ebay: $US66 billion
- Facebook: $US58 billion
- Telstra: $US52 billion
- DirecTV: $US34 billion
- Viacom: $US32 billion
The News Corp publishing demerger has been an unquestionable success in terms of creating value for holders of the stock, but even old media stocks like Disney and Viacom are clearly more valuable than News Corp.
However, it is way too early to pass judgement on the trading value of the New News Corp (NNC) because, as The Australian Financial Review‘s Chanticleer column pointed out today, the ASX has allowed the company to trade without providing anything like reasonable guidance or information about the world’s biggest newspaper business.
If Fairfax Media is now even breaking out the separate results of The AFR, surely News Corp will have to start disclosing the huge losses being racked up by publications such as The Times, The New York Post and, to a lesser extent, The Australian.
Reading through the printed share tables in The Australian this morning, readers are advised that old News Corp voting shares (NWS) jumped 37c to $30.90 yesterday. At 11am this morning they were down 62c at $30.28.
It doesn’t seem right that old and new News Corp trading entities can be simultaneously traded in Australia, especially when the same isn’t occurring on US markets. So much for a globalised trading world. The situation gets even more complex when you consider there will soon be eight different ways to get on the Murdoch investment bandwagon because both NNC and 21st Century Fox will have separate voting and non-voting shares listed on the ASX and the NASDAQ.
Trying to make sense of yesterday’s wild gyrations was hard work. This is what media writer Nick Leys observed in the The Oz today:
“The value of the New News Corp rallied on its second day of trading with the hived-off entity gaining more than 15%, or $2.20, to end the day at $16.75. And the non-voting stock finished the day 18.53% higher at $16.95.”
The voting shares (ASX code: NNC) are down 5c at $16.70 this morning, while the non-voting stock (ASX code: NNCLV) had lost 20c to $16.75 at 11.15am. Given News Corp’s non-voting shares traditionally trade at a discount to the voting stock, this wild and illogical trading after one of the world’s biggest demergers should be thoroughly investigated by those responsible for order and transparency on the ASX.
Cutting through all the noise and distortions of Murdoch’s latest poison pill, the voting gerrymander and another market-distorting $US500 buyback proposed for NNC, the Murdoch family have never had a bigger or more secure fortune to fight over. And the family dynamics have never been more complicated or uncertain, with the 82-year-old patriarch — who has produced six children from three broken marriages — now serving as executive chairman of two completely separate companies. This is unprecedented.
With eldest son Lachlan Murdoch now serving as non-executive chairman of Ten Network Holdings and a non-executive director of both Murdoch-controlled companies, the obvious move for the New News Corp will be a takeover bid for Ten that gives Lachlan a dominant Australian business to run.
Someone should ask both Communications Minister Stephen Conroy and inevitable replacement Malcolm Turnbull to make firm written statements before the September 14 election as to whether that is a scenario of Murdoch family dominance they would tolerate.
*Stephen Mayne is a former News Ltd journalist and monitor of all Murdoch family-controlled entities trading on the ASX for the Australian Shareholders’ Association