Out of the blue. Is there change in the air for the global empire of the Murdoch clan? The Financial Times ran a fascinating story on its website this morning suggesting a possible change of tack regarding ownership of Sky, the biggest pay TV business in Europe. At 14.4 billion pounds (more than A$28 billion), it would be a big bite, especially as any price would have to include a premium, which would take the final figure well past A$30 billion. The Murdochs could try and sell their 39%, but UK regulators would want to see a follow-up bid for the rest of the company. Reports the FT:

“The chatter in media circles suggests that Fox may, in fact, be a seller rather than a buyer. Could the Murdoch era at Sky be coming to an end? Bankers are buzzing about what a Sky sale would mean for the European media sector. The company has a market capitalisation of 14.5 billion pounds and there would be no shortage of possible suitors — at the right price”.

This is the first time a possible change of tack by the Murdoch clan about the ownership of Sky (which is Rupert Murdoch’s biggest and most important media contribution, building it from nothing just over 35 years ago into a giant worth close to A$30 billion) has emerged in the media. For years the conventional wisdom has the Murdoch empire buying the 61% of Sky it doesn’t own (it tried a cheapskate grab in 2011 but was brought undone by the News of the World phone-hacking scandal). And don’t worry, there would be buyers — John Malone would likely have a grab, even though his companies are buying two cable rivals in the US and Cable and Wireless in the UK. He could sell Virgin Media in the UK to clear the way for Sky. Vodafone is now mentioned as a possible buyer for Virgin.

Comcast, the giant US media group has the fire power after trying unsuccessfully to buy Time Warner Cable last year. And remember the Murdochs wanted to spend US$71 billion buying Time Warner last year. And there are other groups — tech and net and private equity. Big media and buyout groups are stalking Yahoo as it contemplates breaking itself up and selling its internet business. Yahoo is worth more than US$30 billion and the internet business could cost any buyer more than US$12 billion.— Glenn Dyer

Food falls. The sharp falls in iron ore, oil, gold, copper and other industrial commodities has obscured similar falls in global food prices. The FAO (Food and Agricultural Organisation) said last night that world food prices fell in November for the first time in three months, pulled down by a strong dollar and ample supplies, The FAO said its food price index (which measures monthly changes for a basket of cereals, oilseeds, dairy products, meat and sugar) fell 1.6% to average 156.7 points in November against a revised 159.3 points in October. The index is 18% cheaper than a year ago as the index has falling for most of the past 20 months, thanks to a combination of the rising US dollar (most commodities are priced in greenbacks) and to an abundant global supplies. The index is back within two points of the six-year low hit in August (oil and gold prices are close to if not at six year lows as well).

The FAO Cereal Price Index fell 2.3%, as grain prices fell. In fact coarse grain prices fell even more due to favourable harvests in the United States, the world’s largest maize producer and exporter. Vegetable oil prices fell 3.1% from October, helped by lower energy prices, and  good early planting and production prospects for soy crops in South and North America.  And the FAO’s Dairy Price Index also fell 2.9% on low volumes. Meat prices also fell in November, while sugar rose strongly for the third month in a row. — Glenn Dyer

The cost of Twiggy. Andrew Forrest’s Fortescue Metals Group seems to be out of the woods, despite the plunging price of iron ore. Intense cost-cutting across the entire group, judicious investment, well-timed debt buybacks and some skilled PR (and no more talk about conspiracies between BHP Billiton and Rio Tinto to do down poor little old Fortescue) have relieved much of the pressure from the company that almost pushed it to the edge in the first half of this year. But saving Fortescue and Twiggy’s bacon has had a cost — a big one for two the contractors that used to work with the country’s third-ranking iron ore exporter. For example, the loss of a key Fortescue contract earlier this year cost the private equity-owned Bis Industries big time — $700 million in write-downs when Fortescue axed Bis Industries’ off-road haulage contracts at the Christmas Creek and Cloudbreak iron ore mines in May, taking the work in-house. And then there was Macmahon Holdings, the contractor, which lost $260 million in annual revenue in April when Fortescue consolidated its Christmas Creek and Cloudbreak mining contracts in favour of Downer EDI. — Glenn Dyer

No money in money? There’s a global glut of bank notes, and it has forced the biggest private note printer De La Rue to take an axe to its business, slashing the number of printing plants, cutting staff and trying to end a halving in its share price in the past two years. Earnings have fallen as demand for notes have slowed. So to save itself millions of dollars a year, the company’s total note printing capacity will be cut — to 6 billion notes from 8 billion. Some 300 staff will go as the company closes a printing plant in Malta, leaving it with plants in the UK, Sri Lanka and Kenya. That will mean the number of printing lines falls from eight to four. — Glenn Dyer

Peter Fray

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