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. Murdoch Relocates News Limited To US: Eyes Fortune 500 Revaluation

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 by T.K. Maloy
 Washington - Apr 06, 2004
News Corporation, Ltd., Australian-based media empire headed by Rupert Murdoch, is moving its place of incorporation and its stock listing to the United States in order to access more capital on the American market -- though the company leader said there are no plans for any major acquisitions.

The company's global headquarters in already situated in New York City and 75 percent of News Corp.'s revenue comes from its U.S.-based businesses. Its American media properties include the Fox television network and the New York Post.

The move comes at a time when there has been speculation as to who will succeed the septuagenarian Murdoch, with two sons, Lachlan and James, both actively involved in the management of the company. The 32-year-old Lachlan is the chief operating officer of News Corp while 31-year-old James is the chief executive officer of British Sky Broadcasting, PLC., which is over 35 percent owned by News Corp.

For the time being, ageing lion Rupert Murdoch has shown no sign of definitively surrendering the reins.

The reincorporation decision, which was unanimously approved by the company's board, will require shareholder and various regulatory approval. In a series of conference calls, Murdoch said the action was expected to markedly help New Corp's share price and will give the company access to the much larger U.S. capital markets, including various key institutional investors. Murdoch described the company he founded as "strong and getting stronger."

"This will have a tremendous positive influence on our company -- and our share price," Murdoch said. The reorganization is expected to be completed by the end of this year.

According to the media titan, "While historic gains in News Corporation stock have been impressive, our present status as a foreign issuer in the U.S. leaves many of the world's biggest funds and investors unable to invest in News Corporation. That we believe is a prime reason our stock trades at a discount to some of our peers, despite our very strong financial performance in the past few years."

Among other increases in capital, the company is gunning for potentially larger investments from such media investment firms as Barclays, State Street and Vanguard, who have collectively invested billions in such media giants as Disney, Time Warner and Viacom.

News Corp. chief financial officer David DeVoe echoed Murdoch's comments, saying "we expect our shareholder base to expand."

DeVoe elaborated on the technical considerations that under the company's current incorporation, many U.S. institutional investors are restricted in investing in the company's preferred limited voting ordinary shares. Under the terms of the proposed reincorporation, "preferred" stock will be converted into non-voting common stock.

In a statement, the company said that the board has established a special committee of non-executive directors to evaluate the reorganization. The completion of the reorganization will be subject to obtaining regulatory clearances, court approvals, certain tax rulings and the requisite vote of the company's shareholders. The special committee will retain independent legal counsel and investment banking advice to assist the committee in evaluating the reorganization.

The company statement also said that the proposed reorganization will be accomplished under Australian law with existing holders of News Corp.'s ordinary and preferred shares, including those ordinary shares and preferred shares represented by American depositary shares (ADRs), exchanging their shares for equivalent shares of voting and non-voting common stock in the new News Corp. entity.

Like many U.S. companies, News Corp. will be incorporated in Delaware.

"The reincorporation is expected to benefit all shareholders by increasing the scope and depth of the shareholder base, improving trading liquidity, enhancing access to the capital markets and making the company's shares eligible for inclusion in a variety of U.S.-based indices, the company statement said.

The company expects that after the reincorporation, News Corp.'s primary stock exchange listing will be on the New York Stock Exchange and, in addition to the Australian Stock Exchange, the company intends to maintain a secondary listing on the London Stock Exchange, according to a statement from News Corp.

Murdoch began his ascendancy after inheriting a small South Australian newspaper business from his father. The company has grown to become the fifth-largest media company in the world, worth an estimated market value of over $51 billion.

In trading Tuesday, preferred American depository shares of News Corp. gained $2.10 or 6.38 percent to close at $34.99.

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