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MEDIA'S MEGA-DEAL MAKERS | NEWS ANALYSIS : PROFILE:
EXPANDING AN EMPIRE

Murdoch Has Eye on Remote Control

July 18, 1996|JAMES BATES | TIMES STAFF WRITER

Like the space aliens who invade Earth in the hit film "Independence Day" released by his Twentieth Century Fox studio, Rupert Murdoch would like nothing better than to take over the world.

At least that's the way he's long been portrayed by cynical detractors and competitors.

Murdoch's goals are, in fact, less ambitious than worldwide conquest. Murdoch would settle for controlling vast amounts of TV programming and distribution around the world. On Wednesday, he took yet another major step toward that goal with a $2.48-billion stock deal to acquire New World Communications Group.

In one fell swoop, the Australian-born media baron would become the largest television station owner in the United States, reaching four out of 10 homes. In buying the 80% of New World he doesn't already own, Murdoch would get control over 10 television stations in such cities as Dallas; Cleveland; Tampa, Fla.; Phoenix; and Austin, Texas--on top of the 12 stations already in his portfolio.

That would give him more control over the destiny of his Fox network programs, allow him better odds of succeeding in launching a major news operation and let him reap the lucrative profits that network-owned television stations are capable of generating. In addition, it would put Murdoch in a stronger position to launch new shows.

In a statement Wednesday indicative of his determination, Murdoch declared that he aims to "become the leading over-the-air free broadcast television network in the United States," with Fox playing a role in the industry "for decades to come." Murdoch's determination is long-standing: In 1985, he became a U.S. citizen in order to get his original broadcast license.

As usual, Murdoch is paying a price that has raised eyebrows on Wall Street. Shares of News Corp., the media and entertainment conglomerate Murdoch controls, fell $1.375 to $20.625 on the New York Stock Exchange. One Wall Street investor who admires Murdoch said, "This is really expensive, but over time it should prove a reasonable deal."

In the past, Murdoch has proven skeptics wrong, although not without a close brush with a liquidity crisis in 1990. Murdoch's mid-1980s purchase of Metromedia's stations for $1.85 billion was greeted with gasps, and his purchase of Twentieth Century Fox in 1985 from Marvin Davis was considered too expensive as well. Murdoch executives note that Wall Street's reaction seemed to forget that he's often right.

"The market is consumed with what's the immediate earnings impact," said an obviously irritated Chase Carey, chairman of Fox Broadcasting.

Because decisions at News Corp. begin and end with Murdoch, he has the luxury of paying what he wants if he believes it's a good long-term deal, which is why Wall Street nervousness over what he is paying doesn't seem to faze him.

William Shawcross, author of a 1993 biography of Murdoch, said, "He has that luxury because he has the ability to make decisions instantly based on an instinct that usually proves to be right."

The New World deal furthers Murdoch's conviction that controlling program distribution is an increasingly important goal amid the clutter of broadcast, cable and satellite channels worldwide. To get his new 24-hour news channel carried, Murdoch offered cable operations an unprecedented $10 per subscriber to carry it. In May, he offered cable giant Tele-Communications Inc. a 20% stake in the new news channel if it would distribute it.

New World's stations already carry Fox's programming, but the lack of full ownership of the stations makes for something of an arms-length relationship that can be frustrating to Fox executives. For example, Fox doesn't have full say over the programs that run late at night on the New World stations, and in some markets the company's Sunday morning news show doesn't air.

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For Murdoch, the deal is another high-profile move after he has laid low amid the flurry of major media and entertainment acquisitions of the last two years--deals that saw Walt Disney Co. buy Capital Cities/ABC Inc., Westinghouse Electric Corp. buy CBS Inc., Seagram Co. buy MCA Inc., and Time Warner Inc. strike a deal to buy Turner Broadcasting System Inc.

Despite the appearance that he was on the sidelines in the acquisitions game, Murdoch had been looking. He was rumored to be circling MCA when Seagram was cutting its deal, and he was an unsuccessful bidder for Metro-Goldwyn-Mayer Inc., which announced this week that it will be sold to a group backed by billionaire Kirk Kerkorian for $1.3 billion.

One former senior executive in Murdoch's empire said Murdoch can never be considered too far removed: "Rupert is never on the sidelines. He's always waiting for the appropriate opportunities, and the right price."

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