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News Corp. closes deal for Shine Group

The $674-million purchase brings Rupert Murdoch's daughter Elisabeth, who turned Shine into a leading producer of reality TV shows, back into the corporate fold.

April 06, 2011|By Meg James, Los Angeles Times
  • Elisabeth Murdoch, left, will join father Rupert and two brothers on the News Corp. board.
Elisabeth Murdoch, left, will join father Rupert and two brothers on the… (Indigo / Getty Images )

Rupert Murdoch's News Corp. completed its $674-million purchase of Shine Group, the London television production company owned by the mogul's daughter Elisabeth Murdoch.

The transaction accomplishes Murdoch's goal of bringing back his daughter to the corporate fold a week after her brother James Murdoch was elevated to deputy chief operating officer of News Corp. Rupert Murdoch has long refused to anoint an outright successor, but those plans appear to be accelerating after Murdoch turned 80 last month.

James Murdoch, 38, is expected to move to New York from London this summer to become more involved in the U.S. operations of the sprawling media empire. Elisabeth Murdoch, 42, plans to remain in London. She will continue to oversee Shine, the company she launched in 2001 and has since built into a leading producer of reality shows that include "MasterChef," "The Biggest Loser" and "One Born Every Minute."

The Shine purchase, which News Corp. announced in February, prompted a lawsuit by Amalgamated Bank, a New York state bank that, through funds it manages, holds nearly 1 million shares of News Corp. common stock. The bank contends the purchase price for Shine was excessive, with News Corp. overpaying to enrich a Murdoch family member.

"Murdoch has treated News Corp. like a wholly owned family candy store," the bank's complaint said. "Murdoch historically has operated News Corp. as his own private fiefdom with little or no effective oversight from the board."

News Corp. has dismissed the bank's allegations, calling them meritless. In its announcement Tuesday, News Corp. said the stock transaction had been approved by its audit committee, which is "composed entirely of independent directors." The committee, News Corp. said, "received advice and a fairness opinion" from an outside investment bank, Centerview Partners, and legal advice from the law firm Wachtell, Lipton, Rosen & Katz.

Shine shareholders, including Elisabeth Murdoch, received a total of about $472 million in "aggregate proceeds," News Corp. said. Six weeks ago, it reported that it would pay $674 million for the operation, calling the amount the "enterprise value" of Shine.

But on Tuesday, News Corp. provided only the lower figure, which was the "take away" amount left after retiring Shine's debt and paying other liabilities, a company official said.

Elisabeth Murdoch owned 53% of Shine. Sony Pictures Entertainment owned 20% and British Sky Broadcasting, which News Corp. is in the process of acquiring, owned 13%. Minority shareholders held the rest.

Elisabeth Murdoch is expected to be nominated for a seat on the News Corp. board, joining brothers Lachlan and James, who are already directors. Including Rupert Murdoch, that would bring to four the number of Murdochs on the 17-member board of News Corp.

meg.james@latimes.com

Times staff writer Dawn C. Chmielewski contributed to this report.

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