Murdoch-Watchers Mull Over Separation

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Shock and surprise from friends and relatives -- as well as
a few murmurings from investors -- was the reaction to the news April 21 concerning the
end of the 32-year marriage of Rupert and Anna Murdoch.

News Corp. shareholders showed some jitters, with the
company's stock price opening 20 cents lower than the previous day's close, down
to $A10.93 from $A11.10 ($US7.21).

The Murdochs' split will impact News Corp. due to
issues like the value of a potential settlement agreement between the couple, the fate of
stock owned by the family and the order of succession at the company. Sources at
Australian unit News Limited said Anna, a devout Catholic, won't divorce.

While three of the four Murdoch children hold senior posts
in News Corp. around the world, Rupert told British journalist Matthew Horsmann in an
interview last year for his book, Sky High, that 26-year-old Lachlan was
effectively the heir apparent. Until Lachlan or one of the other children was ready to
take over, however, it was widely expected that if anything happened to Rupert, both Anna
and senior executives like News Corp. president Peter Chernin would act as temporary chief
executives.

"There has been an expectation that Anna had been
hanging around for a potential regents rule, should something happen to Rupert, so the
market should be concerned if Rupert were no longer there," one fund manager said.

The New York Post reported that Anna would remain on
the board of News Corp. and as an executive on its audit committees.

Australian newspapers have speculated that the separation
could see Lachlan Murdoch taking a more senior role at News Corp. headquarters in New
York. He is currently executive chairman of News' Australian operations, 18 months
into a five-year term. Elisabeth Murdoch is general manager of the British Sky
Broadcasting platform in the United Kingdom, and James Murdoch is deputy publisher of the New
York Post
and president of News America Digital Publishing. Prudence, Rupert's
daughter from his first marriage, is not involved in the company.

The Murdoch family is the single-largest owner of News
Corp. stock, controlling 25 percent, although Rupert has distributed all of the
family's stock to his children. The company's stock has been riding high in the
last few months on the back of some major asset sales and on the success of the
company's U.S. television interests and of 20th Century Fox's record-breaking
co-production hit, Titanic.

Rupert's and Anna's reported $A100 million ($US66
million) in personal assets include a home in Beverly Hills, Calif.; a rural property in
Australia's New South Wales; and a ranch in Carmel, Calif..

The Murdochs gave a statement to New York Post
(owned by News Corp.) gossip columnist Liz Smith, and her column of April 21 said:
"It is with some personal sadness that I announce the amicable separation of Rupert
Murdoch and his beautiful wife, Anna. The Murdochs say that their situation is very
painful, and it leaves them torn, but they are attempting to work out their
differences."

Sources at News Limited said Murdoch's global
ambitions have become ever more far-reaching, and his work rate has not slackened.
According to reports, Anna gave him an ultimatum: "Cut back on the work, or I
leave." Anna is currently reported to be in London with her daughter, Elisabeth,
while Rupert remains in Los Angeles.

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