Rupert Murdoch’s continued public absence is feeding suggestions that his sons — or, at least, Lachlan — are overriding his fondness for print. Since his December accident, the 87 year old has made only one public showing, when he walked unaided into Trump’s state dinner for French President Macron late last month.
In that absence, News Corp has been taking the first steps on the long march of closing or disposing of its many newspapers with the announcement that it’s looking for a private equity buyer for its regional and local papers. For buyers, the good news is the price could be close to zero. The bad news is the value might be less.
Famously, last year, two private equity groups quietly tip-toed away from Fairfax. Even financier Warren Buffet, whose love excited the industry when he bought into local newspapers in 2012 has now acknowledged that his papers are doomed.
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The valuation model for this is the New York Daily News, which sold for $1, provided the buyer took on liabilities for staff entitlements, such as pensions and accrued leave. Some News Corp local papers (most of which have the benefit of being regional or local monopolies) may find local buyers at that price, but anyone will face the same challenges.
At the same time, News Corp is struggling with the costs of defending Foxtel from the impact of streaming, a threat so serious that the cable monopoly has opted to pay most of the cricket broadcasting deal.
This movement suggests that News Corp, together with the post-Disney residue of 21st Century Fox, are looking to perhaps fill the gap left in its newspaper production with television, possibly in partnership with its ideological US confrere, Sinclair, or with Seven West Media. But while television may lag behind newspapers on the decline curve, it’s on the same trajectory.
On the same day of Rupert’s appearance, despite earlier speculation, Fox was not named as a buyer of any stations being offloaded by Sinclair Broadcasting (the largest US television station operator) to resolve potential breaches under the US versions of the reach and single market rules, although Fox may be the “party to be announced”.
Here in Australia, the surprising 25% jump in Seven’s share price last week says something is going on at Seven, with or without the Murdochs.
James Murdoch has his own distractions as chair of Fox’s 39% owned Sky UK. Last week, the British regulator sent the culture secretary its final report on Fox’s bid to buy the remaining 61%. This report has not yet been released, though it may have been overtaken by events, with US broadcaster Comcast trumping the bid and Sky revealing that, as a result, it no longer had a preferred bidder.
It must be a hard choice for the Murdochs. Do they sell and pocket the estimated AU$15 billion they’d earn? Or do they up their bid? And what does either option mean for the Disney share swap, given that the Sky share is about one-sixth of the value of 21st Century Fox?
News Corp’s search for buyers follows Fairfax’s February announcement that it would close any of 84 New Zealand mastheads it could not sell by June 30. Fairfax has already disclosed that there are no appropriate buyers for at least half and they’re slated for closure. Expect the same for most of the rest.
Traditionally more polite than Fairfax on these matters, News hasn’t used the “closure” word. However, while News Corp is keen to be a seller, there’s not a lot of sign of eager buyers coming to the rescue.