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News Corp. Fends Off Malone

8/11/2005 11:05 AM Eastern

News Corp. renewed its shareholder-rights plan for two years, a move made specifically to stop Liberty Media Corp. chairman John Malone from accumulating more voting shares in the media giant.

News Corp. announced the renewal of the poison pill, which would make it difficult for any single shareholder to amass more than 15% of its voting stock, in conjunction with its fiscal fourth-quarter results.

Wednesday night, in a conference call with analysts, News Corp. chairman Rupert Murdoch said that negotiations with Liberty to buy back its voting shares have reached a standstill.

Liberty, which began buying News Corp. voting stock last year, said in December that it had accumulated 18% of its voting stock. That rivals only Murdoch’s 30% voting stake in the company and prompted the company to enact the initial shareholder rights plan.

“We’ve frankly moved on,” Murdoch said on the conference call. “When Liberty comes up with a plan that is acceptable to them, we’ll have to look at it. If the situation [with Liberty] goes away, then the stockholder rights plan goes away too.”

Earlier, Murdoch said that the two companies have had discussions, but could not reach a decision that would be beneficial to both companies.

“We’ve been ready to help find some solution,” Murdoch said. “He said that he may decide to hold the shares as a long-term investment. If he is a long-term investor, he’s very, very welcome. If he wishes to sell or come up with a scheme to distribute, we’d be happy to cooperate in a friendly way. Until that is decided, we’re keeping the stockholder plan in place.”

Malone, on a conference call last week to discuss Liberty’s second quarter results, had said that he would buy more News voting shares if the poison pill were allowed to expire.

The Liberty situation nearly overshadowed what was a strong fourth quarter for News Corp., fueled by gains at its cable networks. Revenue rose 12% to $6.1 billion and operating profit increased 42% to $955 million. At the cable networks, operating income was up 14% to $137 million, fueled by advertising sales gains of 22% at Fox News Channel.

Murdoch said that News Corp.’s $580 million purchase of Intermix Media last month won’t be its last Internet acquisition. He added that News Corp. could spend between $1 billion and $2 billion on Internet assets, adding that the company is in “advanced negotiations” to purchase a search engine company.

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