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News Corp. is said to be near acquiring Elisabeth Murdoch's Shine Group

In addition to securing one of Europe's fastest-growing TV production companies, the deal would bring Rupert Murdoch's 'relentlessly ambitious' daughter Elisabeth back to the family business.

February 11, 2011|By Meg James, Los Angeles Times
  • Elisabeth Murdoch, Rupert Murdoch's second-oldest daughter, has spent the last 10 years building Shine Group into a leading producer of reality shows such as MasterChef, The Biggest Loser and One Born Every Minute.
Elisabeth Murdoch, Rupert Murdoch's second-oldest daughter, has… (Tim Matthews, Allstar )

Rupert Murdoch is close to bringing his daughter Elisabeth back into the family business.

In recent weeks, negotiations have accelerated for Murdoch's media empire News Corp. to acquire Elisabeth Murdoch's London-based television production company, Shine Group, for about $700 million, according to people familiar with the situation.

The move would hand one of Europe's fastest-growing TV companies, with operations in nearly a dozen countries, to News Corp., which owns the Fox TV network, Fox News Channel, regional sports networks, the 20th Century Fox movie studio, the Wall Street Journal and the New York Post.

Over the last half-century, Murdoch has assembled one of the world's biggest media companies but has steadfastly refused to spell out a succession plan. Elisabeth's arrival at News Corp. would help consolidate the Murdoch family's control over the media giant: Two of his four adult children would be in positions of power.

Elisabeth Murdoch, 42, has spent the last 10 years building Shine Group into one of Britain's largest independent TV production companies. She rapidly expanded Shine through acquisitions that have given it operations in France, Germany, Sweden, Norway, Australia, New Zealand and the U.S., along with a reputation as a leading producer of reality shows such as "MasterChef," "The Biggest Loser" and "One Born Every Minute."

News Corp. and Elisabeth Murdoch declined to comment.

News Corp's deal for Shine, which is expected to be finalized in the next couple of weeks, will probably intensify the intrigue surrounding which of Murdoch's children will succeed him to run the company. Initially, Murdoch had indicated it would be his oldest son, Lachlan. Then, in 2005, Lachlan left News Corp. and moved to Australia. The spotlight has since fallen on his second son, James, who runs News Corp.'s European and Asian operations.

However, some insiders have long believed that it is Elisabeth, whom friends describe as "relentlessly ambitious" and most like her father in her entrepreneurial nature, who will eventually win the nod.

Rupert Murdoch — who turns 80 next month — has no plans to step down or even slow down. (His mother, Dame Elisabeth Murdoch, just turned 102.) In recent weeks he has been particularly busy, launching a digital news product, "The Daily," for Apple Inc.'s iPad tablet. On the other side of the Atlantic, News Corp. has been embroiled in a controversial bid to take control of satellite television service British Sky Broadcasting in a $12-billion deal that is awaiting government approval.

People familiar with News Corp.'s interest in Shine — who were not authorized to speak publicly about the transaction — said several factors were driving the deal, including Rupert Murdoch's desire to have his second-oldest daughter in the company. Not insignificantly, it also would give News Corp. a strong toehold in international TV production. That has become increasingly important as production companies take successful reality show formats and replicate them around the globe, creating some of the world's biggest hits.

At the same time, the people said, Elisabeth has her own reasons to sell Shine. Minority shareholder Sony Pictures Entertainment has been looking to cash out, and Elisabeth was not interested in bringing aboard new partners that would dilute her stake. On top of that, the European television production industry is in a consolidation phase, and Shine has considerable debt and lacks the financial resources to amass its way up to the next level, the people said.

Elisabeth Murdoch owns 53% of the company; Sony owns 20%; BskyB owns 13%, and a smattering of minority shareholders hold the remainder. After a slew of acquisitions, Shine's revenues have soared. In 2009, Shine reached revenue of more than $400 million, up from $38 million five years earlier. The most recently reported annual profit was $45 million.

Despite her more than 50% interest, Elisabeth Murdoch is not expected to receive a commensurate payout. Many of her acquisitions of smaller production companies contained provisions requiring that previous managers be compensated in a sale, according to a person familiar with the structure.

For about a year, Elisabeth Murdoch has served as an observer on News Corp.'s board, which allows her to sit in on board meetings. Her brothers James and Lachlan are voting board members, but there was concern that deeper involvement by Elisabeth in corporate governance would jeopardize the public funds that Shine receives from the British government as an independent production house.

Early in her career, Elisabeth Murdoch owned television stations in California, including one covering Santa Barbara and San Luis Obispo counties. Although she has never held a high-level position within News Corp., she previously held a senior programming position with Sky Networks, an arm of BSkyB, and worked at Fox TV stations.

News Corp. has not indicated what Elisabeth Murdoch's role within News Corp. would be. She is expected to stay in Britain. Her husband, Matthew Freud, is in the process of reacquiring the company he founded, Freud Communications, one of Britain's most influential public relations agencies. The pair — who combined have six children — are one of Britain's most celebrated power couples. More than 350 guests attended Elisabeth Murdoch's 40th birthday party two years ago, including then-Conservative Party leader David Cameron, now prime minister; former Prime Minister Tony Blair; and rock star Bono.

meg.james@latimes.com

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